The Capitol Hill complex has reached an 85% vaccination rate against COVID-19, which means that vaccinated House members, staff, and visitors no longer need to wear masks in the Capitol or the House office buildings. The House of Representative’s Attending Physician, Brian Monahan, announced the new guidance last week. Masks had been encouraged but never required on the Senate side.
Senate approves Endless Frontier Act
Last week the Senate voted 68-32 to pass S. 1260, the Endless Frontier Act, which would provide $250 billion for a wide range of programs intended to boost American competitiveness in technology and innovation, especially against China. The bill incorporates more than a dozen different proposals to increase investment in manufacturing, research and development, STEM education, precision agriculture, and supply chain diversification. It would create a Directorate for Technology and Innovation within the National Science Foundation (NSF) that would seek to strengthen US leadership in critical technologies. The bill also includes $50 billion in emergency funding for the Commerce Department to boost domestic production of semiconductors. S. 1260 has a House companion, HR 2731, but House Foreign Affairs Chairman Gregory Meeks (D-NY) has introduced his own bill, the EAGLE Act, to improve US competitiveness against China.
INVEST in America Act moves to House floor
Last Thursday, the House Committee on Transportation and Infrastructure approved HR 3684, the INVEST in America Act, by a vote of 38 to 26. It would provide $547 billion over five years for investments in roads, bridges, transit, and rail. The legislation includes more than 1,400 member-designated projects (formerly known as earmarks), the first time these projects have been included in House legislation since 2006. Committee Chairman Peter DeFazio (D-OR) emphasized that the INVEST in America Act is a surface transportation reauthorization bill that should be considered separately from President Biden’s broader American Jobs Plan. He told House leadership that he wants consideration of the bill to proceed under regular order, rather than be folded into a reconciliation process. House Majority Leader Steny Hoyer (D-MD) has said the House will consider the bill the week of June 28.
House Transportation Committee approves Water Quality Protection bill
The House Transportation Committee began its work last Wednesday by marking up HR 1915, the Water Quality Protection and Job Creation Act, which passed on a vote of 42-25. HR 1915 would authorize $40 billion for wastewater infrastructure over five years through the Clean Water State Revolving Fund (SRF); $2 billion in grants to municipalities to capture, treat, and reuse stormwater and sewer overflows; $2.5 billion in grants to states for water pollution control programs; $1 billion for Clean Water pilot programs; $1 billion in grants for alternative water source projects; $1 billion in Clean Water Act grants to municipalities for the implementation of PFAS standards; and $2.5 billion for wastewater infrastructure on tribal lands.
House lawmakers introduce bipartisan antitrust package
The chairman and ranking member of the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law unveiled five bipartisan bills last Friday to curtail monopoly power and encourage competition among online service providers. Chairman David Cicilline (D-RI) and ranking member Ken Buck (R-CO) said the legislative agenda would break up “Big Tech’s monopoly power to control what Americans see and say online.” The American Innovation and Choice Online Act, sponsored by Reps. Cicilline and Lance Gooden (R-TX), would prohibit discriminatory practices by dominant platforms. The Platform Competition and Opportunity Act, introduced by Reps. Buck and Hakeem Jeffries (D-NY), would prohibit dominant platforms from acquiring competitors. The Ending Platform Monopolies Act, sponsored by Reps. Pramila Jayapal (D-WA) and Gooden, would end dominant platforms’ ability to self-preference and disadvantage competitors. The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, introduced by Reps. Mary Gay Scanlon (D-PA) and Burgess Owens (R-UT), would reduce barriers to entry and switching costs for businesses and consumers through interoperability and data portability requirements. And the Merger Filing Fee Modernization Act, sponsored by Reps. Joe Neguse (D-CO) and Victoria Spartz (R-IN), would update merger filing fees for the first time in 20 years.
CBDC could revolutionize payments, “crowd out” riskier cryptocurrencies
A hearing of the Senate Banking Subcommittee on Economic Policy last week explored the pros and cons of a central digital bank currency (CBDC). Dr. Neha Narula, Director of the Digital Currency Initiative (DCI) at MIT, said that Project Hamilton, a joint venture of the DCI and the Federal Reserve Bank of Boston, will publish preliminary research and open-source software this summer. A digital dollar offers the opportunity for a ground-up redesign of the global payments system, she said, if they are able to address fundamental questions: how could consumers access a digital dollar? How would a digital dollar protect privacy and operational security? How could it be used for offline transactions? Christopher Giancarlo, former Chair of the Commodity Futures Trading Commission, described the efforts of the nonprofit, private-sector Digital Dollar Project, which will be launching five pilot programs over the next 12 months. He emphasized the need for the US to take the lead in setting standards for digital currency. About 60% of the central banks that participate in the Bank for International Settlements have digital currency projects underway, several with the specific goal of displacing riskier private cryptocurrencies.
Time to get serious about leaving LIBOR
At Friday’s meeting of the Financial Stability Oversight Council, Secretary of the Treasury Janet Yellen issued a stern warning about the need to facilitate an orderly transition from the London Inter-bank Offered Rate (LIBOR), which will be phased out completely on June 30, 2023. “We have reached a critical juncture,” Yellen said, and business loans, among other sectors of the market, “are well behind where they should be at this stage in the transition.” She acknowledged that some market participants want a forward-looking SOFR term rate, and said that a prompt switch in derivatives from LIBOR to SOFR this summer would speed up the Alternative Reference Rates Committee (ARRC)’s recommendation of a term SOFR rate.
DOL includes definition of “fiduciary” on spring regulatory agenda
The Department of Labor plans to publish a notice of proposed rulemaking (NPRM) on the definition of “fiduciary” for purposes of the Employment Retirement Income Security Act (ERISA) sometime before the end of the year, according to the regulatory agenda published last Friday. “This rulemaking would amend the regulatory definition of the term fiduciary . . . to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries,” the agency said. The Employee Benefits Security Administration (EBSA) will also “evaluate available prohibited transaction class exemptions and consider proposing amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors.”
Fed seeks comment on FedNow service
The Federal Reserve Board opened the comment period for its proposed rule governing fund transfers through its FedNow service, a 24x7x365 service that will support instant payments in the United States. The Fed expects FedNow to become available next year. The proposed rule would amend Regulation J, creating a framework similar to provisions that govern the Fedwire Funds Service. The proposal is open for comment for 60 days.
Duhnke removed from PCAOB, SEC seeks new members
The Securities and Exchange Commission (SEC) announced that it had removed the chairman of the Public Company Accounting Oversight Board (PCAOB), William D. Duhnke III, from the Board. Duane M. DesParte, a CPA who has been a member of the PCAOB since 2018, was named acting chairperson. SEC Chair Gary Gensler said that he looked forward to working with DesParte and his fellow SEC commissioners “to set it on a path to better protect investors by ensuring that public company audits are informative, accurate, and independent.” The SEC is seeking candidates to fill all five positions on the PCAOB; its Office of the Chief Accountant will begin the process of soliciting new applications in the next few weeks.
Confirmations, Nominations, Departures
- Rep. Val Demings (D-FL) announced that she will run for Senate in 2022 rather than seek reelection to a fourth term in the House of Representatives.
- Rep. Vicky Hartzler (R-MO) announced that she will leave the House after her sixth term in order to run for the Senate seat being vacated by retiring Senator Roy Blunt (R-MO).
- The Senate confirmed the nominations of Nuria Fernandez to serve as Federal Transit Administrator and Adrianne Todman to be Deputy Secretary of Housing and Urban Development.
- Peggy Twohig is retiring from her position as assistant director for supervision policy at the Consumer Financial Protection Bureau (CFPB). Bryan Schneider, associate director of the CFPB’s Division of Supervision, Enforcement and Fair Lending, will also be leaving the Bureau in July.
The Week Ahead in Washington
Voting on the House floor will resume this week, with a schedule that includes HR 1187, the ESG Disclosure Simplification Act of 2021. The House Financial Services Committee voted out HR 1187 in April by a vote of 28-22. It would require public companies to disclose information related to environmental, social, and governance matters, and would require the SEC to promulgate regulations and metrics for that reporting. HR 1187 has no Senate counterpart.
June 15 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “21st Century Communities: Local Leaders on the Infrastructure Needs Facing America’s States, Cities, and Towns.”
June 15 at 10:00 a.m. House Financial Services Task Force on Financial Technology holds a hearing on “Digitizing the Dollar: Investigating the Technological Infrastructure, Privacy, and Financial Inclusion Implications of Central Bank Digital Currencies.”
June 15 at 10:00 a.m. House Small Business Subcommittee on Economic Growth, Tax, and Capital Access holds a hearing on “Reversing the Decline in Women Entrepreneurship: Opportunities for Rebuilding the Economy.”
June 16 at 10:00 a.m. House Financial Services Subcommittee on Housing, Community Development, and Insurance holds a hearing on “Flexible Federal Funding: Examining the Community Development Block Grant Program and its Impact on Addressing Local Challenges.”
June 16 at 1:00 p.m. House Oversight Subcommittee on Environment holds a hearing on “Jumpstarting Main Street: Bringing Jobs & Wealth Back to Forgotten America.”
June 16 at 2:00 p.m. House Financial Services Subcommittee on National Security, International Development and Monetary Policy holds a hearing on “Schemes and Subversion: How Bad Actors and Foreign Governments Undermine and Evade Sanctions Regimes.”
The Ellis Insight
Jim Ellis reports on political news
Alabama: Katie Britt (R), the former Alabama Business Council President and CEO, early last week announced her US Senate candidacy. She is also a former chief of staff to retiring US Senator Richard Shelby (R). Ms. Britt will be a formidable candidate opposite Rep. Mo Brooks (R-Huntsville) and ex-US Ambassador Lynda Blanchard in the GOP primary. Democrats do not yet have an announced candidate. Early reports suggest that Sen. Shelby will endorse Ms. Britt.
Arizona: Saying new Senator Mark Kelly (D) has “been complicit in the ongoing war on our basic freedoms,” two-term Arizona Attorney General Mark Brnovich (R) announced his US Senate candidacy. It appears Mr. Brnovich is the top-tier type of candidate the Republican leadership has desired, so expect the Arizona campaign to again become a national Senate race.
Missouri: Six-term Missouri Rep. Vicky Hartzler (R-Harrisonville/ Columbia) declared her US Senate candidacy last week. She will join an open seat Republican field that includes former Governor Eric Greitens, Attorney General Eric Schmitt, and attorney Mark McCloskey with Reps. Ann Wagner (R-Ballwin), Billy Long (R-Springfield), and Jason Smith (R-Salem/ Bootheel region) remaining as possible entrants. At this time, former St. Louis area state Senator Scott Sifton appears to be the leading Democrat.
Ohio: Former Ohio Republican Party chair Jane Timken has released her new US Senate poll that shows her gaining support. The survey, from Moore Information for the Timken campaign (5/26; 600 OH likely Republican primary voters; live interview), still projects former state Treasurer and 2012 US Senate nominee Josh Mandel as leading the race, but Ms. Timken has drawn closer to him. According to the numbers, Mandel has a 24-19% edge over Timken, down from the 20-5% spread the survey research firm found in February.
Countering the Timken campaign poll, Mr. Mandel responded with data of his own. The Remington Research Group conducted a poll for the Mandel campaign (6/1-3; 1,040 OH likely Republican primary voters; interactive voice response system) and posted the former state Treasurer and 2012 US Senate nominee to a 45-22% advantage.
None of the other nine announced or potential GOP candidates, including author J.D. Vance, businessman and former US Senate candidate Mike Gibbons, and state Senator and Cleveland Indians baseball club minority owner Matt Dolan, were included on the RRG ballot test. This clouds the results since it is clear the Republican Senate primary is far from a two-way contest.
North Carolina: Lara Trump, daughter-in-law of ex-President Donald Trump has decided not to enter the 2022 open US Senate contest in her native state of North Carolina. Quickly after she made her decision public, Mr. Trump endorsed US Rep. Ted Budd (R-Advance) in the GOP primary. The Congressman is opposing former Gov. Pat McCrory and ex-US Rep. Mark Walker (R-Greensboro). The leading Democrats are former North Carolina Supreme Court Chief Justice Cheri Beasley and state Sen. Jeff Jackson (D-Charlotte). This is another national US Senate campaign.
Pennsylvania: Two-term Pennsylvania US Rep. Chrissy Houlahan (D-Devon) announced last week that she will not enter the open US Senate Democratic primary but instead will seek re-election, saying her “highest best use” is to remain in the House. Pennsylvania will lose one seat in reapportionment, which means her 6th District, like all other Keystone State seats, will undergo significant boundary changes.
With the Democratic majority at only five seats once all the special elections conclude, Rep. Houlahan gives the party their best chance of retaining what could again become a competitive US House seat.
FL-7: While elective politics in the Orlando area has recently centered around whether Reps. Stephanie Murphy (D-Winter Park) and Val Demings (D-Orlando) would run statewide – Rep. Murphy decided to seek re-election while Ms. Demings will run for Senate – a new political move suggests that we will also see a potentially credible challenge emerging on the congressional district level.
State Rep. Anthony Sabatini (R-Clermont), in anticipation of a new redistricting map, has changed his committee placeholder filed with the Federal Election Commission from running in Rep. Dan Webster’s (R-Clermont) 11th District to challenging Rep. Murphy in the 7th.
NY-1: Nancy Goroff, who held Rep. Lee Zeldin (R-Shirley/East Long Island) to a 55-45% re-election victory, will not return to compete in the open seat now that the Congressman is running for Governor. Ms. Goroff attended Suffolk County Legislator Kara Hahn’s (D) congressional announcement and formally endorsed her candidacy. At this point, four Democrats have announced for the seat, including now two Suffolk County legislators, but no Republicans to date. This, for a seat that Republican Zeldin has held for four terms.
OH-15: The special Republican primary election to nominate a candidate to succeed resigned Rep. Steve Stivers (R-Columbus) has one less contender. State Rep. Brian Stewart (R-Ashville) announced during that he is withdrawing from the race after filing his papers to become a candidate. Before the Stewart decision became public, a total of 12 Republicans had filed including four sitting state legislators, two from each House.
Mr. Stewart says he couldn’t compete financially with state Rep. Jeff LaRe (R-Violet Township) now that former Rep. Stivers has launched a support independent expenditure for him with much of his current campaign war chest that totals more than $2.3 million. Additionally, former President Trump issued an endorsement for Ohio Coal Association chairman Mike Carey (R). The special congressional primary is scheduled for August 3rd, and the eventual GOP winner will become the heavy favorite to carry the November 2nd special general election.
TX-6: Susan Wright, the widow of Texas US Rep. Ron Wright (R-Arlington) who passed away in February, just released her American Viewpoint special election runoff survey. Ms. Wright finished first in the May 1st jungle primary and advanced to a July 27th runoff election with state Rep. Jake Ellzey (R-Waxahachie). According to the AV poll (6/1-3; 400 TX-6 likely special runoff election voters; live interview), Ms. Wright would lead Rep. Ellzey 49-34% if the runoff election were held last Friday. The July 27th runoff winner will serve the balance of the unexpired term.
Kansas: Early last week, state House Speaker Ron Ryckman (R-Olathe) announced he would not run for Governor and proceeded to endorse state Attorney General Derek Schmidt in the Republican gubernatorial primary. Mr. Ryckman’s decision to stay in the legislature better defines the GOP primary as a two-way race between AG Schmidt and former Governor and Lt. Governor Jeff Colyer. The winner of next year’s August primary will challenge Democratic Gov. Laura Kelly.
Maryland: A late May poll, just now being released from Gonzales Research & Media Services (5/17-22; 301 MD likely Democratic primary voters; high error factor of 5.8%) finds former Prince Georges County Executive Rushern Baker leading state Comptroller Peter Franchot, 22-18%, with ex-Democratic National Committee chairman and possible 2022 gubernatorial candidate Tom Perez at 10% preference. This early poll projects that the Democratic primary will be hard fought ending in a tight finish. With approximately ten months remaining in the nomination campaign, however, much can change.
Michigan: A Competitive Edge Research & Communication survey conducted for the Michigan Republican Party (5/26-6/4; 809 MI likely voters) finds recently retired Detroit Police Chief James Craig (R) leading Gov. Gretchen Whitmer (D), 45-38%, which is an obvious improvement over the relatively recent Target Insyght survey (5/9-11; 800 MI registered voters) that found the Governor topping Mr. Craig, 48-42%.
Curiously, the CERC poll found 2020 US Senate nominee John James, who lost a close race to Sen. Gary Peters (D), recording a considerably different result. If he were the Republican nominee, Gov. Whitmer would lead 50-45%.
New Jersey: New Jersey voters went to the polls last Tuesday and Republicans selected former state Assemblyman Jack Ciattarelli to oppose Gov. Phil Murphy this November. Gov. Murphy drew no opposition for his re-nomination in the Democratic primary. Mr. Ciattarelli was favored on the Republican side, as he earned the official party endorsement from local GOP committees in 17 of the Garden State’s 21 counties. He recorded 50% of the vote against three opponents.
Though Democrats are the dominant New Jersey political party, we can expect this gubernatorial contest to attract national attention as we move toward a November 2nd general election day vote.
Ohio: Former Congressman and 2018 US Senate nominee Jim Renacci followed through on his previous claims that he would challenge Gov. Mike DeWine in the 2022 Republican primary and made his official announcement last Thursday. Mr. Renacci plans to make the Governor’s COVID-19 shut down policies a key tenet in his quest to deny Mr. DeWine re-nomination.
Virginia: As expected, former Gov. Terry McAuliffe easily won the Democratic nomination in last week’s Virginia primary with a strong 62.3% victory against four opponents and setting him on course to face former international investment hedge fund CEO Glenn Youngkin (R). The state’s one-term gubernatorial limit prohibits Governors from seeking re-election, hence Mr. McAuliffe’s bid for a second term was delayed four years. He becomes the early favorite in the general election, but a competitive campaign with Mr. Youngkin, who is capable of funding his own campaign, appears probable.
Illinois: After passing legislation to re-draw the state legislature’s district lines as well as those for the state Supreme Court based upon Census Bureau estimates, the Illinois House and Senate sent Gov. J.B. Pritzker (D) a bill that will move the state’s 2022 primary from March 14th to June 28th. Many early primary states will be forced to move their nomination elections because the Census Bureau has delayed in producing the necessary redistricting data.
Texas: Texas Republican Party chairman Allen West, a former Florida Congressman, resigned his post after holding the position for less than a year. It is believed that Mr. West is resigning to soon announce his candidacy either in a GOP gubernatorial primary challenge to two-term incumbent Greg Abbott or as a federal candidate in the 32nd Congressional District race against two-term Rep. Colin Allred (D-Dallas). It is likely that Mr. West will wait until he sees how redistricting might affect the 32nd District before making a decision to again run for the House.
Arlington, Ft. Worth, McAllen, Texas: Texas Republicans won three mayoral runoff elections, the biggest surprise of which happened in the Texas-Mexico border city of McAllen, where the Hispanic population in the city registers just under 85%. Republican Javier Villalobos, a former Hidalgo County Republican Party chairman and member of the McAllen City Commission (Council), won a 51% victory in the mayoral runoff.
GOP candidates Mattie Parker and Jim Ross were elected in Ft. Worth and Arlington, respectively. Both Ft. Worth and Arlington lie in Tarrant County, an entity that went for Joe Biden over Donald Trump in November by a slim margin. Mr. Biden was the first Democrat to carry the county since Lyndon Johnson won here in 1964. The mayoral elections, all with increased turnouts from their citywide elections of four years ago, could be a signal of growing post-election GOP strength.
Atlanta: Last month, we saw Atlanta Mayor Keisha Lance Bottoms (D) withdraw from her re-election campaign. After her announcement, the candidate field grew to five individuals. Now, former two-term Mayor Kasim Reed (D) is poised to enter the open race in hopes of re-claiming his former political position. Mr. Reed was ineligible to seek a consecutive third term in 2017. He will become the favorite to finish atop of the current mayoral field of candidates.