The Hill’s Morning Report – Presented by Charter Communications – Dem wheels wobble on BBB train; Fed rate hikes in ’22

by Alexis Simendinger and Al Weaver - 12/16/21 6:26 AM ET

Presented by Charter Communications

Welcome to The Hill’s Morning Report. It is Thursday! We get you up to speed on the most important developments in politics and policy, plus trends to watch. Alexis Simendinger and Al Weaver are the co-creators. Readers can find us on Twitter @asimendinger and @alweaver22. Please recommend the Morning Report to friends and let us know what you think. CLICK HERE to subscribe!

Total U.S. coronavirus deaths each morning this week: Monday, 797,348; Tuesday, 798,710; Wednesday, 800,473; Thursday, 802,511.

Not even Santa Claus can satisfy the Democratic Christmas wishlist as their hopes to pass the Build Back Better package or a voting rights proposal by next week’s holiday were dimmed significantly on Wednesday.

Talks between top Democrats and Sen. Joe Manchin (D-W.Va.) are on the verge of cratering, all but ensuring that the party’s nearly $2 trillion social spending and climate bill will not be passed by Christmas, a self-imposed goal of Senate Majority Leader Charles Schumer’s (D-N.Y.). As The Hill’s Alexander Bolton details, at issue is the Democratic effort to extend the child tax credit for one year.

Instead, Manchin is proposing the idea of extending the credit for multiple years so that the proposal, which is likely to be extended by Congress in the future, is fully reflected in the Build Back Better bill, which is now officially projected to cost roughly $2 trillion over the next decade.

“Manchin is trying to back out of a deal with the White House,” said one Democratic source familiar with the negotiations between President Biden and Manchin. “Manchin earlier agreed to a one-year extension of the child tax credit. They shook on it.”

Extending the expanded child tax credit for ten years would cost $1.6 trillion, according to the Tax Foundation, which would nearly equal the entire cost of the colossal package as drafted by the House.

Manchin also showed signs of boiling over on Wednesday. At one point, the moderate member railed at a reporter, calling him “bullshit” after being asked to confirm the child tax credit-related spat with the White House.

“This is bullshit. You’re bullshit,” Manchin yelled at Arthur Delaney, a reporter for HuffPost, adding “I’m done, I’m done” as his voice rose (The Hill).

Despite the Democratic appetite for the tax credit, one possibility that is likely not in the cards is a standalone bill to deal with it. Speaker Nancy Pelosi (D-Calif.) on Wednesday downplayed the odds of that taking place saying that she was not going to “let anybody off the hook” by nixing it from the Build Back Better bill (The Hill).

“I think that this is called the legislative process. And we have our rules, then they have their rules. I’m not going to have a post-mortem on something that hasn’t died. I think we will have legislation that will pass.” Pelosi said of the status of the multi trillion-dollar proposal.

Upshot: A Christmas deadline was set after Democrats initially floated an unrealistic deadline of Halloween. Flashback: Remember this? Now, the question is: Can the party pass anything this big by the end of January? Even that seems like a high hurdle, some Democrats say privately.

The Wall Street Journal: Democrats’ $2 trillion package stalls as Manchin talks make little headway.

The New York Times: Democrats ready to punt social policy bill to 2022 as Manchin balks.

Politico: “Going very poorly”: Biden can’t nail Manchin down on Dems’ bill.

With passage of the Build Back Better agenda before next weekend likely not happening, Democrats turned their gears momentarily to the possibility of filibuster reform with the hopes of breaking a months-long stalemate on voting rights and election legislation (The Hill).

Key word: momentarily.

Those hopes were dashed hours later when Sen. Kyrsten Sinema (D-Ariz.) said in a statement that while she supports the elections bill in question, she will not consider doing away with the 60-vote threshold to advance it.

“Sen. Sinema continues to support the Senate’s 60-vote threshold, to protect the country from repeated radical reversals in federal policy which would cement uncertainty, deepen divisions, and further erode Americans’ confidence in our government,” a Sinema spokesman told The Hill.

Politico: Sinema pops Democrats’ filibuster trial balloon on voting rights.

The Hill: Senate approves $768 billion National Defense Authorization Act.

CNN: Biden says former Trump chief of staff Mark Meadows seems “worthy of being held in contempt” for failing to appear for an interview with the Jan. 6 committee.

The Washington Post: Role as former President Trump’s gatekeeper puts Meadows in legal jeopardy — and at odds with Trump.

The Hill: Schumer tees up nominations marathon as deal with Sen. Ted Cruz (R-Texas) elusive.

> Economy: The Federal Reserve is now two meetings away from ending quantitative easing this spring, after which interest rates may rise, Chairman Jerome Powell said on Wednesday (NBC News). The Fed board voted unanimously to wrap up its massive bond-buying program in half the time it initially anticipated, and projected three rate hikes in 2022 (The Hill).

“The extent to which they will be separated in time is something we haven’t really discussed,” he noted, referring to the Fed’s separate “tools” of accelerating its anticipated tapering and lifting interest rates.

“Inflation is more persistent and higher, and the risk of that remaining persistent and higher has grown,” Powell told reporters.

“This is a strong economy,” he emphasized, when asked about inflation and challenges in the labor market. Powell said he was not commenting on fiscal stimulus enacted last spring or spending policies proposed by the White House and Democrats in Congress. “It’s really not our role. It’s really important that we stay out of that business,” the chairman added.

During Trump’s term, Powell sidestepped commenting on the GOP Tax Cuts and Jobs Act beyond broad economic theory. By 2019, Trump publicly pressured the central bank to cut interest rates and underscored his displeasure with the chairman, telling The Hill during an interview that he had the power to fire him. Powell then gave a speech insisting the Fed would not let political considerations shape its efforts to foster maximum employment and stable prices. “The Fed is insulated from short-term political pressures — what is often referred to as our ‘independence,’” Powell said in June 2019. “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.”

On Wednesday, Powell denied that the Fed’s pivot to faster tapering was in any way related to the timing of Biden’s Nov. 22 announcement that Powell would be renominated for a term that begins in February. “Absolutely nothing to do with it whatsoever,” the chairman said.

Powell noted what he called unpredictable risks that could impact the U.S. economy, mentioning COVID-19 as one among many.

“Just one month after initiating the taper, they have doubled the pace of withdrawal in an effort to conclude by March so they can raise interest rates sooner,” Greg McBride, chief financial analyst at Bankrate, told NBC. “The omicron variant is a wild card for both Fed policy and the overall economy. Until there is greater clarity about transmissibility and possible economic fallout, the Fed has left themselves room to reverse course should it become necessary.”

A MESSAGE FROM CHARTER

We believe internet access for all means opportunity for everyone. That’s why we’re investing billions to extend our network to reach those who need it most.

LEADING THE DAY

CORONAVIRUS: Winter’s punch from delta and omicron, even with vaccine doses and therapeutic treatments, is surging the number of cases of COVID-19 across the United States at a time when many hospitals and those who care for coronavirus patients are stretched thin.

Deaths exceeding 800,000 and rising COVID-19 infections, even among the fully vaccinated, have contributed to public confusion and professional hand-wringing.

“Our delta surge is ongoing and, in fact, accelerating. And on top of that, we’re going to add an omicron surge,” said Jacob Lemieux, a medical professor and researcher who monitors variants for a research collaboration led by Harvard Medical School.

“That’s alarming, because our hospitals are already filling up. Staff are fatigued,” leaving limited capacity for a potential crush of COVID-19 cases “from an omicron wave superimposed on a delta surge,” he added (The Associated Press).

Omicron will not require a variant-specific booster vaccine, a prospect that would have opened the door to a fourth dose for some Americans, Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, told reporters on Wednesday. “Our booster vaccine regimens work against omicron,” he said. “At this point, there is no need for a variant-specific booster” (The Hill and Yahoo News).

The Hill: In a slender victory for the administration, the United States Court of Appeals for the 5th Circuit on Wednesday effectively revived in about half the country Biden’s vaccine mandate for health workers at hospitals that receive federal funding. The procedural ruling temporarily scaled back a nationwide injunction issued by a Louisiana-based federal judge last month.

Reuters: Preliminary evidence indicates that COVID-19 vaccines may be less effective against infection and transmission linked to omicron, which also carries a higher risk of reinfection, the World Health Organization said on Wednesday.

NPR: Two doses of Moderna’s COVID-19 vaccine were 50 times less effective against the omicron variant than were two doses of the original coronavirus strain, according to a new study made public on Wednesday based on laboratory blood samples from 30 people. The good news for anyone vaccinated who worries about breakthrough infection: Pfizer and Moderna booster doses are able to pump up antibodies against COVID-19, according to early research.

The Washington Post: Complications with the Johnson & Johnson COVID-19 vaccine tied to blood clots, which have contributed to nine deaths, are in the spotlight inside the Centers for Disease Control and Prevention, which is weighing possible limits on the vaccine’s use. The rare complications have appeared to affect young and middle-aged women and are the subject of an advisory panel meeting today.

> Diplomacy interrupted: Secretary of State Antony Blinken cut short his travels on Wednesday to return to the United States from Malaysia after a member of the traveling press corps tested positive for COVID-19. The decision to cut short the three-nation Southeast Asia tour took into account the potential of additional infections among the U.S. traveling party, which could have required quarantine in Asia over the Christmas holiday. The journalist who tested positive must stay in Kuala Lumpur for a mandatory 10-day isolation period (The Associated Press).

Reuters: Canada advises against international travel amid the omicron threat.

The Associated Press: Indonesia reacts to its first confirmed case of omicron. The affected hospital worker has no symptoms.

The United Kingdom on Wednesday broke its single-day record for new, confirmed coronavirus infections, seen as an alarm bell that omicron is racing through the population, especially in London (The New York Times). … France today will tighten restrictions for those traveling from the U.K. (Reuters). … European Union leaders want to keep borders open, but are conferring at a summit today about threats posed by omicron (The Associated Press).

> Sports & leisure: Omicron is also wreaking havoc on the sporting landscape as teams across the major sports deal with COVID-19 outbreaks, with threats of postponements and depleted rosters taking shape.

Reuters: From schools to sports, a new wave of COVID-19 disrupts American life.

The New York Times: New York University is the latest college to cancel events because of a surge of COVID-19 infections. Out of an abundance of caution, the university announced on Wednesday that all “nonessential” gatherings and events both on and off campus, including graduations, holiday parties, study groups and athletic competitions, are canceled.

The NFL on Wednesday announced 25 new positive cases among players, marking the third straight day of high totals for the league. Among the high-profile cases were Cleveland Browns head coach Kevin Stefanski and quarterback Baker Mayfield. However, NFL commissioner Roger Goodell said there are no plans to scuttle the Browns’ planned Saturday game against the Las Vegas Raiders.

“The thing that made us successful is keeping safety first. And second, being willing to adapt at all times,” Goodell said on Wednesday (Sports Illustrated).

In Toronto, new regulations rolled out by the Ontario province forced the Scotiabank Arena (home to the Toronto Raptors and Toronto Maple Leafs) to limit fan attendance to 50 percent, making it the first venue in the major North American sports leagues to reduce capacity in recent months (Sportsnet).

The New York Times: When the show doesn’t go on: Broadway is rattled by COVID-19 cancellations.

The Associated Press: New York’s Metropolitan Opera announced it will require ticket holders and staff to show proof of booster COVID-19 vaccine doses beginning on Jan. 17.

IN FOCUS/SHARP TAKES

ADMINISTRATION: Eyeing structures reduced to splinters by tornadoes, mountains of rubble where neighborhoods last week had sparkled ahead of Christmas, and the exhausted, grieving faces of Kentuckians shouldering profound loss, Biden on Wednesday said the federal government was there to help.

“I intend to do whatever it takes, as long as it takes, as long as it takes to support your state, your local leaders, as you recover and rebuild. Because you will recover and you will rebuild,” Biden said in Dawson Springs, Ky., after a briefing.

“I promise you, you’re going to heal. We’re going to recover, we’re going to rebuild. You’re going to be stronger than you were before. We’re going to build back better than it was,” he said (The Hill).

The president on Wednesday amended a major disaster declaration he issued on Sunday in order to increase federal funds for debris removal and emergency protective measures from 75 to 100 percent of the total eligible costs for a 30-day period from the date of declaration.

Kentucky Gov. Andy Beshear (D), who accompanied Biden during Wednesday’s stops, praised Washington’s response. The tornadoes, which mowed a 200-mile path, killed at least 88 people in five states on Friday into Saturday, and many people remain missing this morning.

CNN: Rep. James Comer, who represents the district that includes Mayfield and Dawson Springs, Ky., both walloped by tornadoes, was the lone Republican lawmaker to accompany Biden through the area on Wednesday.

> The Associated Press: Biden chose Caroline Kennedy to be U.S. ambassador to Australia; Victoria Kennedy, widow of the late Sen. Ted Kennedy (D-Mass.), to be ambassador to Austria; and former Olympian and U.S. figure skater Michelle Kwan to serve as his chief envoy to Belize. The three women were early Biden campaign supporters.

> The administration today released a plan to begin new regulation through the Environmental Protection Agency to remove dangerous lead water pipes nationwide while allowing a long stalled Trump administration rule to take effect (The Hill).

> The administration today announced efforts to add to the U.S. trucking workforce to address supply chain bottlenecks. More than 70 percent of the country’s freight is transported by trucks, according to government data (The Hill).

> Federal cyber security officials today warned business leaders in writing to be on guard against cyberattacks during the upcoming holiday season, noting that hackers are often more active when Americans are taking time away from work. The government issued similar warnings before Labor Day and the Thanksgiving holiday (The Hill).

The Morning Report is created by journalists Alexis Simendinger and Al Weaver. We want to hear from you! Email: asimendinger@digital-stage.thehill.com and aweaver@digital-stage.thehill.com. We invite you to share The Hill’s reporting and newsletters, and encourage others to SUBSCRIBE!

OPINION

The Jan. 6 committee has a vital mission, but it may not pay political dividends for Democrats, by Karen Tumulty, columnist, The Washington Post. https://wapo.st/3EZKBrH

Hawkish Fed talk, dovish action, The Wall Street Journal editorial board. https://on.wsj.com/3DZdnHC

A MESSAGE FROM CHARTER

We believe internet access for all means opportunity for everyone. That’s why we’re investing billions to extend our network to reach those who need it most.

WHERE AND WHEN

The House meets at 11 a.m. for a pro forma session.

The Senate convenes at 10 a.m.

The president will receive the President’s Daily Brief at 9:30 a.m. Biden at 1:30 p.m. will award the Medal of Honor to soldiers who served with conspicuous combat gallantry in the Iraq and Afghanistan wars: Army Sgt. 1st Class Alwyn C. Cashe, Army Sgt. 1st Class Christopher A. Celiz and Army Master Sgt. Earl D. Plumlee (The Washington Post). Vice President Harris will attend the event.

The vice president will speak at the AFL-CIO building at 9:55 a.m. about the infrastructure law accompanied by Environmental Protection Agency Administrator Michael Regan. Harris will join the president and advisers at 3 p.m. for a COVID-19 and omicron briefing in the Roosevelt Room. At 4:20 p.m., she will ceremonially swear in Brian Nelson as Treasury Department under secretary for terrorism and financial crimes.

First lady Jill Biden will appear on MSNBC’s “Morning Joe.”

The White House press briefing is scheduled at 3:15 p.m.

Hill.TV’s “Rising” program features news and interviews at http://digital-stage.thehill.com/hilltv or on YouTube at 10:30 a.m. ET at Rising on YouTube.

ELSEWHERE

➜ INTERNATIONAL: North Koreans have been executed for watching K-pop videos, according to rights organization Transitional Justice Working Group (The New York Times).

➜ CRIME & PUNISHMENT: Former Minnesota police officer Derek Chauvin pleaded guilty on Wednesday to federal charges of violating the civil rights of George Floyd in his murder. The plea averts a federal trial but likely extends Chauvin’s prison sentence (The Associated Press). … San Francisco Mayor London Breed (D), in office since 2018, on Tuesday launched an emergency police crackdown on criminal activity on the city’s streets (CBS Local). “It’s time the reign of criminals who are destroying our city, it is time for it to come to an end,” she said. “And it comes to an end when we take the steps to be more aggressive with law enforcement. More aggressive with the changes in our policies and less tolerant of all the bullshit that has destroyed our city.” Residents, businesses and tourists have complained for years about homelessness, open-air drug use, thefts and other crimes. “In recent months we’ve not only seen a number of high-profile incidents of brazen robberies and car break-ins but also street behavior and criminal activity especially in the Tenderloin that has become far too normal and cannot continue to be tolerated,” Breed said.

➜ TECH: Zoom, the video conferencing juggernaut that has exploded during the pandemic, joined The Global Internet Forum to Counter Terrorism, an independent counterterrorism group that shares information among major tech companies to combat violence and extremism. The forum was founded by Facebook, Microsoft, Twitter and YouTube in 2017 and now has 18 members. Among those are WhatsApp, Pinterest, Dropbox, Discord and Amazon (Reuters).

THE CLOSER

And finally … It’s Thursday, which means it’s time for the Morning Report Quiz! Inspired by the public’s grasp of fun in 2021, we’re eager for some smart guesses about things Americans loved this year.

Email your responses to asimendinger@digital-stage.thehill.com and/or aweaver@digital-stage.thehill.com, and please add “Quiz” to subject lines. Winners who submit correct answers will enjoy some richly deserved newsletter fame on Friday.

Among hundreds of enticing recipes published in 2021 by The New York Times, the most popular (most viewed) was which?

Pesto Pizza
Kimchi Jjigae
Glazed Tongue
Extra-creamy Scrambled Eggs

Which of these TV series continued to be addictive among viewers this year (especially this week), judging by enthusiasm on social media, from entertainment reviewers and audiences? (Hint: Another season is coming.)

“Succession” (HBO)
“Viva Laughlin” (CBS)
“Sex/Life” (Netflix)
“Call Your Mother” (ABC)

Americans love their pups, especially during a pandemic. In 2021, Bella was the most popular name for female dogs and Max for males, but which of these doggie names also proved infectious, according to recently published research by a canine-devoted website?

Fauci
Covid
Zoom
All of the above

Annual toy trends showcase the cultural milieu surrounding U.S. kids (and their parents). Which of these is among 10 runaway holiday favorites this year, according to a recent news account about popular toys?