Happy Monday and welcome to what’s sure to be another busy week, with very big stakes — some even say the future of the world lies in the balance. Read on to see why.
Congress Could Decide ‘the Future of the World’ This Week ... but Probably Not
Congressional lawmakers are scheduled to head home for the holidays at the end of the week, but those plans could maybe, possibly still change depending on whether either chamber sees progress or pressure on key unfinished business.
Right now, that seems unlikely — but Ukrainian President Volodymyr Zelensky is visiting Washington this week to press the case for continued funding for his war against Russia even as Republican opposition grows. Zelensky is set to address senators and meet with House Speaker Mike Johnson on Tuesday.
Zelenky’s discussions with lawmakers come as congressional negotiators have struggled to make progress toward a deal to address security at the southern border and win backing for a $111 billion package including aid to Ukraine and Israel.
Sen. James Lankford of Oklahoma, the lead negotiator for Senate Republicans, said Monday that “there’s no time” to finish a deal and get it to President Joe Biden’s desk this month if the House heads home at the end of the week, according to Politico. Republican Sen. John Cornyn of Texas made the same point and sought to blame Senate Majority Leader Chuck Schumer. “I think Sen. Schumer got this started so late that we might just run out of time, so I think it’s going to be a January exercise,” he said.
Lankford of Oklahoma told CBS’s “Face the Nation” on Sunday that the Biden administration isn’t going far enough. “The problem is the administration is trying to be able to figure out how to be able to just slow down a little bit of the flow. We had 12,000 people, for instance, on Tuesday of this last week that crossed the border illegally. They're trying to figure out some way to be able to say, well, we'll do a few thousand less, but not actually stop the flow.”
In an appearance on NBC’s “Meet the Press,” Democratic Sen. Chris Murphy said he thinks it’s tragic that Republicans are even linking support for Israel and Ukraine to immigration in the first place, calling it “maybe the most difficult issue in American politics.” And he warned of the danger of failing to support Ukraine against Russian President Vladimir Putin at this moment.
“The future of the world is at stake,” he said. “If we fail, if Republicans don't get reasonable in the next 24 to 48 hours, Russia is going to march into Ukraine. China is going to be given a green light to invade Taiwan. The world, for my children, is fundamentally different under that scenario. The United States’ security is at risk. So, I am just beside myself. The Republicans are playing games with the security of the world. I will try to meet them where they are, but this is a very dangerous point.”
Murphy agreed that the border must be addressed, but he drew a line at some of the GOP proposals. “We are not going to put Donald Trump's immigration policies into statute. We're not going to do that. That would be bad for the country,” he said, later adding, “If I were a cynic, I would say that Republicans have decided to tie support for Ukraine to immigration reform, because they want Ukraine aid to fail. But I'm not a cynic. And so we are still trying to resolve some pretty big differences that remain.”
Murphy said that the White House will get more engaged in the talks this week.
What else needs to get done: The Senate will look to pass the National Defense Authorization Act (NDAA), the annual defense policy bill, and send it to the House, which also will be busy this week with votes on two competing versions of bills to reform Section 702 warrantless surveillance powers. Under the “queen of the hill” process being used, the bill that wins the most support will be sent to the Senate. The House will also vote on formalizing Republicans’ impeachment inquiry into Biden.
Both chambers are also expected to pass an extension of the Federal Aviation Administration authorization until March 8 this week.
And though floor action on annual spending bills isn’t likely to resume before lawmakers depart the Capitol, a January deadline to fund parts of the government is approaching, with another funding deadline following shortly after.
“Johnson is negotiating with the other congressional leaders on top-line spending levels for the current fiscal year, which must be agreed upon before they can finalize spending bills,” The Washington Post’s Theodoric Meyer and Leigh Ann Caldwell wrote Monday. “He wrote to colleagues last week that it was still his ‘intention that the House and Senate complete action on full-year bills’ before funding for some agencies expires Jan. 19 and funding for the rest of government expires Feb. 2.”
The bottom line: It’s not clear that negotiators will be able to finalize a border deal — or that there would be enough votes in both chambers for it to pass, given the level of Republican opposition to Ukraine aid and likely Democratic pushback against severe border policy changes. Senate leaders will need to see progress to delay their holiday break. And Johnson, who reportedly compared himself to Moses in a recent speech to a Christian group, has also indicated he wants to let his House people go home at the end of the week. But stay tuned.
Chart of the Day: Gazing Into the Future
The Federal Open Market Committee meets this week for the last time in 2023, and the expectation is that the central bank will hold steady on interest rates amid signs that inflation is falling and the economy, while healthy, is slowing.
According to Diane Swonk, chief economist at KPMG, the Fed has likely finished its rate hike campaign. In her new 2024 outlook, Swonk estimates that the Fed will hold its funds rate where it is until May 2024, when the bank will start to cut. “The descent on rates is expected to be much slower than the ascent,” Swonk writes. “The noninflationary or neutral fed funds rate has likely moved up, closer to 3%. … Rates are not likely to return to the zero lower bound as they did in the 2010s unless we enter yet another financial crisis. The ultralow rates of the 2010s were an anomaly, not the norm.”
First CHIPS Act Grant Goes to Major Defense Contractor
The Biden administration announced Monday that the first federal grant intended to boost U.S. semiconductor manufacturing is going to an American subsidy of BAE Systems, a multi-billion-dollar British defense contractor.
The $35 million grant is a tiny slice of the roughly $50 billion provided by the CHIPS and Science Act of 2022 to strengthen American manufacturing of this key piece of technology. BAE will reportedly use the funds to expand a manufacturing facility in Nashua, New Hampshire, that produces computer chips used in advanced weapons systems, including F-15 and F-35 fighter jets.
Speaking at the BAE facility Monday, Commerce Secretary Gina Raimondo highlighted the national security logic behind the federal support for semiconductor manufacturing. “In order to defend our great country, we need to make the chips that go into military equipment in the United States of America, by Americans,” she said. “And that’s what this is about.”
More and larger grants will be announced in 2024, Raimondo said, as the program ramps up. “Fundamentally, you’ll see, all over the country, big expansions in semiconductor manufacturing and the supply chain,” she said.
In a statement, President Joe Biden noted that the semiconductor was invented in the U.S. “But over time, the United States went from producing nearly 40% of the world’s chips to just over 10%, undermining America’s national security and making our economy vulnerable to global supply chain disruptions,” he said. “My CHIPS and Science Act aimed to change that – and already, we are revitalizing America’s leadership in semiconductors, strengthening our supply chains, protecting national security, and advancing American competitiveness as a result of the law and our Investing in America agenda.”
The White House has also emphasized the economic benefits of expanded chip manufacturing. “This announcement delivers on President Biden’s commitment to restoring American leadership on semiconductors, advancing our national security, and creating good family-sustaining jobs here in New Hampshire and around the country,” said Lael Brainard, who leads the National Economic Council.
Among other incentives, the law provides a 25% tax credit for new chip manufacturing facilities built in the U.S.
Biden’s $280 billion legislative package has sparked more than $220 billion in private investment in chip manufacturing, involving 44,000 new jobs, according to the Semiconductor Industry Association, a trade group.
While the CHIPS Act appears to have been effective in sparking new investment so far, some experts have warned that more subsidies may be needed in the future, given the higher costs of manufacturing in the U.S. “I think the huge question that remains is how enduring will these investments be over time,” Chris Miller, a historian of technology at Tufts University, told Anna Swanson of The New York Times. “Are they one-offs or will they be followed by second and third rounds for the companies involved?”
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Fiscal News Roundup
- Ukraine Money Likely to Be Delayed Until January, Senate Republican Says – The Hill
- Zelensky Faces Impossible Task Ahead of Meetings in Washington – CNN
- Congress Stares Down Hefty To-Do List in Its Final Week of 2023 – The Hill
- Fallout Rises From McCarthy Handshake Deal With White House – The Hill
- Murphy, Lankford Highlight Border Divide, as Poll Shows Importance to Voters – Axios
- High-Speed Routes Biggest Winners in Latest Rail Funding Round – Roll Call
- Biden Goes Into 2024 With the Economy Getting Stronger, but Voters Feel Horrible About It – Associated Press
- ‘Bidenomics’ Is a Big Hit — Outside the US – Politico
- Cigna Calls Off Humana Pursuit, Plans Big Stock Buyback – Wall Street Journal
- ‘Don’t Get Sick. It’s Too Expensive’: Medical Debt Is Putting More Americans in Financial Crisis – Guardian
- Up to 5.4 Million in U.S. Already Have Had the Flu This Season – Washington Post
Views and Analysis
- Congress’s Crucial (Last?) Week in Washington – Theodoric Meyer and Leigh Ann Caldwell, Washington Post
- Seven Weeks in, Speaker Johnson Faces Intensifying GOP Pressure – Steve Benen, MSNBC
- Want to Tax the Rich for Real? Pay Attention to This Supreme Court Case – Joseph Fishkin and William E. Forbath, New York Times
- I Covered Joe Manchin for Years. He Might Not Care If He Sinks Joe Biden – Ry Rivard, Politico
- Are the Democrats Sleepwalking to Disaster? – Harold Meyerson, American Prospect
- Why Gas Prices Are Dropping Ahead of the Holidays – Zack Budryk, The Hill
- How Good Is the U.S. Economy? It’s Beating Pre-Pandemic Predictions – Catherine Rampell, Washington Post
- This Economy Has Bigger Problems Than ‘Bad Vibes’ – Tressie McMillan Cottom, New York Times
- Speaker Mike Johnson Colludes With Democrats to Raid Medicare – Christopher Jacobs, The Federalist
- The Field of Medicine Is Sick. Here’s How We Can Fix It – Rep. Gregory F. Murphy (R-NC), The Hill