White House announces framework for digital assets
The Treasury Department released three reports President Biden asked for in an Executive Order issued last March: one on , one on “,” and an “.” The White House had promised a whole-of government approach to maximizing the benefits of digital assets while minimizing risks to consumers. This morning it that approach will take:
- The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will aggressively pursue investigations and enforcement actions against unlawful practices.
- The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) will redouble efforts to monitor consumer complaints and enforce laws against unfair, deceptive, or abusive practices.
- The White House in encouraging agencies to issue guidance on current emergent risks, to collaborate with law enforcement on acute digital asset risks, and to share data on consumer complaints.
- The Financial Literacy Education Commission (FLEC) will lead a public-awareness campaign to help consumers understand the risks involved with digital assets.
The White House acknowledged digital assets’ potential to facilitate faster payments, but noted that the Federal Reserve will launch FedNow next year, to operate alongside the Clearinghouse’s Real Time Payments system. Agencies will encourage the adoption of these instant payment systems, and will use those systems for their own transactions where appropriate.
The President said he would also consider agency recommendations to create a federal framework to regulate nonbank payments. Agencies will prioritize work to improve the efficiency of cross-border payment systems, and the National Science Foundation will back research on how best to make digital asset ecosystems available to all.
Recognizing the importance of responsible innovation in financial technology, the White House announced that it would foster this through regulatory guidance and a new Digital Assets Research and Development Agenda sponsored by the Office of Science and Technology Policy (OSTP) and the National Science Foundation (NSF). The Department of Commerce will consider establishing a permanent forum to convene federal agencies, industry, academics, and members of the public to discuss federal regulation and standards.
The White House announcement did not mention legislative changes, but it was a topic of considerable discussion on Capitol Hill.
Senate panels talk crypto
Securities and Exchange Commission Chair Gary Gensler and Commodity Futures Trading Commission Chair Rostin Behnam appeared before two different Senate Committees, both of which wanted to talk about digital assets. SEC Chair Gensler testified at a , where Republican members, in particular, voiced frustration that the SEC had not proposed any formal rulemaking or guidance for crypto issuers or intermediaries, despite Gensler’s repeated assertion that most digital assets are securities. CFTC Chair Behnam that the CFTC should be regulating digital commodities, but needed legislative authority to do so — authority that would be provided by , the Digital Commodities Consumer Protection Act, co-sponsored by Senators Debbie Stabenow (D-MI), Cory Booker (D-NJ), John Boozman (R-MT), and John Thune (R-SD).
Bipartisan support emerges for free trade agreement with Taiwan
Democratic and Republican members of the House Ways & Means Committee voiced strong support for stronger trade engagement with Taiwan at a . Trade experts and advocates told the panel that Taiwan is already an important market for US exports, especially in the agriculture sector, and that expanding and formalizing the trade relationship could be good for Taiwanese democracy and workers’ rights. The Biden administration announced last month that negotiations would begin this fall on the U.S.-Taiwan Initiative on 21st-Century Trade, but members on both sides of the aisle called for a more formal agreement, along the lines of the US-Mexico-Canada trade agreement.
What is “common sense” right to repair?
The right to repair one’s own equipment and and electronic devices is “alluring in its simplicity,” Rep. Claudia Tenney (R-NY) said at a last Wednesday, but more complicated than it first appears. As consumer electronics, automobiles, and other heavy equipment have become more sophisticated, repairing these products often requires access to diagnostic systems, tools, and parts whose distribution is strictly limited. Rep. Jared Golden (D-ME), chairman of the Subcommittee on Underserved, Agricultural, and Rural Business Development, called for “common-sense and bipartisan right-to-repair laws,” but the hearing produced no consensus about what this might look like. Ken Taylor, President of Ohio Machinery Company and Chairman of Associated Equipment Distributors, told the panel that one bill currently under consideration would create disintermediation in the equipment parts sector, and lead to chaos and shortages. The House Rules Subcommittee on Legislative and Budget Process is having an unusual this Wednesday.
Senate Banking examines new financial products
Innovations in the financial services industry include new acronyms as well, and the discussed three of them: BNPL, EWA, and TRAP, financial products gaining popularity that are designed to help users manage cash flow. “Buy now, pay later” (BNPL) allows customers to make multiple interest-free payments for a purchase over time. Earned wage access (EWA) is an employer-sponsored advance on a worker’s paycheck. Training Repayment Agreement Provisions (TRAP) recoup a company’s cost of training workers if and when the workers move to other jobs. Chairman Sherrod Brown (D-OH) compared TRAP to “indentured servitude,” and said that BNPL too often came with hidden fees and lacked transparency. Senator Pat Toomey (R-PA), the Committee’s ranking member, said that bank partnerships with fintech companies and other competition from nonbank service providers were generating more and cheaper options for consumers who need short-term funding, and should not be stifled.
Confirmations, Nominations, Departures
The Week Ahead in Washington
Both House and Senate are scheduled to be out of session for the entire month of October, which means the next two weeks will be an absolute frenzy.
The Ellis Insight
Jim Ellis on Political News
New Hampshire: While the New Hampshire votes continue to be counted, retired Army General Don Bolduc has been projected as the Republican primary winner and he now advances to face Sen. Maggie Hassan (D). The Senator’s campaign wasted no time in attacking Bolduc, hitting him with an abortion ad the day after the primary ended.
Gen. Bolduc’s margin of victory over state Senate President Chuck Morse (R-Salem) will be in the neighborhood of 1,800 votes when all the counting is finally complete. Though former President Trump did not endorse a candidate in the Senate race, his supporters had a big night on Tuesday and are largely credited with delivering the victory.
In responding to whether the national Republican establishment will support Bolduc, after many in the party question whether he is strong enough to defeat Hassan and a great effort was spent in trying to deny him the nomination, the query was basically answered. Sen. Rick Scott (R-FL), the National Republican Senatorial Committee chairman, said his committee remains fully committed to New Hampshire as a key target race. The organization has over $9 million in media time already reserved for the general election.
In the tight House races, former Trump White House aide Karoline Leavitt won the GOP nomination in the swing 1st District, defeating 2020 nominee Matt Mowers, 35-25%, with former television news reporter Gail Huff Brown placing third with just under 18% of the party primary vote. Ms. Brown is the wife of former Massachusetts Senator and ex-Ambassador to New Zealand Scott Brown (D), who also ran for the Senate in 2014 from New Hampshire.
Ms. Leavitt now advances into the general election to face two-term Rep. Chris Pappas (D-Manchester) in the district that has defeated more incumbents than any other since 2004. In 2020, Mr. Pappas defeated Mr. Mowers, 51-46%, which is the strongest re-election margin for an incumbent since former US Representative, and now state Senate Majority Leader, Jeb Bradley (R) was re-elected 16 years ago with 63% of the vote.
The other outstanding race from the New Hampshire primary was the 2nd District GOP contest. This race was just as close as the Senate campaign, but it now is certain that former Hillsborough County Treasurer Robert Burns defeated Keene Mayor George Hansel by just under three percentage points or a little over 1,600 votes. He now advances to face five-term Rep. Annie Kuster (D-Hopkinton/Concord).
Rhode Island: Gov. Dan McKee, who ascended to his office when then-Gov. Gina Raimondo (D) resigned to become US Commerce Secretary, eked out a close victory in the Rhode Island Democratic primary, securing about one-third of the vote, which was enough to claim a plurality win.
Gov. McKee defeated corporate CEO Helena Foulkes and RI Secretary of State Nellie Gorbea, who finished a close second and third. The Governor now advances into the general election to face the new Republican nominee, businesswoman Ashley Kalus (R), and is categorized as a heavy favorite in this most Democratic of states.
In the contested open 2nd Congressional District seat, as expected, state Treasurer Seth Magaziner (D), who left the Governor’s race to run in the open 2nd when 11-term Rep. Jim Langevin (D-Warwick) announced his retirement, easily captured the Democratic nomination with a 54% victory total in a field of six candidates. Mr. Magaziner now opposes former Cranston Mayor and ex-gubernatorial nominee Allan Fung who wasn’t challenged in the Republican primary. Though the district is heavily Democratic, polling shows the open 2nd can become competitive in a shortened general election cycle.
Alaska: A new poll from the Fabrizio Ward/Impact Research organizations for AARP (9/6-11; 1,050 AK likely voters; 500 statewide sample; 550 voters 50 years of age and older; live interview & text) sees the Alaska Senate race heading in a much different direction than even the jungle primary results revealed.
The AARP poll finds former Alaska Administration Director Kelly Tshibaka (R) leading Sen. Lisa Murkowski (R), 43-35%, which is a significant change from the August 16th primary vote when the Senator topped her main opponent, 45-39%. Moving to the Ranked Choice Voting rounds, the two candidates fall into a flat tie.
Arizona: In the 2020 special US Senate election, then-candidate Mark Kelly (D) consistently ran ahead of then-Sen. Martha McSally (R) and by an average of 7.1 percentage points in 21 polls conducted from October 1st to election day, but only won the race, 51-49%. In the 2020 cycle, we see much closer polling as two new surveys exemplify.
The pair of studies, both taken during the September 6-7 period, are from Emerson College (627 AZ likely voters; multiple sampling techniques) and the Republican research firm Insider Advantage (550 AZ likely voters). Emerson finds the race well within the polling margin of error at 47-45%, while the IA result projects a 45-39% division. Both post Sen. Kelly leading Republican nominee and venture capitalist Blake Masters.
Connecticut: Emerson College released new polling figures on the Connecticut Senate race, the first public numbers we’ve seen since the state’s early August primary. The Emerson poll (9/7-9; 1,000 CT likely general election voters; multiple sampling techniques) posts Sen. Richard Blumenthal (D) to a 49-36% lead over Republican nominee Leora Levy, a former Ambassadorial nominee in the Trump Administration. While the Senator has a strong advantage, the margins suggest a potential climate of competitiveness developing, but it is doubtful the Levy campaign will have the ability to build serious upset potential.
Ohio: After most polling had given author J.D. Vance (R) a small lead in the Senate race, Suffolk University’s new survey (9/5-7; 500 likely general election voters; live interview) finds US Rep. Tim Ryan (D-Warren/ Youngstown) claiming a slim one-point, 47-46%, advantage. Additionally, the Democratic firm, Impact Research, also went into the field (8/17-23; 800 OH likely general election voters) and sees Rep. Ryan holding a slightly larger 50-47% margin. This race continues to seesaw between the two candidates.
Utah: Utah Independent US Senate candidate Evan McMullin released a Democratic firm’s poll that yields him a one-point edge. Impact Research (8/29-9/1; 800 UT likely general election voters) found McMullin leading Sen. Mike Lee (R) by a 47-46% margin. Sen. Lee quickly countered with re-releasing his early August WPA Intelligence poll that saw him holding a major 50-32% advantage. The Center Street PAC then released their new Utah survey (9/6-9; 563 UT likely general election voters) that posts Sen. Lee to only a 43-39% edge.
AK-AL: The Fair Vote organization, which is the principal promoter of the Ranked Choice Voting system, released a further analysis of the RCV vote in the Alaska special election that elected Democrat Mary Peltola even though she attracted only 40% of the actual vote. The Ranked Choice advocates claim the system rewards the candidate who has the broadest support, but it tends to do the opposite since candidates with minority support have won most of the major races where the system has been used.
The analysis suggests that had candidate Nick Begich III run opposite Ms. Peltola in the final round instead of former Governor and Vice Presidential nominee Sarah Palin, he would have won the race. The Fair Vote analysis reveals that 59% of the Palin vote would have gone Begich’s way as opposed to the latter woman gaining only 50.3% of the Begich second choice votes. The bigger difference, however, was Ms. Peltola attracting only 6% of the Palin second choice votes, as compared to the 28% she received from Begich voters.
What the analysis fails to include, however, are the more than 11,000 Begich voters whose ballots were not counted in the second round. The analysis claims those people simply didn’t make an additional ranked choice, but in reality, it may be due to a lack of understanding the confusing system. In other places, attorneys who have challenged the system report that most ballots are disqualified because the voter inaccurately completed the ballot. Therefore, the Fair Vote conclusion that Ms. Palin lost because the Begich voters eschewed her may not be entirely accurate.
NY-19: Though Rep. Pat Ryan (D-Poughkeepsie) won the NY-19 special election in late August, he is seeking re-election in the 18th District. Attorney Josh Riley is the succeeding Democratic nominee who is opposing Dutchess County Executive Marc Molinaro (R). A new Garin Hart Yang Research Group poll (8/29-9/1; 403 NY-19 likely general election voters; live interview) again finds the race within the polling margin of error, like most competitive races around the country. The GHY data finds Mr. Riley leading Mr. Molinaro, 47-44%.
New York: RMG Research, again conducting a series of polls for US Term Limits, tested three New York congressional districts and found close contests developing in each.
In the open Long Island 3rd CD (8/27-9/2; 400 NY-3 likely general election voters; weighted) RMG projects a very tight contest between Democrat Robert Zimmerman and Republican George Santos. The pair were separated by just one-point on the ballot test, 42-41%, in the Democrat’s favor. In two other races, under identical methodology, Democrat Josh Riley leads Republican Marc Molinaro by a tight 44-41% margin in the open 19th CD, and Republican Brandon Williams holds a 43-40% edge over Democrat Francis Conole in the Syracuse anchored new 22nd CD.
Arizona: The aforementioned pair of Arizona polls from Emerson College and Insider Advantage (see Arizona Senate race above) forecasts an even closer race for Governor than they do for US Senate. Emerson College projects a straight tie between Secretary of State Katie Hobbs (D) and former Phoenix news anchor Kari Lake (R), with both candidates posting 46% support scores. Insider Advantage finds a similar result with Ms. Hobbs leading by the slightest of margins, 44-43%.
New Mexico: Two surveys were just released in the New Mexico Governor’s race after a long period with no public data. Both Survey USA (9/8-12; 558 NM likely general election voters; online) and Emerson College (9/8-11; 1,000 NM likely general election voters; multiple sampling techniques) find Gov. Michelle Lujan Grisham (D) now developing a discernible lead over former television news meteorologist Mark Ronchetti (R). S-USA pegs the Governor’s advantage to be twelve points, at 48-36%, while Emerson sees her ahead, but in a closer 48-43% count.
New York: A new survey, this one from the Republican survey research firm co/efficient, confirms an earlier poll that Gov. Kathy Hochul’s (D) lead over US Rep. Lee Zeldin (R-Shirley/East Long Island) is down to single digits. The co/efficient survey (9/5-7; 1,194 NY likely general election voters; live interview & text) posts the Governor to only a 49-43% lead.
Last week, the Trafalgar Group released their poll (8/31-9/1; 1,091 NY likely general election voters; multiple sampling techniques) that gave the Governor a similar 48-43% edge. In between, however, Emerson College (9/4-6; 1,000 NY likely general election voters; online, text & interactive voice response system) produced a 50-35% ballot test in Gov. Hochul’s favor.
In response, Democratic pollster Public Policy Polling (9/6-8; 510 NY likely and probable general election voters; live interview & text) released their New York study and found the Governor leading 54-39% lead. This is just one of a series of states that is currently producing polling with wildly different results. Whether her lead is small or larger, Gov. Hochul remains the favorite to clinch victory in November.
Oklahoma: While some controversy had been brewing around Gov. Kevin Stitt (R), this week we saw the first evidence that the 2022 Oklahoma Governor’s race could become competitive. The Sooner Poll, a survey taken regularly in Oklahoma elections for two television news stations in the state (9/2-7; 402 OK likely general election voters; live interview) finds Gov. Stitt leading his Democratic opponent, state Superintendent of Public Instruction Joy Hofmeister, by just a single percentage point, 44-43%.
The closeness stems from Gov. Stitt’s favorability index, which is upside down at 46:53% favorable to unfavorable. This race could be one to watch as it unfolds in the final weeks.