This Week in Washington

Thanks for your interest in Washington, D.C., and for reading This Week in Washington.

Steve Gordon and former Congressman Erik Paulsen report on COVID-19 and the pushes and pulls felt by members of Congress as they try to legislate and campaign during a full year of crises compacted into six months. Steve and Erik also include thoughts from Senator Chuck Grassley (R-IA) and Senator Roy Blunt (R-MO). Al Jackson provides his monthly update on Defense and Defense Appropriations.

We are preparing a special interview with Sean Callinicos, an exceptional lawyer who has years of public policy experience in healthcare.  Sean worked with Congress many years ago to lay the foundation for America’s vaccine industry, and his thoughts on the race to develop a COVID-19 vaccine are timely.

Our special interview with Sean Callinicos will be sent to you on July 8, and the next regular edition will be sent on July 22.

Stay safe and be well.

Heard on the Hill

By Steve Gordon, Total Spectrum Managing Partner and Congressman Erik Paulsen (2009-2019), Total Spectrum Strategic Consultant

A tale of two regions of the country

Dr. Anthony Fauci, Director of the National Institutes of Allergy and Infectious Diseases, said Tuesday at a hearing of the House Energy and Commerce Committee that “the surge in infections (of the COVID-19 virus) in parts of the country is very concerning…  The next couple of weeks will be critical to address the surges we are seeing.”

On Wednesday, the governors of New York, New Jersey, and Connecticut jointly announced a 14-day quarantine would be required for visitors who want to travel there from states which have significant community spread of the COVID-19 virus. Those states include Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Texas, and Utah.

But Washington, D.C. is finally in Phase 2 of reopening. Restaurants and health clubs have reopened with appropriate restrictions. Most folks (including us) have finally rid themselves of three months of hair.

The Senate and the House will be in session until July 2, and then adjourn for a two-week State-District work period. Congress will return to Washington the week of July 20 and will have two weeks to tie things together before their annual August recess.

Pushes and pulls

We have gone through five extraordinary events in six months – starting with an impeachment trial, then a 100-year pandemic, followed by the closing down of our society which was designed to prevent our healthcare providers from being totally swamped. The shutdown created a recession with near record unemployment, and then came racial strife sparked by a brutal and senseless killing in Minneapolis.

It is also a presidential election year. The Democrat presidential race was effectively over on February 29 when Vice President Biden won the South Carolina primary. The November elections are four months and change away – and voting will start even sooner for those who can vote early.

It has been a year of uber-partisanship with the impeachment trial. It has been a year when the Administration worked with Congress, and Congress passed near unanimously major legislation responding to the COVID-19 crisis. All that, and we are only near the end of June.

There is some legislating that must – and will – still be done in 2020. But once we cross August 1st, the legislative trail will narrow, and the campaign trail will become an interstate.

The view from a leading Senate healthcare appropriator

A group of us were on a call recently with Senator Roy Blunt (R-MO), a member of the Senate Republican Leadership. He is Chair of the Senate Rules and Administration Committee; a member of the Senate Commerce, Science & Transportation Committee; a member of the Appropriations Committee; and Chair of the Appropriations Subcommittee on Labor, Health & Human Services, Education, and Related Agencies.

Senator Blunt said that the CARES Act provided significant funds that will help create the vaccines that will be successful and provide the ultimate solution to COVID-19 and return us to economic vitality. The Administration’s Operation Warp Speed is designed to provide funds so pharmaceutical companies can start the manufacturing process before the Food and Drug Administration has approved one or more vaccines, therefore saving many months of lost time.

The White House announced on June 3 that 14 pharmaceutical companies were in the final list to be included in Operation Warp Speed, and that the list would be ultimately reduced to five or six companies. The goal of this program is to have at least 100 million doses of vaccines available for Americans when the FDA provides final approval of one or more vaccines – hopefully, this December – and have at least 300 million doses available next January. The bet is that at least half of the companies in Operation Warp Speed will produce vaccines that work.

Senator Blunt said the worst that could happen is that the government spends money on a few possible vaccines that are not effective. He said the best thing that could happen is we shorten the time it takes to get vaccines ready for Americans – and we ultimately save lives.

He stressed that the risk is only that not all the vaccines are successful. It should not be implied that any of the companies involved will be creating a risky vaccine.

He concluded with thoughts on the way forward on stimulus bill 4.0, which is being called CARES 2. Senator Blunt said that all the previously appropriated stimulus funds will be out by end of July, so the pause before appropriating additional funds makes sense. Senator Blunt wants CARES 2 to have more funds for hospitals, medical providers, and vaccines. He predicted that the Senate bill will have a narrowly and sharply focused COVID-19 liability provision, and it will be Senate Republicans’ goal to have the bill on the President’s desk by August 1.

The View from the Chairman of the Senate Finance Committee

Chairman Chuck Grassley met with a group of us to share his views on various subjects.

  • Senate Republicans have not been able to find a dedicated funding source for the highway bill that has been passed out of the Senate Environment and Public Works Committee.
  • Many ideas are being discussed regarding changes to tax provisions, including an idea designed to help restaurants and the ‘carry-back provision’. There is no interest in opening the 2017 Tax and Jobs Act.
  • The White House is correctly upset over China’s lack of transparency about COVID-19, but they will not get out of the U.S.-China Trade Agreement.
  • Senator John Kennedy (R-LA) has proposed that if states and local governments have not spent their portion of previous support, they would have increased leeway and more flexibility to use the money as they wish. Chairman Grassley likes that idea, but suspects Congress will appropriate more money for states and local governments.
  • Senator Grassley would like the plus up of an additional $600 of unemployment compensation phased out and a plan phased in that creates incentives for returning to work, like the plan promoted by Senator Rob Portman (R-OH).

Police Reform

The President signed an Executive Order last week which mandated that the Attorney General issue grants to law enforcement agencies that achieved high goals as established by appropriate entities.

Both the Senate and the House of Representatives will vote this week on separate bills designed to address inappropriate actions by police, but the future is at best cloudy for this legislation. Republicans want to encourage adoption of police reforms through incentives, and Democrats want mandates.

Senator Tim Scott (R-SC) has been the author and driving force for the Senate Republican bill, and Majority Leader Mitch McConnell is bringing the bill to the floor today. But Democrats wanting a tougher bill decided to vote against police reform with the hope that a stronger bill can be achieved.

For more detail on Senator Scott’s bill, download the full text, the section-by-section analysis, or a one page fact sheet.

This and That

  • Senator Dan Sullivan (R-AK) said last week the highway bill that came out of the Environment and Public Works Committee last year is the first five-year bill that has been passed in 20 years. Senator Sullivan would like to merge it with the water infrastructure bill which passed out of the same committee and would support the building of water infrastructure projects like ports and harbors.
  • The Federal Reserve last week kicked off their $600 billion Main Street Lending program. This lending program is designed to help companies that are too large to qualify for the Paycheck Protection Program. The minimum loan is $250,000 for new loans and can be as high as $300 million for existing loans. The Federal Reserve also unveiled plans last week to offer loans to small and medium-sized non-profit organizations under the Main Street Lending program.
  • The House of Representatives passed a transportation bill entitled the Moving Forward Act which, if it were to become law, would authorize $1.5 trillion for infrastructure of all sorts. A fact sheet on the bill is available here.

The U.S. Senate has now confirmed almost 200 judicial nominees, which includes two Supreme Court nominees and 51 appeal judges.

Defense Update

By Al Jackson, Strategic Consultant to Total Spectrum

The Pentagon is facing billions of dollars in pandemic-related claims, which may force it to raid both the modernization and readiness accounts if Congress doesn’t backfill the money according to the leadership of acquisition with the Department of Defense.

Testifying before the House Committee on Armed Services (HASC) recently, Ellen Lord, Undersecretary of Defense for Acquisition and Sustainment, reaffirmed the Pentagon’s commitment to request supplemental appropriations from Congress beyond its FY2021 budget ask of $740 billion.  In previous communication between the Hill and DoD, the department has disclosed a request is forthcoming.  That request is currently being reviewed by the White House Office of Management and Budget.  This funding is needed to cover the costs associated with defense industry monetary claims, which are covered by Section 3610 of the Coronavirus Relief Package.  One major prime defense contractor informed DoD that they and their suppliers could claim as much as $1 billion in funding.  Undersecretary Lord used this as an example of the challenges the department currently faces.

Under Section 3610, the Pentagon and other agencies can reimburse suppliers for expenses to keep workers employed.  Under other provisions, contractors can seek reimbursement for pandemic-related leave and DoD-directed purchases of personal protective equipment, cleaning, and costs associated with spacing out workers in factories.  According to Lord, the agency doesn’t have adequate funding to cover those costs, which are estimated “in the lower end” of “double-digit billions of dollars.”  As previously noted, the Pentagon is in need of Congress to pass supplemental appropriations beyond its FY2021 request, as the department cannot fulfill these defense contractor claims, which would create even more dire circumstances for these companies and their employees.

House Democrats are currently working on a proposal in the billions that would create a pandemic response and preparedness fund in the National Defense Authorization Act.  The House Committee on Armed Services is expected to markup that key legislation early in July.  HASC Chairman Adam Smith (D-WA) has signaled his support for such a provision as a means to strengthen the Department of Defense’s ability to respond to a potential COVID-19 resurgence and other future infectious diseases.  Chairman Smith indicated during the hearing, “the military has a unique ability to lead” in efforts to ramp up domestic production of key equipment, per its experience in acquisition and stockpile management.

The challenge facing the DoD Joint Acquisition Task Force, re-directed to deal with the Covid-19 pandemic – which has executed $284 million of a planned $312 million for medical resources – indicates America is too dependent upon overseas suppliers.  “Reconstituting domestic production or creating new production that shifted offshore years ago often requires capital equipment expenditures, retooling, and re-training of the workforce,” Undersecretary Lord indicated.  “It can be months before a supplier is fully capable of producing components or end-items at scale, and these timelines are taken into account when reviewing projects to ensure production increases align to prospective needs of medical items.”

Major elements of the aforementioned proposal will aim to strengthen the small business supply chain for essential gear like personal protective equipment; improve the DoD’s ability to rapidly acquire and manufacture response supplies using the organic industrial base; and increase DoD research funding for infectious disease detection, treatment, and response technologies.  The billions of dollars needed to fund this endeavor will come from unspecified “lower priority accounts,” as to ensure the bill comes in below the $740 billion threshold. 

If passed into law, the legislation would further engage the Defense Department in the mission of supporting domestic health care, which falls outside of its traditional responsibilities.  The reasoning behind why the committee is moving in this direction is due to the military’s vast experience in mobilizing its manpower and logistics infrastructure to bring a lot of people to a problem in short order. 

The Senate Armed Services Committee recently marked up its version of the National Defense Authorization Act (NDAA).  The 60th annual National Defense Authorization Act (NDAA) supports a total of $740.5 billion in Fiscal Year 2021 funding for national defense, which is consistent with the 2019 Bipartisan Congressional Budget Agreement.  Within this topline, the legislation authorizes a base defense budget of $636.4 billion for the Department of Defense (DOD) and $25.9 billion for national security programs within the Department of Energy.  The NDAA also authorizes $69 billion for Overseas Contingency Operations.

Contrary to the wishes of the department, the legislation establishes a minimum number of aircraft for each major mission area in the U.S. Air Force and prohibits the divestment of aircraft until the minima are reached to ensure that Air Force can meet NDS and combatant command requirements.  The Pentagon’s plan to retire legacy aircraft such as the A-10, KC-10, and KC-135 will be delayed, as Congress wants to prohibit divestment of these platforms.  This is a win for Senator Martha McSally (R-AZ), who fought for the provision pertaining to the A-10 aircraft, as it will have a direct impact on the 355th Fighter Wing located at Davis-Monthan Air Force Base in Arizona and the 23rd Wing located at Moody Air Force Base in Georgia.  The bill also prohibits the divestment of any manned Intelligence, Surveillance and Reconnaissance aircraft operated by Special Operations Command.

The bill authorizes $9.1 billion to procure 95 Joint Strike Fighter aircraft, which is an 14 aircraft more than the administration’s request, enabling the forces to modernize and equip themselves with the most advanced and capable fifth-generation aircraft:

  • $5.5 billion to procure 60 F-35As
  • $1.2 billion to procure 12 F-35Bs
  • $2.4 billion to procure 23 F-35Cs

Other highlights of the package:

  • Adds $165 million for the purchase of an additional MQ-1 aircraft for the Army to meet state requirements for unmanned fixed wing ISR.
  • Increases MQ-9 procurement by a total of $170.6 million to prevent termination without a replacement.
  • Supports Air Force pilot training to protect pilots and reduce the pilot shortage.

Other Congressional action this past month included the confirmation of General Charles Q. Brown as the Air Force’s 22nd Chief of Staff.  Brown will become the first black service member to lead an American military branch.  General Brown is best known throughout the Air Force for the extensive time he spent in leadership roles in Europe, the Middle East and the Asia-Pacific region.

Brown, who is currently the commander of Pacific Air Forces, was confirmed for the post in a unanimous vote of 98-0.  He will replace Gen. Dave Goldfein as the Air Force’s top general.  Brown will be sworn in as chief of staff at a time when the Air Force hopes to realign itself against the threats of a rising China and resurgent Russia.  Under Goldfein’s leadership, the service sought to ramp up investments in key areas like space, command and control, and advanced munitions sometimes at the price of near-term readiness.  In responses to questions posed by the Senate Armed Services Committee ahead of its confirmation hearing in early May, Brown acknowledged that making those trade-offs could become even more difficult due to the COVID-19 pandemic and the resulting constraints on the nation’s economy and budget.

General Brown’s confirmation comes at a time also as the country finds itself embroiled in civil unrest and violence in the wake of the death of George Floyd, a black man who was killed by a white police officer in Minneapolis.  On June 5, PACAF posted a video where Brown talked about Floyd’s death and his own experiences as an African American serving in the Air Force.

“I’m thinking about the immense expectations that come with this historic nomination, particularly through the lens of current events plaguing our nation,” he said.  “I’m thinking about how I may have fallen short in my career, and will I continue to fall short living up to all those expectations. I’m thinking about how my nomination provides some hope but also comes with a heavy burden. I can’t fix centuries of racism in our country, nor can I fix decades of discrimination that may have impacted members of our Air Force.”

Brown said his own experiences in the Air Force “didn’t always sing of liberty and equality.”  He sometimes felt pulled between two worlds, each with their own perspective and views. He recalled feeling like he had to represent black airmen by working twice as hard and having heard insensitive racial comments during his career.

“I’m thinking about my Air Force career, where I was often the only African American in my squadron, or as a senior officer, the only African American in the room. I’m thinking about wearing the same flight suit, with the same wings on my chest as my peers, and then being questioned by another military member: ‘Are you a pilot?”

Brown closed by saying he has considered how the Air Force can make institutional improvements so that all airmen can serve in a professional environment where they can reach their full potential.  Part of that, he said, would mean leading conversations about racism inside the Air Force and listening to airmen’s perspectives about how to make the service more diverse and inclusive.

Calendar

Monday, June 22

  • 11 a.m. House Armed Services Intelligence and Emerging Threats and Capabilities Subcommittee markup of H.R. 6395 (116), the fiscal 2021 National Defense Authorization Act.
  • Noon. House Education and Labor Committee virtual hearing on racial inequities widened by the coronavirus.
  • 1 p.m. House Armed Services Strategic Forces Subcommittee markup of H.R. 6395 (116), the fiscal 2021 NDAA.

Tuesday, June 23

  • 10 a.m. Senate Health, Education, Labor and Pensions Committee hearing on preparing for future pandemics.
  • 11 a.m. House Armed Services Tactical Air and Land Forces Subcommittee markup of H.R. 6395 (116), the fiscal 2021 NDAA.
  • 11 a.m. House Appropriations Committee Member Day virtual hearing on fiscal 2021 appropriations.
  • 11 a.m. House Energy and Commerce Committee hearing on the White House’s response to Covid-19. NIAID Director Anthony Fauci, FDA Commissioner Stephen Hahn and CDC Director Robert Redfield, among others, testify.
  • 1 p.m. House Armed Services Military Personnel Subcommittee markup of H.R. 6395 (116), the fiscal 2021 NDAA.
  • 2:30 p.m. House Budget Committee virtual hearing on how the coronavirus exposed how much change is needed to combat health and wealth inequality.
  • 2:30 p.m. Senate Judiciary Committee hearing on the Foreign Sovereign Immunities Act.
  • 2:30 p.m. Senate Banking, Housing and Urban Affairs Committee hearing on oversight of the Export-Import Bank of the United States. 565 Dirksen.
  • 3 p.m. House Armed Services Readiness Subcommittee markup of H.R. 6395 (116), the fiscal 2021 NDAA.
  • 4:30 p.m. House Armed Services Seapower and Projection Forces Subcommittee markup of H.R. 6395 (116), the fiscal 2021 NDAA.

Wednesday, June 24

  • 9:30 a.m. Senate Energy and Natural Resources Committee hearing on Covid-19’s impact on mineral supply chains.
  • 10 a.m. Senate Homeland Security and Governmental Affairs Committee virtual hearing on the role of the Strategic National Stockpile in pandemic response.
  • 10 a.m. Senate Agriculture, Nutrition and Forestry Committee hearing on S.3894, the Growing Climate Solutions Act.
  • 10 a.m. Senate Judiciary Committee hearing on pending nominations.
  • 10 a.m. Senate Agriculture, Nutrition and Forestry Committee markup of the United States Grain Standards Reauthorization Act.
  • Noon. House Judiciary Committee hearing on oversight of DOJ.
  • 2:30 p.m. Senate Budget Committee hearing on the nomination of Derek Kan to be deputy director of the Office of Management and Budget.
  • 2:30 p.m. Senate Indian Affairs Committee hearing on pending legislation.

Thursday, June 25

  • 9:30 a.m. Senate Homeland Security and Governmental Affairs Committee hearing on oversight of CBP. 562 Dirksen.
  • 10 a.m. Senate Judiciary Committee markup of S. 685 (116), the Inspector General Access Act.
  • Noon. House Financial Services Committee virtual hearing on capital markets and emergency lending.

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