Republicans Eye Frozen Russian Assets to Fund Ukraine

Republicans Eye Frozen Russian Assets to Fund Ukraine

Soldier in Ukraine loading an American-made M777 howitzer
Future Publishing via Reuters
By Michael Rainey
Thursday, March 14, 2024

Happy Thursday! It’s a big day for fans of giant flying machines as SpaceX successfully launched its massive Starship rocket from a facility in Boca Chica, Texas. All 33 of Starship’s “super heavy” booster engines fired like clockwork, sending it into space at orbital speed for a nearly hour-long test flight. Although the spacecraft burned up on reentry into Earth’s orbit, spoiling plans for a splashdown in the Indian Ocean, technicians said the flight was a success.

Meanwhile, Congress is speeding towards yet another shutdown deadline at the end of next week, even as lawmakers struggle to find a way forward on an aid package for U.S. allies.

Here’s what’s happening in fiscal news.

Republicans Consider Seizing Russian Assets to Pay for Ukraine Aid

Pressure is rising on House Speaker Mike Johnson to figure out a way to provide military aid to Ukraine and Israel.

Johnson told Politico’s Olivia Beavers Thursday that aid packages for Ukraine and Israel could emerge from the House in the coming weeks, either together or separately, following the completion of government funding bills due on March 22.

“I think it is a stand-alone, and I suspect it will need to be on suspension,” Johnson said, referring to a legislative process that would speed the floor vote while raising the requirement for passage to two-thirds – guaranteeing the need for significant Democratic support.

The Republican leader would certainly need help from Democrats, given the resistance to providing more aid to Ukraine among conservatives.

The calendar, however, could make it difficult if not impossible to pass aid quickly. The House is currently scheduled to go on break immediately after the shutdown deadline, potentially pushing any foreign aid bills well into next month.

Ukraine supporters, including some Republicans, have warned against waiting until April. “Pushing it off past next Friday is reckless, and I’ve made that clear,” House Armed Services Chair Mike Rogers, a Republican from Alabama, said.

Rep. Adam Smith, the senior Democrat on the House Armed Services Committee, said he doesn’t think there’s enough time to bring up a new bill, so the House should focus instead on the $95 billion aid package already passed by the Senate, which includes $60 billion for Ukraine as well as money for Israel and the Indo-Pacific region. “The choice that Mike Johnson faces at this point is binary: Give us a vote on the Senate bill, or abandon Ukraine,” he said.

Eyeing Russian assets: Bloomberg’s Erik Wasson, Billy House, and Maeve Sheehey reported Thursday that the idea of seizing Russian assets to pay for another round of military aid to Ukraine is gaining traction among Republicans in Congress.

Texas Rep. Michael McCaul, the Republican Chair of the House Foreign Affairs Committee, said he is looking into using some of the $300 billion in Russian assets that were frozen in the West following the country’s invasion of Ukraine.

Rep. French Hill, a Republican from Arkansas, said Russian asset seizure “must” be part of any Ukraine aid bill. Texas Republican Sen. John Cornyn said “It would be justice to make the Russians pay for Ukraine, pay the United States and allies for arming Ukraine.”

Seizing Russian assets may be easier said than done, however. The majority of the Russian central bank funds – which include foreign currency, gold and government bonds – are being held in the central securities depository Euroclear in Belgium. There is no understanding yet on how to divide or use those funds, and reaching an agreement could take a significant amount of time and require further legislation.

Trump Vows Not to Cut Social Security

Former President Donald Trump pushed back against charges that he plans to cut Social Security if he returns to office, an accusation based on comments he made speaking to CNBC’s Joe Kernen earlier this week.

Asked how he would “handle entitlements” including Social Security and Medicare in the context of a rising national debt, Trump told Kernen that “there is a lot you can do in terms of entitlements, in terms of cutting – and in terms of also the theft and the bad management of entitlements, tremendous bad management of entitlements.”

Democrats were quick to jump on what sounded like an expression of intent to cut benefits, given the chance, with President Biden declaring “Not on my watch” on social media. But as The Washington Post’s Philip Bump argued, Trump’s statement was murky at best, even if it implied cuts in the context of the interview. “Trump seems to have been riffing in his response and was expressing general agreement with his interviewer’s concerns,” Bump wrote.

In an interview with the far-right news and opinion site Breitbart published Thursday, Trump said he has no plans to cut the popular program. “I will never do anything that will jeopardize or hurt Social Security or Medicare,” Trump said. “We’ll have to do it elsewhere. But we’re not going to do anything to hurt them.”

Why it matters: Policymakers are facing a shortfall for Social Security funding in 2033, and pressure will grow to make changes in the program, potentially including increased taxes and raising the retirement age. In a break with Republican orthodoxy, however, Trump has joined Democrats in saying he won’t make cuts to the program, a move that has altered the playing field for reform, at least for the next four years.

Number of the Day: 1.6%

Another inflation measure came in hotter than expected Thursday, as the Producer Price Index registered a 1.6% increase on an annual basis in February. It was the largest increase in the index, which measures wholesale prices paid by manufacturers and service providers, since the 1.8% reading for the 12 months ending in September 2023. On a monthly basis, the index rose by 0.6%, twice the 0.3% increase seen in January.

For the most part, analysts said the surprising results were more a reminder that the path to lower inflation will be bumpy than a warning about a new wave of price hikes. “The February PPI report was a mixed bag,” Gus Faucher, chief economist for PNC Financial Services, said Thursday, per CNN. “Inflationary pressures remain in the pipeline, but with supply and demand continuing to normalize after the pandemic, inflation continues to gradually slow.”

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