This Week In Washington

Latest news from Washington, D.C. produced by Total Spectrum/SGA exclusively for members of the Arizona Chamber of Commerce & Industry

More Info: Michael DiMaria | Partner and Vice President of Business Development | 602-717-3891 | [email protected]

Thank you for your interest in Washington, D.C., and thanks for reading This Week in Washington.

In this edition, our friend and colleague Patrick Robertson brings us a summary of Democrats’ legislative must-dolist. Al Jackson brings us up to date on defense and related appropriations issues.

Washington is quiet – in fact, it’s beyond quiet. Both the Senate and the House are on a state or district work week. Congressional staff, folks involved in partisan politics, and people in the advocacy world are taking a few days to catch their breath. Add in the thousands of folks who have not yet returned to their offices, and you get a real sense why both Capitol Hill and downtown Washington are listless. Restaurants are near-empty (except for on Valentine’s Day), retail stores are holding on, and cabs are virtually non-existent.

But it is a very eerie quiet because there are a lot of things happening below the surface and across the ocean.

Democrats and Republicans are both mindful that this November’s midterm election will almost assuredly bring major changes to Congress. Both sides are working feverishly on candidate selection, fundraising, and messaging, and in normal recess weeks a political story would hold our focus. But there were two big events this week.

The first big story was President Biden’s selection today of Judge Ketanji Brown Jackson to be his nominee to replace Associate Justice Stephen Breyer on the U.S. Supreme Court. Ms. Jackson was previously confirmed by the U.S. Senate and currently serves on Washington’s federal appellate court. If confirmed, she would become the first Black female on the U.S. Supreme Court.

The second big story this week was Russia’s invasion Wednesday evening of Ukraine, which did unite Republicans and Democrats. Here’s a sampling of legislators’ responses to Russia’s invasion.

  • “Vladimir Putin’s invasion into Ukraine is reckless and evil. The United States stands with the people of Ukraine and prays for their safety and resolve. Putin’s actions must be met with serious consequence.”  Minority Leader Kevin McCarthy
  • “If there’s any authority [Biden] doesn’t have that he does need to increase sanctions on Russia, he’ll get it from Congress.” Congressman Adam Schiff (D-CA), Chairman of the House Intelligence Committee
  • “Ratchet the sanctions all the way up. Don’t hold any back. Every single available tough sanction should be employed and should be employed now.” Senate Minority Leader Mitch McConnell
  • The entire post World War international order sits on a knife’s edge. If Putin does not pay a devastating price for this transgression, then our own security will soon be at risk.” Senator Chris Murphy (D-CT), a member of the Senate Foreign Relations Committee

President Biden announced Thursday a series of sanctions on Russian companies and Russian individuals. These included a series of measures from the Treasury Department that are intended to severely impact Russian banks and financial institutions, Russian elites and their family members, and state-owned entities. The White House also announced a series of Commerce Department sanctions that will severely impact the exporting of technologies used by the Russian defense sector.

Whether Putin will be deterred by sanctions, no matter how severe, is yet to be seen. But it’s clear that the battle for Ukraine is really the first battle between the United States, Russia, and China for dominance in a rapidly changing world.

Former Senator Phil Gramm (R-TX) was elected to Congress as a Democrat and served in the U.S. Senate as a Republican until he retired in 2002.  Phil Gramm has a doctorate in economics and was a leader in the Senate for a strong defense. He often remarked to me and many others that “I don’t believe there will ever be a time when the lion will lay down with the lamb. Just don’t believe it. But if I am wrong, I surely would prefer to be the lion.”

We will be back in two weeks for the next issue of This Week. Stay well.

Steve Gordon

Total Spectrum Managing Director

Washington Whispers

By Patrick Robertson, Total Spectrum Strategic Consultant

In government as in business, the best laid plans do not last very long. Just six or seven weeks ago, Senator Joe Manchin (D-WV) told everyone that he could not support the reconciliation package passed by the House known as Build Back Better (BBB). At the time, Democrats took this as a serious setback, but not the end of the effort. They said publicly that they would go back to the drawing board and work to get Sen. Manchin’s support.  

Since then, Supreme Court Associate Justice Stephen Breyer announced his retirement, setting off the confirmation process for his successor. In addition, the smoke was still rising off the Olympic Torch when Russia began its move into Ukraine. These two seismic events have scrambled the calendar and consumed Washington, and in the case of Russian aggression, the world.  

Shortly after the Russian action, President Biden released a list of sanctions and restrictions on the two breakaway regions in the Ukraine, two Russian banks, and some wealthy Russian families. He also announced other economic sanctions. The most severe penalties, like export controls, have been reserved for use if Putin and Russia decide to wage war. Congress was not able to agree on a list of potential sanctions before it left town for the recess last weekend, so the President was left to act alone with a Joint Resolution condemning potential Russian action against Ukraine.

Many said that the Build Back Better proposal would be back on track or at least headed in the right direction by this time. But the reality is that publicly, and by all reports privately, no real progress has been achieved on a new bill or discussions toward one. Labor negotiations between baseball owners and baseball players seem to be going better than talks on Build Back Better.

Senator Manchin has indicated he is not going to support the Build Back Better bill that the House of Representatives passed, and he does not seem inclined to provide an alternative. 

Opponents of Build Back Better say that this bill was too large, and supporters of the package should have waited to take inflation, world events, and pandemic recovery into consideration. They now contend that these things have stacked up to make the provisions of the Build Back Better no longer necessary.

While Build Back Better languishes without a clear path forward, Congress is working toward a final agreement to fund the federal government for Fiscal Year 2022, which began more than four months ago. Congress passed last week another stopgap bill funding the government at last year’s levels through March 11. Appropriators and leadership on both sides of the Capitol have agreed on a total funding number as well as allocations for each of the spending groups. They are now furiously writing the language of the bills and agreeing on individual programs.  

Most expect Congress will meet this March 11 deadline and will fund the government, crossing off one of the remaining items on it’s must get done to-do list before the mid-term election. A Supreme Court nomination and a few other miscellaneous items remain.

Primaries in Congressional and Senate races will begin in the coming weeks, although some states, like Ohio, are still finalizing their Congressional district maps. As these primaries and the general election begin in earnest shortly thereafter, Members of Congress will spend less time in Washington and more time at home.  

However, much like the plans for Build Back Better and so many other items, Congressional plans are subject to shifts in events and the whims of the world.

Defense Update

By Al Jackson, Total Spectrum Strategic Consultant

Congress recently passed another short-term continuing resolution (CR) to keep the government funded until March 11, 2022. All signs point to an agreement sometime in early March on a Fiscal Year 2022 funding package that will fund the government, including the Department of Defense, through September 30, 2022.  

In the interim, the administration is putting the finishing touches on a Fiscal Year 2023 funding package to send to Capitol Hill for consideration. It’s expected the budget request for the Pentagon will fall somewhere between $770 and $780 billion. This number does appear high compared to the FY22 budget request of $715 billion for defense, considering the administration has in the past signaled flat or decreasing budgets for defense. 

However, three consecutive CRs passed by the Congress have resulted in a decline in the military’s purchasing power, record breaking inflation this year, and a nearly six-month freeze in spending. The administration had little choice but to increase their funding request. The likely budget request for FY23 is an 8% increase over the previous forecast and 5% higher than the recently passed FY22 National Defense Authorization Act (NDAA). Additional concerns about the situation between Russia and Ukraine may shift the budget upwards.  

Various reports indicate that the defense budget will likely once again focus on greater investment in Research and Development (R&D) due to competition with China. Heidi Shyu, Under Secretary of Defense for R&D, recently indicated the FY23 R&D budget request would again be historically high. Recent comments from Pentagon leaders indicate the budget will favor R&D programs that are ready to move into production and procurement as opposed to those with a lower terminal readiness level (TRL), which is a measurement used by the military to estimate technology maturity. Army Secretary Christine Wormuth recently said key modernization programs are being scrutinized for cuts. Those that will survive are prototypes that are affordable and ready to scale. “If they’re not primed for this, they are vulnerable in the FY23 budget request.”

It is expected that most of the $60 billion increase in funding will be allocated to service members. The FY22 NDAA, even with its planned increase, does not track with the inflation impact on service members, and a 7.5% increase in costs with only a 2.7% increase in pay will severely impoverish our lowest ranking troops. For FY23, the NDAA called for a pay raise of 4.7%, well short of the 7.5% increase in inflation. As a result, OMB may direct DoD to submit a military pay raise of at least 7% for FY23, which will result in a price tag of $12 billion.  

Another $20 billion would be added to the Pentagon’s procurement and research accounts to help match up to congressional additions in the FY22 budget which were not part of the administration’s FY22 request. Current readiness costs are also increasing. The Air Force recently reported that it is cutting its flying hours to cover increased sustainment costs. The Army is forced to cut back training to pay for the deployments to Europe, and the Navy indicated they would have to reduce training exercises due to the lack of a timely FY22 budget.  

The rise in sustainment costs is a result of fuel price increases, deployments to Europe to counter Russian threats, and increases in the costs of spare parts. Additional readiness needed to offset these increased costs is about $20 billion. After the areas of pay for our service members, readiness, and sustainment, there remains $8 billion of the $60 billion to fund advanced weapons such as hypersonic, space, and cyber. 

Getting a FY23 budget approved will be a monumental challenge. First, the administration will deliver a budget late to Congress, as it was supposed to be delivered in February but will not likely make it to the Hill until after the March 1 State of the Union address. Budget negotiations for FY22 haven’t been completed, hence the passage of another CR until March 11. Finally, as mid-term elections draw near, the prospects for starting FY23 under a long-term CR become more likely.

Covid-19 tracker: Positivity rates slow, but some states still see high community spread

Click image for full report

What you need to know about tax season

Click image for full report

States loosen mask mandates as Omicron wave subsides

Click image for full report

What you need to know about China’s military expansion

Click image for full report

The state of semiconductor manufacturing in the US

Click image for full report

Fentanyl surged during the pandemic

Click image for full report

30 chip-making companies now have fabs in 18 states

Click image for full report

Guest Contributor

Add comment

Subscribe to the Dry Heat

Get updates on the most important news delivered right to your email. Fully personalized options. No SPAM. Unsubscribe anytime.

Sign Me Up!

Let’s Get Social

Chamber Business News wants to connect with you. Follow us, tweet, share, post, comment... however you get social is the perfect way to connect.