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

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

I describe in Heard on the Hill the environment and mood in Washington, and what Congress is likely to tackle in the final six months of this Congressional session. Al Jackson updates us on defense and related appropriations, and Ramona Lessen monitored this week’s hearing of the Senate Finance Committee that dealt with the President’s budget for Fiscal Year 2023.

Congressman Erik Paulsen is interviewing Senator Tim Scott (R-SC) for Total Spectrum Spotlight. Senator Scott sits on the Senate committees for Finance; Banking, Housing and Urban Affairs; Health, Education, Labor, and Pensions; and Small Business. Senator Scott is a rising star in Republican politics, and we look forward to bringing you this Total Spectrum Spotlightinterview in the very near future. In case you missed it, we’ve also included a recent interview with Charlie Cook, founder of and contributor to the Cook Political Report. His insights on political momentum and which issues will truly drive voters in the midterm elections are worth a watch.

We’ll be back in two weeks for the next issue of This Week.

Steve Gordon

Total Spectrum Managing Director

Total Spectrum Spotlight

ICYMI: In Case You Missed It

Charlie Cook, who’s been called the “Picasso of election analysis,” founded The Cook Political Report in 1984 as an independent and non-partisan newspaper that analyzes both elections and political trends. For nearly 40 years, people from both parties have wanted to know “What does Charlie think?”

In this edition of Total Spectrum Spotlight, Congressman Erik Paulsentalks with Charlie Cook about what issues may actually drive voters in the 2022 midterms, how we could see a wave election while our country is so divided, and two Members of Congress who, in Charlie’s opinion, have really improved the American experience.

Heard on the Hill

By Steve Gordon, Total Spectrum Managing Partner

Legislative Outlook for the Balance of the Year

I recently had a series of off-the-record conversations with key Republican Senators on issues to watch during the balance of this legislative session.

First, let’s set the table and call it what it is. The Democratic agenda is stalled and stymied. There is a bucketload of reasons for it. But here are a few – an unpopular President, a deadlocked 50-50 Senate where a majority can only be achieved with the vote of Vice President Harris serving as the President of the Senate, Majority Leader Schumer’s inability to build consensus in his caucus, the filibuster rule that requires 60 votes, and strong inflation that is being felt every day by almost every American.

The Biden Administration and the Democratic majorities in Congress ruled the roost at the beginning of last year and had the opportunity to push their agenda. But they went for a bigger agenda than their razor-thin majorities could pass, and they pushed a more progressive agenda than America wanted.

The first midterm election is rarely good for the party in power, and this year will not be the exception. This political reality is strongly impacting the legislative items that can be passed in the last six months of this Congress.

A Brewing Wave

Tip O’Neill, the former Speaker of the House, famously said that “all politics is local”, and it was true for years. But we’ve nationalized our politics, and that has fostered waves of momentum and money. Waves are fun if the wind is at your back, but they bite when the wind is blowing directly at your face.

Most people predict that Republicans will pick up about 30 seats in November and regain the Majority in the House. Senator McConnell is doing everything possible to pick up seats to regain the majority, and a pickup of 2 or 3 seats is probably realistic.

What to Watch for from Congress Yet This Year

Best chance of passing: The China Competitiveness bill. The bill was originally pushed in the Senate by Senator Todd Young (R-IN) and Majority Leader Chuck Schumer. It’s been passed by both the Senate and the House and has gone to a conference committee to reconcile the differences. The conference committee will most likely approve a compromise bill that should give an emergency appropriation of as much as $50 billion to the American semiconductor industry and will support other technologies.

Second best chance of passing. Senate Veterans’ Affairs Chairman Jon Tester (D-MT) and Ranking Member Jerry Moran (R-KS) have crafted a bill that will for the first time provide care to veterans who have been exposed to toxic chemicals and conditions under the Department of Veterans Affairs.

Best chance of causing anguish.A subsidy in Obamacare is scheduled to run out prior to the election in November. Democrats know they need to deal with this ticking time bomb, and one way would be to use the budget reconciliation process and pass it with their 50 Senators and a vote from the Vice President.

Appropriations.Both Senators Patrick Leahy and Richard Shelby, respectively Chairman and Ranking Member of the Appropriations Committee, are retiring as of December 31. They would both like to do one more budget. The issue always is how much money will go to defense and how much will go to non-defense items in the budget. They are currently waiting on these ‘top-line’ numbers, and then a few of the appropriations bills could pass sometime before the election. The balance of the appropriations bills will pass in some fashion either in a lame duck session or after January in a new Congress.

Taxes. There are a number of tax credits, often appropriately referred to as tax extenders, that must be extended every so often. These must be handled and may come up in a lame duck session or could be handled retroactively after the first of the year.

Defense Update

By Al Jackson, Total Spectrum Strategic Consultant

In a recent House Armed Services Committee, Chairman of the Joint Chiefs of Staff Gen. Mark Milley, Defense Secretary Lloyd Austin, and Pentagon comptroller Mike McCord all acknowledged the submitted Fiscal Year (FY) 2023 budget does not adequately reflect the current rate of inflation. “This budget assumes an inflation rate of 2.2%, which is obviously incorrect because it’s almost 8%,” said Milley. “Because the budget was produced quite a while ago, those calculations were made prior to the current inflation rate.”

The FY 2023 request marks a $30.7 billion increase over the $742.3 billion enacted budget for FY 2022. According to McCord, nearly half of that increase, approximately $14 billion, was attributed to the Pentagon’s need to incorporate a “goods and services inflation increase in buying power.” Another $6 billion went to increases in compensation for personnel, including a 4.6% pay raise for service members and civilian employees, increases in the Basic Allowance for Housing and Basic Allowance for Subsistence, and a raised minimum wage for contractors.

Republicans and some pro-defense Democrats have criticized the low inflation rate, arguing the defense top-line number should be higher than the $813 billion the Pentagon is proposing. The FY 2023 budget is $30 billion over the $783 billion Congress appropriated for the Defense Department for FY 2022, a 4% increase. “Nearly every dollar of increase in this budget will be eaten by inflation,” Rep. Mike Rogers (R-AL), House Armed Services Committee Ranking Member, said at the hearing. “Very little, if anything, will be left over to modernize and grow capability.”

Inflation typically hits defense harder than other economic sectors, according to a McKinsey & Company report released in March. Currently, the Pentagon’s budget is expected to increase to $810 billion by 2026, excluding military construction. If the inflation rate stays at 7% annually and the budget isn’t increased to reflect the rising costs, that would decrease the Defense Department’s purchasing power to $578 billion in 2026, according to the report, significantly reducing the money it can spend on new weapons, equipment, suppliers, and other items. The cumulative lost buying power between 2021 and 2026 could be around $480 billion, or the equivalent of approximately 6,000 F-35 fighter jets.

Ranking Members on both the House and Senate Armed Services Committees, Rep. Mike Rogers (R-AL) and Senator Jim Inhofe (R-OK) respectively, who have long advocated for major increases in the Pentagon’s budget, are currently proposing an additional $100 billion to the administration’s FY 2023 budget request to allow for inflation.

In related news, both the House and Senate Armed Services Committees will begin markups of the FY 2023 National Defense Authorization Act in early June.

Hearing Report

By Ramona Leesen, Executive Direcotor, Total Spectrum

Senate Finance Committee Hearing on The President’s Fiscal Year 2023 Budget

Tuesday, June 7, 2022; 10:00 a.m.

To view a livestream of the hearing please click here.

Senator Ron Wyden (D-OR), Chairman

Majority Statement

Senator Mike Crapo (R-ID), Ranking Member

Minority Statement

Witness:

The Honorable Janet L. Yellen

Secretary

United States Department of the Treasury

Washington, DC

Testimony

Congressional Calendar

All times ET

Tuesday, June 7

10 a.m. House Oversight Committee business meeting to depose David Pauken.
10 a.m. Senate Foreign Relations Committee closed hearing – Around the World Assessment.
10 a.m. Senate Agriculture Conservation Subcommittee hearing on the drought affecting the western U.S.
10 a.m. Senate Appropriations Defense Subcommittee hearing on the fiscal 2023 budget request for the National Guard.
10 a.m. Senate Finance Committee hearing on President Joe Biden’s fiscal 2023 budget request. Treasury Secretary Janet Yellen testifies.
10 a.m. Senate Homeland Security and Governmental Affairs Committee hearing on ransomware attacks and ransom payments enabled by cryptocurrency.
10 a.m. Senate Judiciary Committee hearing on domestic terrorism after the May 2022 Buffalo, N.Y., shooting.
10 a.m. House Veterans’ Affairs Technology Modernization Subcommittee hearing on cybersecurity and risk management at the VA.
10:30 a.m. Senate Appropriations Labor-HHS-Education Subcommittee hearing on the fiscal 2023 budget request for the Education Department. Education Secretary Miguel Cardona testifies.
2 p.m. House Rules Committee meeting to prepare two bills for floor consideration, including one that would impose a variety of Democratic gun safety proposals, including raising the age limit to purchase some semi-automatic rifles to 21 years old, establishing a federal ban on new high-capacity magazines, seeking to address safe gun storage and creating a new federal firearms offense for gun trafficking and straw purchases.
2:30 p.m. Commission on Security and Cooperation in Europe hearing to examine European energy post-Russia.
3 p.m. Senate Commerce Tourism, Trade and Export Promotion Subcommittee hearing on reviving tourism through international travel.
3 p.m. Senate Energy and Natural Resources Public Lands, Forests and Mining Subcommittee hearing on 21 bills, including one that would seek to improve the management of grazing permits and leases.
3 p.m. Senate Foreign Relations Committee hearing on two nominations, including Elizabeth Shortino’s nomination to be U.S. executive director of the International Monetary Fund.

Wednesday, June 8

9:30 a.m. House Appropriations Interior-Environment Subcommittee hearingon the fiscal 2023 budget for the arts and humanities.
10 a.m. House Appropriations State-Foreign Operations Subcommittee hearing on the fiscal 2023 budget for the United Nations. U.S. ambassador to the United Nations Linda Thomas-Greenfield testifies.
10 a.m. House Oversight Committee hearing on addressing gun violence.
10 a.m. House Science Committee hearing on detecting and quantifying oil and gas sector methane emissions.
10 a.m. House Small Business Committee hearing on veteran entrepreneurship.
10 a.m. House Transportation and Infrastructure Highways and Transit Subcommittee hearing on building safer roads.
10 a.m. Senate Commerce Committee hearing on three nominations, including Robin Hutcheson’s nomination to be administrator of the Federal Motor Carrier Safety Administration.
10 a.m. Senate Environment and Public Works Committee hearing on two Nuclear Regulatory Commission nominations.
10 a.m. Senate Foreign Relations Committee hearing on U.S.-Syria policy.
10 a.m. Senate Judiciary Committee hearing on pending nominations.
10 a.m. House Armed Services Cyber Subcommittee markup of the fiscal 2023 NDAA, H.R. 7900.
10 a.m. Senate HELP Committee markup of two bills, including one that would reauthorize the FDA’s user-fee programs for prescription drugs, medical devices, generic drugs and biosimilar biological products. 216 Hart. Pro Premium subscribers can read our Pro Bill Analysis on the House version of the FDA reauthorization bill here.
10:15 a.m. House Agriculture Nutrition Subcommittee hearing on stakeholder perspectives on SNAP.
12 Noon. House Armed Services Strategic Forces Subcommittee markup of the fiscal 2023 NDAA.
2 p.m. House Armed Services Seapower Subcommittee markup of the fiscal 2023 NDAA.
2 p.m. House Foreign Affairs International Development, International Organizations and Global Corporate Social Impact Subcommittee hearingon the fiscal 2023 budget request for the United Nations and international organizations.
2:30 p.m. Senate Small Business Committee hearing on the small business workforce challenge.
2:30 p.m. Senate Banking Committee business meeting to consider Michael Barr’s nomination to be vice chairman for supervision of the Federal Reserve Board of Governors, as well as two nominees to the Securities and Exchange Commission.
3:30 p.m. House Armed Services Military Personnel Subcommittee markupof the fiscal 2023 NDAA.

Thursday, June 9

8 a.m. House Armed Services Readiness Subcommittee markup of the fiscal 2023 NDAA.
9 a.m. House Armed Services Tactical Air and Land Forces Subcommittee markup of the fiscal 2023 NDAA.
9 a.m. Senate Judiciary Committee business meeting to consider six nominations, including two U.S. Circuit Court nominees.
9 a.m. House Agriculture General Farm Commodities Subcommittee hearing on economic perspectives on Title I commodities and Title XI crop insurance.
9 a.m. House Homeland Security Intelligence and Counterterrorism Subcommittee hearing on industry perspectives on terrorism and cryptocurrency.
9 a.m. House Select Climate Crisis Committee hearing on ocean climate action.
9:30 a.m. House Judiciary Constitution, Civil Rights and Civil Liberties Subcommittee hearing on civil rights litigation reform, with a focus on state and local government employer liability.
9:30 a.m. House Natural Resources Energy and Mineral Resources Subcommittee hearing on five bills, including one that would make certain activities eligible for Abandoned Mine Reclamation Fund grants.
10 a.m. House Armed Services Intelligence and Special Operations Subcommittee markup of the fiscal 2023 NDAA.
9:30 a.m. Senate Foreign Relations Committee business meeting to consider three nominations, including Michelle Kwan’s nomination to be U.S. ambassador to Belize, and eight bills and nine resolutions, including one bill that would prioritize the State Department’s efforts to combat international trafficking of synthetic drugs, such as fentanyl, and new psychoactive substances.
10 a.m. Senate Commerce Communications Subcommittee hearing on oversight of the National Telecommunications and Information Administration. NTIA Administrator Alan Davidson testifies.
10 a.m. Senate Energy and Natural Resources Committee hearing on the fiscal 2023 budget request for the U.S. Forest Service. USFS Chief Randy Moore testifies.
10 a.m. Senate Environment and Public Works Transportation and Infrastructure Subcommittee hearing on a bill that would prohibit the manufacture, processing, use and distribution of commercial asbestos and mixtures containing commercial asbestos.
10 a.m. Senate Foreign Relations Europe and Regional Security Cooperation Subcommittee hearing on supporting Europe’s energy diversification agenda.
10:15 a.m. Senate Homeland Security Committee hearing on domestic extremism and white supremacist violence in America.
11 a.m. Senate Agriculture Commodities, Risk Management and Trade Subcommittee hearing on agricultural trade.
11 a.m. Senate Budget Committee hearing on Social Security.
8 p.m. House Select January 6th Committee hearing on the investigation of the Jan. 6, 2021, attack on the U.S. Capitol.

Friday, June 10

9 a.m. House Oversight National Security Subcommittee virtual hearing on the U.S. and international humanitarian response to Russia’s invasion of Ukraine.

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