CLIFFHANGER ON TRADE BILL … EXPORT-IMPORT BANK BEFUDDLEMENT … DEFENSE BILLS … CONGRESS GOES LOCO OVER OCO … BETWEEN IRAQ AND A HARD PLACE … ONE MAN’S ‘TRAINER’ IS ANOTHER MAN’S ‘ADVISER’ … BACHELOR #1 … and other news of the week.
Wishing the Army an early 240th birthday (it’s on Sunday).
A special shout-out to Capstone’s John Rogers on his recent keynote speech at the Aerospace & Defense Conference hosted by Drexel Hamilton in NYC.
Joyce Rubenstein and the Capstone Team (John Rogers, Steve Moffitt, Alan MacLeod, Diane Rogers, Erik Oksala and Ross Willkom)
P.S. The Washington Report won’t be published next week … back on June 26th.
FRANTIC DRIVE TO SAVE THE TRADE DEAL Politico: “President Obama and his aides launched a full-court press to save his trade package as House Democrats’ internal struggles pushed Obama’s top legislative priority perilously close to defeat. (In fact, Obama is on Capitol Hill this morning, to meet with House Dems ahead of a vote.) As Obama made phone calls to reluctant Democrats from the White House, Chief of Staff Denis McDonough, Treasury Secretary Jack Lew and Labor Secretary Tom Perez went face-to-face with trade opponents including AFL-CIO President Richard Trumka in a testy closed meeting on Capitol Hill. It was unclear whether the White House was making any progress. An Obama administration official notes that if TAA is killed, about 100,000 workers per year who would have access to the assistance program would lose it-and it would end the longest TAA reauthorization since 2002.”
HOW DO YOU REALLY FEEL? Democracy for America will level this threat against Democrats today, from chair Jim Dean: ‘If you vote for either Medicare-cutting Trade Adjustment Assistance legislation or Fast Track Authority for the job-killing Trans-Pacific Partnership, we will not lift a finger or raise a penny to protect you when you’re attacked in 2016, we will encourage our progressive allies to join us in leaving you to rot, and we will actively search for opportunities to primary you with a real Democrat.”
WSJ notes that few Democrats have changed their views on trade since 2002.
EXPORT IMPORT BANK TO SHUT DOWN AT END OF MONTH Politico: Just three years ago, the House voted overwhelmingly to extend the charter of the Export-Import Bank and to expand its business of loaning money to boost American exports. Among Republicans, 147 voted yes and 93 voted no. Nothing much has changed since then. The Export-Import Bank supported itself and generated returns of $675 million for taxpayers last year. Its default rate as of March was under two-tenths of 1 percent. SO WHAT’S ALL THE FUSS ABOUT THIS YEAR Yet now Republicans say a majority of the caucus wants to abolish the bank, and the Republican Study Committee — representing 170 House conservatives — has come out against renewing the charter. Opponents in both the House and Senate have so far succeeded in keeping the renewal from coming up for votes (in which a pro-bank, mostly Democratic coalition would almost certainly prevail), and without action the bank will shut down at month’s end. BEFUDDLED “Here I am, in the minority of my own conference, fighting to defend the Ex-Im Bank that is the best example of creating jobs in America,” Rep. Chris Collins (R-N.Y.), said. “I am befuddled by what’s going on in the heads of some of my fellow members in my party that want to have the Ex-Im Bank charter expire and cost us thousands upon thousands of small-business jobs.” BANK IS ‘BETE NOIRE’ [aka bane or in French, literally, ‘black beast’] Collins shouldn’t be befuddled. Republican presidential candidates trying to harness the populist energy in the electorate have come out against the bank, which has become a bete noire with the tea party set. Conservative groups howling about corporate welfare and big government have, for the moment, bested the corporate interests that have previously co-opted grass-roots conservatives. LITTLE CHANCE THE BANK DIES but there’s a real chance the bank will close temporarily. At an Ex-Im hearing before the House Financial Services Committee on Wednesday, veteran congressman Frank Lucas (R-Okla.) tried to talk sense into his hotheaded GOP colleagues — one of whom, committee chairman Jeb Hensarling (Tex.), has bottled up legislation renewing the bank.
EX-IM BANK IN SENATE TEST Bloomberg: “The U.S. Senate showed strong support for reauthorizing the Export-Import Bank in a test vote bolstering backers’ argument that a majority of Congress wants to keep its charter from expiring at the end of this month. The 31-65 vote Wednesday sought to keep alive a proposed amendment to extend the bank’s charter. Bank proponents have maintained the Senate and the House of Representatives would reauthorize the bank if they were allowed to vote on the issue. They don’t have a promise of floor votes before June 30, though, which makes it likely the bank’s charter will lapse and it will be unable to approve financing for new projects.
“When you get this kind of support, almost veto-proof support, from the United States Senate, maybe you ought to move a bill,” Senator Heidi Heitkamp, a North Dakota Democrat and bank supporter, said on the Senate floor after the vote. Wednesday’s vote was intended to be only a preliminary skirmish over the 81-year-old bank. Senator Kelly Ayotte, a New Hampshire Republican who offered the amendment to reauthorize the bank on behalf of Illinois Republican Mark Kirk, withdrew it after the vote.
WHAT DOES THE EX-IM BANK DO AGAIN? Ex-Im provides loans, loan guarantees and insurance to facilitate overseas sales by U.S. companies. Senator Lindsey Graham, a South Carolina Republican, said Ex-Im supporters were trying to find “a must-pass piece of legislation to keep the bank afloat.” Once renewed regularly without controversy, Ex-Im has become a target of conservative Republicans who say it benefits only a few large corporations that don’t need government assistance. Boeing Co. is by far the bank’s biggest beneficiary: its customers received more than $7 billion of the $10.8 billion in long-term guarantees Ex-Im issued last year.
FALLOUT IF EX-IMPORT BANK CLOSES Bank advocates say an expiration of Ex-Im’s charter would hamstring small businesses. They say that once the charter lapses, U.S. exporters might permanently lose customers who turn to rivals in other countries with export credit agencies. … U.S. manufacturers say major industrial contracts in developing countries, from rail links in Africa to power plants in Eastern Europe, will be in jeopardy. Officials at companies such as Boeing Co., General Electric Co., and Westinghouse Electric Co. also warn that competition for water, transportation, and electricity deals is so cutthroat that they would be forced to move manufacturing overseas if the Ex-Im Bank isn’t open to guarantee financing. The bank’s conservative critics say bluster over busted deals or potential job losses reflects the kind of “crony capitalism” that the Republican Party should root out. Because it backs big-ticket exports of aircraft and industrial equipment, a large share of the Ex-Im Bank’s guarantees go to corporate titans such as GE and Boeing.”
WHERE THE DEFENSE BILLS STAND Politico: “…The House, easily passed the defense appropriations bill, 278-149, on Thursday, after the chamber … worked late into the night Wednesday to clear more than 65 amendments. Now all eyes in the defense budget turn to the Senate, where both the NDAA and the defense appropriations bill could be taken up on the floor next week.
SENATE DEMOCRATS UNLIKELY TO FILIBUSTER NDAA Politico: “Senate Democrats appear unlikely to block the defense authorization bill despite the defeat of an amendment Tuesday that would have fenced off extra war funding that they have slammed as a gimmick to skirt spending limits. Democratic leaders aren’t ruling out a filibuster of the NDAA, but they are instead focusing their attention on the next bill on deck in the Senate: DEFENSE APPROPRIATIONS. “The NDAA is primarily a policy measure, and it only authorizes spending. So, some Democrats are leery to vote against it, particularly because the NDAA typically passes with big bipartisan majorities. Several Democrats have said over the past week they believe the appropriations bill is a better place to have the spending fight than the NDAA. ‘Many of them have worked hard on that bill and naturally want to vote for it,’ said Senate Minority Whip Dick Durbin (D-Ill.).”SENATE APPROPRIATIONS The Senate Appropriations Committee marked up its defense spending bill and two other appropriations measures yesterday. And the bill is expected on the Senate floor next week once the NDAA is finished.
CYBER BILL DRAMA GETS THROWN INTO NDAA DEBATE Politico: “Senate Majority Leader Mitch McConnell is firing back at Senate Democrats’ procedural threats – by daring them to oppose a cybersecurity bill just days after a massive attack on the federal government’s computer systems. On Tuesday, McConnell announced his strategy to link the cybersecurity measure to a sweeping defense policy bill that’s now on the Senate floor.”
CONGRESS HAS GONE LOCO OVER OCO ACCOUNT – DEEP DIVE AP “Formally known as the Overseas Contingency Operations fund, OCO has become a political pressure point that is threatening to stall passage of a more than $610 billion bill that funds the military and other national security programs. …The OCO account, which pays for the Afghan and Iraq wars, is exempt from congressional spending caps enacted to reduce government deficits. It grew from about $19 billion in 2002 to $187 billion in fiscal 2008 and is slated to be around $90 billion for the upcoming fiscal year.
WHY SHOULD THE AMERICAN TAXPAYER CARE ABOUT OCO U.S. defense officials don’t want lawmakers to increase defense spending by putting the money in the OCO account, which is funded year to year and is separate from the core defense budget. They say the Pentagon can’t embark on long-term weapons projects, for instance, if the money they get one year evaporates the next. They would rather see the money in the core budget for defense, but that would require lifting the spending cap. So, for now, they say they’ll take it any way they can get it.
WHAT DO REPUBLICANS SAY? Senate Majority Leader Mitch McConnell, R-Ky., on Wednesday accused Democrats of holding money for American service men and women hostage to efforts to increase non-defense spending. The Republicans have upped the ante, saying they want to tack a cybersecurity measure to the defense bill. That would make it tougher for the president to use his veto pen, especially in light of the recent massive hacking attack (more to follow on the hacking at OPM)
WHAT DO DEMOCRATS SAY? Democrats say pouring more money in the OCO account is a budget gimmick. They argue that lawmakers can’t choose to break through the spending caps when it comes to defense, but adhere to them when it comes to non-defense domestic spending. They have threatened to block any spending bill, including defense, unless Republicans work with them to modify – or do away with – the unpopular restrictions imposed in 2011.
WHAT’S NEXT? Democrats are likely to let the defense policy bill pass, but will block the next round of defense spending bills that actually appropriates the money to the Pentagon and other agencies. That would keep the bills stalled on Capitol Hill with lawmakers’ August recess looming – not to mention the end of the fiscal year on Sept. 30. That’s the deadline to keep the government operating.”
ALL-OUT SPENDING WAR THIS SUMMER Politico: “Congressional Republicans are calling Democrats’ bluff on government spending and vowing to press ahead with funding bills despite filibuster threats from the left – a move that deepens a standoff between both parties and all but ensures an all-out spending war this summer. Senate Democrats have threatened to blockade the GOP’s spending bills from the floor in a bid to force negotiations to raise strict budget caps. But Republicans aren’t even batting an eyelash in response and plan to stay the course on their own spending bills.”
SENATORS RENEW AUMF DEBATE Bloomberg News: “Senator Bob Corker, the chairman of the Foreign Relations Committee, said he’ll try to bridge the differences that have prevented U.S. lawmakers from voting to authorize the war against Islamic State. The commitment by Corker, a Tennessee Republican, came after the committee postponed a vote on a proposed measure on Tuesday. In a sign of potential bipartisan support, two committee members — Virginia Democrat Tim Kaine and Arizona Republican Jeff Flake — introduced the measure as an amendment to a State Department policy bill.”
HACK UNDETECTED FOR YEAR ABC News: “The massive hack into federal systems announced last week was far deeper and potentially more problematic than publicly acknowledged, with hackers believed to be from China moving through government databases undetected for more than a year, sources briefed on the matter told ABC News. ‘If [only] they knew the full extent of it,’ one U.S. official said about those affected by the intrusion into the Office of Personnel Management’s information systems.” –“It all started with an initial intrusion into OPM’s systems more than a year ago, and after gaining that initial access the hackers were able to work their way through four different ‘segments’ of OPM’s systems, according to sources.”
BETWEEN IRAQ AND A HARD PLACE MorningD “President Barack Obama was elected on a promise of extricating the U.S. military from Iraq – what he called a ‘clean break.’ More than six years later, he’s found there’s simply no escaping the pressure to send U.S. combat forces back. On Wednesday, the White House announced the U.S. would send 450 more American military advisers, on top of 3,100 already there. AND THEN … Several GOP lawmakers quickly shot out statements Wednesday, saying they were skeptical the troop plus-up was evidence of a real strategy.”
IT’S A MATTER OF SEMANTICS … ONE MAN’S ‘TRAINER’ IS ANOTHER MAN’S ‘ADVISER’ Politico: The White House says the new batch of troops deploying to Iraq are going to train Iraqi recruits to fight the Islamic State. The Pentagon says the 450 American personnel headed to Al-Taqaddum Air Base are going over just as advisers. MIXED SIGNALS come as President Barack Obama struggles to find a balance between achieving his goal of “degrading and ultimately destroying” the terrorist group known as the ISIL while avoiding restarting a war in Iraq that he has worked to end since he became president in 2009.” Asked about the linguistic discrepancy, National Security Council spokesman Alistair Baskey said training could still be in the mix. “The new U.S. force presence at Taqaddum will be primarily to advise and assist initially in response to the most pressing needs of the Iraqis, which are to consolidate and organize to counterattack ISIL, but this does not preclude training as well when the need arises, particularly of tribal fighters.”
WHIP WATCH APP LAUNCHED House Minority Whip Steny Hoyer (2nd Ranking House Dem) goes high-tech with a new app that tracks House actions and happenings. … The iOS app premiere[d] [Thursday] and generates push notifications for new jobs, calendar updates and votes cast on the House floor. Free to the public, it informs you in real time what segments of a bill are up for discussion and how many people have voted for it. It also displays transcribed speeches from representatives and allows you to share them directly on social media. At its essence, it’s a tool to track exactly what the House is up to at any time of the day.”
BRUTAL CRITIQUE OF JEB Larry Sabato (with Kyle Kondik and Geoffrey Skelley) writing in Politico about “The Myths of 2016.” Larry’s Myth #1 is that the GOP race is anyone’s game: He says only Jeb, Marco and Walker have “the resources, positioning and potential to expand the base.” Then he unloads the toughest public assessment anyone has given of Jeb so far, setting the table for weekend conversation: “Everyone can see that Jeb Bush is doing poorly so far. He’s in a much worse position than his father was in 1987 or his brother was in 1999. “This Bush intimidates no one. His political skills are rusty, he’s a pedestrian speaker … The party’s organizational leaders who care only about winning argue for him. The largest share of top elected Republicans back him openly or covertly. … [T]oday’s GOP is considerably less hierarchical and deferential to the leadership.” FOR DEMS … “Myth #2: Hillary Clinton’s favorability is in free-fall.”
IF YOU’RE LOOKING FOR CAMELOT … HE’S NOT YOUR GUY (who knew he was single!) Politico: “The longshot GOP presidential contender — whose never-been-married status has spurred tons of headlines and “rotating first lady” jokes this week on his singledom: “Sen. Lindsey Graham says he’s not ‘defective’ because he’s single. While he’s ‘been close once’ to marrying a woman, he’s unsure why he never did so. And he said that if voters want a John F. Kennedy-esque clan in the White House, they should look elsewhere. ‘If you are looking for Camelot, I’m not your guy,’ Graham said in an interview.” Since entering the race for the GOP nomination last week, the 59-year-old Graham has received his share of media coverage over his status as a bachelor, a rarity for a president … [Graham says:] “I don’t think there’s anything in the Constitution that says single people need not apply for president. And if it bothers some people, then they won’t vote for me. I offer what I offer.'”
–“Sen. John McCain (R-Ariz.), Graham’s best friend in the Senate, offered this assessment: ‘I know he’s dated some attractive women from time to time, but I’ve never seen him get real serious.’ McCain added with a big laugh: ‘I’ve often told Lindsey that he couldn’t find anybody that loves him as much as he does.'”