The Hill’s Morning Report — Democrats on brink of budget bill win

by Alexis Simendinger and Al Weaver - 08/05/22 6:28 AM ET

Senate Majority Leader Chuck Schumer, D-N.Y., smiles as he arrives to speak to reporters after a closed-door policy meeting, at the Capitol in Washington, Tuesday, Aug. 2, 2022. (AP Photo/J. Scott Applewhite)

At last, they have the votes.

Senate Democrats likely sealed the fate of their $740 billion reconciliation bill when Sen. Kyrsten Sinema (D-Ariz.) late on Thursday announced a deal with leaders, handing President Biden and his agenda a massive (and elusive) victory (The Hill).

In a statement, Sinema said that the final bill will do away with a provision that would have nixed the carried interest loophole, which she has opposed throughout negotiations.

“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Sinema said. “Subject to the Parliamentarian’s review, I’ll move forward” (The Hill).

The Arizona Democrat’s decision likely clears the way for the package to be passed in the coming days. Earlier on Thursday, Senate Majority Leader Charles Schumer (D-N.Y.) announced that the upper chamber will reconvene on Saturday and will move ahead with a procedural vote to kick off consideration of the climate, tax and health care proposal.

The vote to proceed to the legislation is expected on Saturday afternoon, followed by a series of amendment votes (also known as “vote-a-rama”), meaning that final passage could come either late Sunday or early Monday (The Hill).

Schumer said in a statement that the deal with Sinema “preserves the major components of the Inflation Reduction Act,” including on prescription drug costs, climate change and the $300 billion in deficit reduction.

“I am pleased to report that we have reached an agreement on the Inflation Reduction Act that I believe will receive the support of the entire Senate Democratic conference,” Schumer said.

The president hailed Sinema’s decision as “another critical step toward reducing inflation and the cost of living for America’s families.”

▪ The Washington Post: Democrats, Sinema reach deal on Inflation Reduction Act, after key changes to tax policies.

▪ Politico: Sinema signs onto Dems’ party-line bill ahead of momentous Saturday vote.

The bill, as originally written, would spend $369 billion on the energy and climate program. Nixing the carried interest loophole move takes away $14 billion in total projected revenue. In its place, Democrats are set to implement a new excise tax on stock buybacks, which is expected to bring in more revenue than the item Sinema jettisoned (The Associated Press).

With questions surrounding the Arizona centrist out of the way, there is little standing in the way of the bill’s passage. As Sinema referenced in her statement, one of the few matters left to be resolved is the Senate parliamentarian, who continues to vet the proposal.

The parliamentarian’s pending ruling is also giving Senate Republicans the slimmest bit of hope. Sen. Mike Crapo (Idaho), the top GOP member on the Senate Finance Committee, told CNN that the party is challenging “every piece that we can” with the Senate’s budget referee.

“We are challenging as much as we can across the entire bill,” Crapo said.

COVID-19 is the other issue that could always throw a wrench into the party in power’s carefully laid plans. No Senate Democrats are currently out, but more than a handful of members have missed time in recent weeks due to positive test results, complicating business in the upper chamber.

As of now, Sen. John Cornyn (R-Texas) is the lone senator out after testing positive earlier in the week, but he could be back by the time the vote on final passage is held. Senate Democrats will need every one of their 50 members present, including Sen. Patrick Leahy (D-Vt.), who has been absent due to recovery from hip replacement surgery.

Looking ahead, if the Senate advances a final bill, the House will briefly return from the August recess to vote on it next week, Speaker Nancy Pelosi (D-Calif.) told reporters last week.

Related Articles

▪ The Hill: AARP, Big Pharma locked in battle over drug pricing bill.

▪ Politico: Pharma group leader says Democrats who vote for reconciliation bill “won’t get a free pass.”

LEADING THE DAY

➤ GEOPOLITICS

Basketball star Brittney Griner, 31, on Thursday was convicted in a Russian court of drug possession charges with criminal intent. She was sentenced to nine years in a penal colony, on top of the five months she has been in detention since February, and she was fined the equivalent of $16,700 (The Associated Press).

Griner — a two-time U.S. Olympic champion and an eight-time all-star with the WNBA’s Phoenix Mercury who pleaded guilty to accidentally packing in her luggage vape cartridges containing cannabis oil — is embroiled in geopolitical tensions between Washington and the Kremlin.

U.S. officials had anticipated a harsh verdict based on Russian law and previous international prosecutions. Griner and her lawyers have 10 days to appeal, a period during which she will remain in the detention facility in which she’s been held since her arrest.

Biden immediately denounced the verdict and the long prison sentence as “unacceptable.”

“I call on Russia to release her immediately so she can be with her wife, loved ones, friends, and teammates,” he said, adding that he would continue to work to bring home Griner and Paul Whelan, an American imprisoned in Russia on an espionage conviction (The Hill).

Secretary of State Antony Blinken publicly appealed last month to the Russian government to work out a prisoner exchange for Griner and Whelan, arguing both Americans are “wrongfully detained.” On Thursday, the secretary issued a statement that Russia’s sentence “further compounds the injustice” of Griner’s wrongful detention and assailed Moscow’s use of its legal system “to advance its own agenda, using individuals as political pawns.”

Blinken described the release of Griner and Whelan as a personal priority and the continued aim of the U.S. government. Russia, through an unofficial intelligence back channel, floated a request for a prisoner swap involving Vadim Krasikov, a former colonel from the country’s domestic spy agency who was convicted of murder in Germany and remains in German custody (CNN).

“We appreciate and continue to support the efforts of @POTUS and @SecBlinken to get a deal done swiftly to bring Brittney, Paul and all Americans home,” Griner’s agent, Lindsay Colas, said on Twitter.

“We should use all available tools,” Colas continued. “This is a time for compassion and a shared understanding that getting a deal done to bring Americans home will be hard, but it is urgent and it is the right thing to do.”

WNBA Commissioner Cathy Engelbert and NBA Commissioner Adam Silver jointly called the Russian court’s verdict and lengthy sentence “unjustified and unfortunate, but not unexpected.” U.S. professional basketball associations are committed to Griner’s safe return, they added. “It is our hope that we are near the end of this process of finally bringing BG home to the United States.”

➤ ADMINISTRATION

The Department of Health and Human Services declared a health emergency in an effort to quell the monkeypox outbreak and ramp up the government’s response. The move allows the administration to reallocate federal funds and resources to combat the virus, which has infected more than 6,600 Americans.

The decision is also expected to help with distributing vaccines to affected areas. New York and San Francisco in recent days have complained that they do not have enough two-dose jabs to meet demand. California, Illinois and New York City are among the spots that have already declared a state of emergency due to rising cases.

The administration’s pending announcement comes days after it named top officials from the Federal Emergency Management Agency and the Centers for Disease Control and Prevention to lead the White House’s response to the outbreak (The Associated Press).

🌏 China’s military exercises aimed at Taiwan, including missiles fired into Japan’s exclusive economic zone, represent a “significant escalation” said Blinken on Friday while traveling in Cambodia. He urged Beijing to back down. Speaking to reporters, the secretary accused China of using the Speaker’s recent visit as a “pretext to increase provocative military activity in and around the Taiwan Strait.” The Pentagon has ordered the U.S.S. Ronald Reagan aircraft carrier group “to remain on station in the general area to monitor the situation,” he added.

“We will fly, sail and operate wherever international law allows,” Blinken said. “We’ll continue to conduct standard air and maritime transits through the Taiwan Strait, consistent with our long-standing approach to working with allies and partners to uphold freedom of navigation and overflight” (The Associated Press).

▪ Bloomberg News: China sanctioned Pelosi and her immediate family in retaliation for her Taiwan visit.

▪ Reuters: Pelosi, who is traveling in Japan at the end of an itinerary through Asia, on Friday praised Taiwan and said her trip, which angered China, was not about changing the regional status quo.

▪ The Wall Street Journal: The Speaker, flanked by U.S. officials in Tokyo on Friday, said the U.S. will not allow China to isolate Taiwan by preventing American officials from traveling to the independent island.

IN FOCUS/SHARP TAKES

➤ POLITICS

Former President Trump had some big wins in primary contests this week, but two of his top endorsees with media backgrounds could potentially spell trouble for the Republican Party come November.

Trump’s support helped put two GOP primary candidates in key states over the top: Kari Lake in Arizona and Tudor Dixon in Michigan, though the latter won handily. Both candidates have aired complaints about the veracity of the 2020 election results, putting both behind the eight-ball heading into the stretch run.

As The Hill’s Niall Stanage notes in his latest Memo, Lake is hardly the type of candidate who is set up for success in November, and the polls show as much. According to the latest surveys, Lake, a former local news anchor in Phoenix, trails Arizona Secretary of State Katie Hobbs. As for Dixon, she also trails Michigan Gov. Gretchen Whitmer (D), a top target for Republicans this year.

Adding to Trump’s troubles, the two gubernatorial picks are on top of struggles three of his Senate candidates have had in recent weeks, all of whom were celebrities in their own right before entering the political arena: Mehmet Oz in Pennsylvania, J.D. Vance in Ohio and Herschel Walker in Georgia.

With Tuesday’s primaries in the rearview mirror, Trump will turn his attention to Wisconsin tonight as he appears to stump for Tim Michels, a gubernatorial candidate, in Waukesha.

In Wyoming, Harriet Hageman, the top GOP primary challenger to Rep. Liz Cheney (R) for the state’s at-large House seat, said on Wednesday at a candidate forum that the 2020 presidential election was “rigged” against Trump, her firmest public stance on the election yet. Trump has endorsed Hageman and is working assertively to defeat Cheney (The Hill).

Shortly after, former Vice President Dick Cheney made his biggest foray into the race by cutting an ad on behalf of his eldest daughter, saying that no single individual has been a “greater threat to our republic” than the former president.

“He is a coward. A real man wouldn’t lie to his supporters. He lost his election and he lost big. I know it, he knows it and deep down I think most Republicans know it,” Cheney said (The Hill).

CNN: Rep. Carolyn Maloney (D-N.Y.) doubles down on debate remark that she doesn’t think Biden will run in 2024 despite apologizing.

📝 Introducing NotedDC, The Hill’s curated commentary on the beat of the Beltway. Click here to subscribe to our latest newsletter.

OPINION

■ Team soft landing is starting to pull ahead, by Jared Dillian, columnist, Bloomberg Opinion. https://bloom.bg/3P0nsJO

■ Alex Jones’ lawyers mistakenly revealed the truth, editorial, Houston Chronicle. https://bit.ly/3Qh9V2l

WHERE AND WHEN

The House is out for the August recess and will return to Washington on Sept. 13. The lower chamber could convene later this month, pending Senate action.

The Senate convenes on Saturday at noon and will resume consideration of the motion to proceed to the reconciliation package.

The president will receive the President’s Daily Brief at 10:30 a.m. Biden will sign two pieces of legislation targeting COVID-19 small business relief fraud.

Vice President Harris at 3 p.m. will speak to Latina state legislators from Kansas, Arizona, Utah, Nevada, Illinois, New York and Texas from her ceremonial White House office about administration efforts to protect reproductive rights.

Secretary Blinken is in Phnom Penh, Cambodia, Friday and will next travel to Manila, Philippines, for meetings with President Ferdinand Romualdez Marcos Jr. and Secretary of Foreign Affairs Enrique Manalo.

HHS Secretary Xavier Becerra heads to Leominster, Mass., for a 9 a.m. roundtable event at Growing Places, a grassroots nonprofit focused on food insecurity. The secretary will be joined in a discussion about nutrition, Black maternal health and reproductive care by Rep. Jim McGovern (D-Mass.). Becerra at 1:30 p.m. will be in Boston’s Codman Square Health Center for a roundtable discussion about health and reproductive rights, accompanied by Rep. Ayanna Pressley (D-Mass.) and Boston Mayor Michelle Wu (D).

Economic indicator: The Labor Department at 8:30 a.m. will report on U.S. employment in July. A job market slowdown is anticipated (The New York Times).

The White House daily briefing is scheduled at 2 p.m.

🖥 Hill.TV’s “Rising” program features news and interviews at http://digital-stage.thehill.com/hilltv, on YouTube and on Facebook at 10:30 a.m. ET. Also, check out the “Rising” podcast here.

ELSEWHERE

➤ INTERNATIONAL

Russian forces have ratcheted up attacks on Ukrainian defenses in the eastern part of the country even as their overall assault has slowed to a crawl (The New York Times).

In Ukraine, the largest nuclear power plant in Europe is in dire condition and poses a hazard, according to the head of the United Nations nuclear agency. Conditions at the Zaporizhzhia nuclear plant in the country’s southeast are “out of control,” Rafael Mariano Grossi said during an interview this week. “What is at stake is extremely serious and extremely grave and dangerous,” he said (The New York Times).

The Bank of England on Thursday raised interest rates by the most in a quarter-century even as it predicted the U.K. economy will fall into recession later this year, underscoring global central banks’ urgency in fighting a surge in inflation. The rate increase to 1.75 percent from 1.25 percent was the largest since 1995 and the first half-point increase since the bank was granted independence in 1997. The move mirrors recent rate hikes by the Federal Reserve and the European Central Bank (The Wall Street Journal).

Despite Germany’s plans to break away from nuclear power, conservatives in the country are pushing to reverse that aim (The New York Times).

In Chile, an enormous sinkhole in the vicinity of a copper mine appeared in the desert and is under investigation by geological experts (CBS News).

➤ PANDEMIC

As soon as this week, the CDC is expected to ease its COVID-19 guidance, including for schools. The updated recommendations are expected to ease quarantine advice for people exposed to the virus and to de-emphasize 6 feet of social distancing as a precaution for the virus, which spreads through the air (CNN).

🦠 House Budget Committee Chairman John Yarmuth (D-Ky.) announced on Thursday on Twitter that he tested positive for COVID-19 and has mild symptoms (The Hill).

Total U.S. coronavirus deaths reported as of this morning, according to Johns Hopkins University (trackers all vary slightly): 1,032,820. Current average U.S. COVID-19 daily deaths are 377, according to the Centers for Disease Control and Prevention.

➤ COURTS, RIGHTS & LAW

The Supreme Court’s June ruling expanding gun rights threatens to upend firearms restrictions across the country as activists wage court battles over everything from bans on AR-15-style guns to age limits. Gun laws may be dramatically reshaped in the U.S. as a result of the high court’s decision. The Associated Press explores how states are proceeding in response.

The Justice Department on Thursday filed civil rights charges against four Louisville police officers over the drug raid that led to the death of Breonna Taylor, a Black woman whose fatal shooting helped fuel the racial justice protests of 2020. The charges are another effort to hold law enforcement accountable for the killing of the 26-year-old medical worker after one of the officers was acquitted of state charges earlier this year (The Associated Press).

A jury on Thursday ordered far-right Infowars broadcaster Alex Jones to pay $4.1 million to the family of a 6-year-old boy killed in 2012 at Sandy Hook Elementary School in Connecticut, compensating them for pain and suffering after Jones repeatedly claimed the mass shooting, which killed 20 school children and six adults, was a hoax. Scarlett Lewis and Neil Heslin, whose son Jesse died, had sought $150 million for defamation and intentional infliction of emotional distress. The jury will also decide whether to award punitive damages. The panel will hear testimony on that subject today (NBC News and The Associated Press).

To fund her 2020 reelection bid, former Puerto Rico Gov. Wanda Vázquez Garced took bribes from a banker and a former FBI agent, according to Justice Department charges on Thursday, and promised something to banker and backer Julio Martin Herrera Velutini in return. In February 2020, Vázquez Garced demanded the resignation of an agency head and appointed a new director favored by the banker a few months later, according to the federal indictment. She lost her race in 2020 (The Washington Post).

➤ STATE WATCH

Republican governors in Texas and Arizona have caused havoc up the East Coast by busing migrants out of their states for asylum and immigration processing elsewhere. Many undocumented immigrants are ending up in homeless shelters, on the streets or in the hands of Washington, D.C., and New York City service providers and local charitable organizations. Officials have asked the Biden administration to intervene in what D.C. Mayor Muriel Bowser (D) has described as an emerging humanitarian crisis. She recently asked for National Guard intervention (The New York Times).

The Hill: Kentucky is expected to face enormous costs after recent devastating floods.

THE CLOSER

👏👏👏 Kudos to our Morning Report Quiz masters! We were in search of smart guesses about swaps and trade this week, and alert readers came through.

Here’s the Friday winners’ circle as August begins: Kathleen Kovalik, Brent Tracy, Terry Pflaumer, Jaina Mehta, Jane Heaton, David T. Johnson, Pam Manges, Jeremy Serwer, Daniel Bachhuber, Candi Cee, Larry Cutlip, Richard E. Baznik, Stanley Wasser, Patrick Kavanagh, Robert Bradley, Harry Strulovici, David J. Anderson and Steve James.

Baseball experts this week described the Washington Nationals’s trade of Juan Soto to the San Diego Padres as a monumental midseason event because he’s the first player 23 or younger to be traded in-season in a year when he was an All-Star. Plus, Soto has been heralded as baseball’s best hitter with the potential to be an all-time great with the change in teams. Thus, the answer we were looking for was “all of the above.”

China on Wednesday blocked the export of sand to Taiwan among other retaliatory responses to register its opposition to the visit by Speaker Nancy Pelosi to the independent island.

The administration wants to swap imprisoned WNBA star Brittney Griner and former Marine Paul Whelan, both held in Russia, reportedly for Russian arms dealer Viktor Bout, who has been behind bars in Illinois since 2012. Bout’s nickname (among possible options) is “Merchant of Death,” according to press accounts.

The Razoni became the first ship this week since the onset of Russia’s war with Ukraine to be able to transport exported grain (corn) out of a Ukrainian port.

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