Morning Report — Government funding deal on thin ice

by Alexis Simendinger and Kristina Karisch - 01/12/24 6:28 AM ET

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Congress is staring down yet another government shutdown deadline, and a deal is looking further and further out of reach.

Senate Majority Leader Chuck Schumer (D-N.Y.) said Thursday it’s “crystal clear” that Congress won’t be able to pass the regular spending bills by the Jan. 19 deadline, and he announced that senators will instead vote next week on a short-term funding measure to avoid a government shutdown (The Hill).

“The most immediate need in the calendar is avoiding a government shutdown and fully funding the government for fiscal year 2024,” he said, warning: “A shutdown is looming over us.”

The procedural move would buy congressional leaders some time to hammer out a deal, a task that’s looking increasingly complicated as hard-line House conservatives balk at the proposed spending numbers. Speaker Mike Johnson (R-La.) was among four bipartisan congressional leaders who endorsed an agreement Sunday establishing the top-line numbers dictating the funding for federal agencies through the remainder of fiscal 2024, which ends on Oct. 1. The White House is also on board.

A LATE PUSH FROM HOUSE CONSERVATIVES to get Johnson to back out of a just-announced top-line spending deal with Democrats is frustrating Republicans on both sides of the Capitol. Members of the Freedom Caucus and other conservatives derailed unrelated legislation on the House floor in a protest vote Wednesday. On Thursday, those same members allowed the leadership’s floor agenda to get back on track — but only after they buttonholed Johnson to try to get him to renegotiate the bipartisan spending deal to seek deeper cuts (The Hill).

“That’s pretty nasty. It’s ridiculous,” Rep. Greg Murphy (R-N.C.) said, noting that the same members have continually complained about spending deals over the past year. “At some point when you have people complain all the time, it’s like crying wolf. It just lacks credibility anymore.”

Backing out of the deal would throw massive uncertainty into how Congress will avoid a government shutdown ahead of the Jan. 19 and Feb. 2 funding deadlines — and through the rest of the fiscal year that ends on Sept. 30 (The Hill).

“Good luck,” Sen. Lisa Murkowski (R-Alaska) said with apparent sarcasm regarding the effort. “I mean, the House is going to have to do what the House is going to do, but agreement has been reached, and let’s, let’s move on.”

Sound familiar? Similar procedural blocks paved the way for the eventual ouster of Johnson’s predecessor, former Speaker Kevin McCarthy (R-Calif.) and Freedom Caucus members have signaled their willingness to boot Johnson, too (The Hill and Roll Call).

The Hill: Democrats reject Johnson’s border demands as part of Ukraine aid package.

🚆Schumer must also decide what to do about the long-stalled rail safety bill sponsored by Sen. Sherrod Brown (D-Ohio). Brown faces a tough reelection, and his winning or losing could make or break the Senate Democratic majority, The Hill’s Alexander Bolton reports, and the bill’s passage would be a major victory for the three-term senator. But Schumer hasn’t been able to find floor time for the measure, which faces significant opposition from the rail industry.

3 THINGS TO KNOW TODAY

▪ Ukraine will receive $3.2 billion in additional assistance from the United Kingdom for long-range missiles, air defense, artillery ammunition and maritime security as Prime Minister Rishi Sunak visits Kyiv today.

▪ The Federal Aviation Administration will probe whether Boeing failed to ensure that certain aircraft it built were safe for operation, the government said Thursday. The Alaska Airlines midair blowout investigation has expanded to include Spirit AeroSystems, the Boeing supplier.

▪ A Seattle company filed a lawsuit against Boeing on behalf of six named passengers and “all others similarly situated,” who were aboard the plane, alleging “the event physically injured some passengers and emotionally traumatized most if not all aboard.”

MIDDLE EAST: An alliance led by the United States and the U.K. calls it self defense. Analysts this morning, however, also point to a widening conflict in the Middle East with Thursday’s air strikes against the Iran-backed Houthi rebels in Yemen.

It’s the first time the U.S. has carried out direct, offensive military action against the Houthis since the rebel group began attacking dozens of merchant ships in the Red Sea in late November, threatening to ignite a regional conflict over Israel’s war on Hamas, which the Biden administration and its allies have been trying to calm for weeks (The Hill). The strikes were launched from air, surface, and sub-surface platforms, a senior military official told reporters. The attacks left at least five people dead and wounded six others, a Houthi military spokesperson said Friday (CBS News).

American-led air and naval attacks occurred after warnings to the Houthis of serious consequences if rebel attacks persisted against ships in the commercially important Red Sea. President Biden Thursday called the response a “clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation in one of the world’s most critical commercial routes” (The New York Times).

To note: in 2021, among a deepening humanitarian crisis in Yemen, the Biden administration removed the Houthis from its terrorist list, reversing a Trump policy. The group’s removal from the list allowed the U.S. to provide Yemen, then at the brink of famine, with food and humanitarian aid.

▪ Politico: Inside Biden’s decision to strike the Houthis.

▪ BBC explainer: Who are the Houthi rebels and why are they attacking Red Sea ships?

▪ The Hill: What to know about Houthis, the Yemeni rebel group.

LEADING THE DAY

POLITICS

The Hill’s Niall Stanage, reporting from Iowa where suspense about Monday’s GOP caucuses seems more about dissecting a voter narrative than crowning the first-in-the-nation victor, finds some Iowa voters favor DeSantis’s record while others say they think Haley could bring Americans together..

A Thursday poll of Iowa voters found that while Trump maintains a dominant lead among Republicans, former South Carolina Gov. Nikki Haley leads over Florida Gov. Ron DeSantis, who has invested his presidential ambitions in the Hawkeye State. The Suffolk University poll of 500 likely caucus-goers found 54 percent named Trump as a first choice, followed by Haley at 20 percent, DeSantis at 13 percent and businessman Vivek Ramaswamy at 6 percent.

IOWA IS A NOTORIOUSLY POOR PREDICTOR of eventual presidential winners, although in 2024, Trump’s perceived dominance in the race could propel him almost seamlessly to the nomination. Of 11 competitive Democratic contests since 1972, the eventual nominee won Iowa seven times, while the eventual GOP nominee won just three of eight.

“Many caucus winners have failed to win the nomination, and many nomination winners have failed to win Iowa,” write Kyle Kondik and J. Miles Coleman of the University of Virginia’s Center for Politics.

Ahead in the New Hampshire GOP primary on Jan. 23, former U.N. Ambassador Nikki Haley faces steep hurdles to topple Trump even with a boost from former New Jersey Gov. Chris Christie’s decision Wednesday to drop out of the presidential race. But new polling suggests Trump’s support has ebbed since November in the Granite State while Haley picked up support. A Thursday Emerson College Polling/WHDH New Hampshire survey found Trump with 44 percent backing among Republican primary voters in New Hampshire, down from 49 percent in November.

Biden and Trump each tell voters there’s a lot at stake in November’s elections, writes The Hill’s Brett Samuels. Biden says democracy, truth and the character of the nation are at risk if he loses. Trump predicts “we’re not going to have a country” if Biden wins. In close campaigns, “one of the greatest motivators is fear,” added Sean Spicer, a former communications director and strategist for the Republican National Committee and Trump’s first White House press secretary.

TURNOUT IS KEY: Voter interest in the presidential race is higher among Republicans than Democrats, but the campaign has a long way to go. During Iowa’s quirky caucuses, attendance is key. Winter weather, conventional wisdom, savvy strategy and voter loyalty impact turnout.

There’s a blizzard warning in Iowa today through Saturday, with forecasts of high winds and temperatures that might barely warm to minus 5 degrees F and leave behind piles of snow, according to the National Weather Service.

Axios: Sub-zero temps and snow make turnout a wildcard at the Iowa caucuses Monday.

❄️ On Thursday while campaigning in Ankeny, Iowa, Haley told a crowd, “It’s going to be so cold. I don’t even know what negative 15 is. I was complaining that it was cold in Iowa in October.”

2024 ROUNDUP

▪ Democrats pounced on Trump’s Wednesday comments taking credit for Roe v. Wade’s reversal. He brought abortion back into the spotlight after the issue — widely blamed for GOP election losses — has somewhat faded from the public discourse surrounding the 2024 campaign cycle.

▪ Democrats fear independent candidate Robert F. Kennedy Jr. will damage Biden’s reelection chances — assuming the independent candidate can appear on enough ballots.

▪ Former Maryland Gov. Larry Hogan (R) stepped down as co-chair of No Labels last month, raising speculation about a potential third-party presidential campaign.

▪ Former Sen. Joe Lieberman (I-Conn.) said Thursday that he wants Christie to consider a third-party presidential bid with No Labels. When asked about No Labels in July, Christie called its effort “a fool’s errand.”

WHERE AND WHEN

The House meets at 9 a.m.

The Senate will convene for a pro forma session at 8:45 a.m.

The president will receive the President’s Daily Brief at 9 a.m. He will fly to the Allentown, Pa., area to meet with workers and residents at several small businesses to speak off-the-cuff about the economy and his policies, NBC News reports. (The swing into battleground Pennsylvania is billed as an official rather than campaign event, complete with a Bidenomics fact sheet.) Biden will return to the White House this evening.

Vice President Harris has no public schedule.

Secretary of State Antony Blinken is scheduled to meet at 10 a.m. with Liu Jianchao, Chinese international liaison department minister at the State Department, one day before Taiwan elections. The secretary will meet at 1:30 p.m. with Foreign Minister Kamikawa Yoko of Japan.

Second gentleman Doug Emhoff will be in New York City to speak at 7 p.m. at Sixth & I synagogue about interfaith collaboration during the “MLK Shabbat: Visions of Freedom and Justice” service.

Economic indicator: The Bureau of Labor Statistics at 8:30 a.m. will release the producer price index for December.

ZOOM IN

© The Associated Press / Patrick Post | The Hague in the Netherlands opened hearings Thursday into South Africa’s allegation that Israel’s offensive against Hamas amounts to genocide against Palestinians.

INTERNATIONAL

THE HAGUE: TODAY IS THE FINAL DAY of hearingsat the International Court of Justice for South Africa’s accusation that Israel has been carrying out genocide in Gaza. South Africa and demanded that the U.N.’s top court order an emergency suspension of Israel’s devastating military campaign in the Palestinian enclave, a response to Hamas attacks in Israel on Oct. 7. On Thursday, South Africa said Israel’s offensive, which has demolished much of the coastal enclave and killed more than 23,000 people according to Gaza health authorities, aimed to bring about “the destruction of the population” of Gaza. Tembeka Ngcukaitobi, advocate of the High Court of South Africa, told the court Israel’s political and military leaders, including Prime Minister Benjamin Netanyahu, were among “the genocidal inciters.”

Israel’s foreign ministry accused South Africa of “functioning as the legal arm of the Hamas terrorist organization” in a case built on “false and baseless claims.” If the ICJ decides to rule in the case, it could take months, and be preceded by several mandated preventive measures, such as cease-fires (The Hill and Reuters).

▪ NPR: Israelis are increasingly questioning what war in Gaza can achieve.

▪ The Economist: Israel has yet to destroy even half of Gaza’s tunnels.

▪ The Atlantic: The U.S. provided Israel with a detailed list of steps, symbolic and concrete, that would prevent the West Bank from becoming another front in the war.

🎧 The New York Times “The Daily” podcast, “The Threat of a Wider War in the Middle East,” with national security reporter Eric Schmitt, explores the risks to peace and efforts underway to avert that threat.

COURTS

Trump gave unexpected remarks in the courtroom Thursday at his civil fraud trial Thursday, slamming New York Attorney General Letitia James (D) and her case against his real estate empire. The civil lawsuit accuses the leading Republican presidential hopeful of deceiving banks and insurers by vastly inflating his net worth.

Trump’s statement came after his lawyer, Chris Kise, asked the court to reconsider his decision to allow the former president to speak. Judge Arthur Engoron asked Trump whether he could contain his statement to “relevant” material, and Trump launched into the speech (The Hill).

“This is a political witch hunt,” he said. “We should receive damages … for what they’ve taken this company through.”

Axios: Hunter Biden pleaded not guilty on Thursday to nine tax-related charges in a federal court in California.

ELSEWHERE

ECONOMY

The latest measure of inflation in December was a mixed-news report for anyone eager to end the nation’s jitters about high prices, which are still above what households remember from the pre-COVID era.

On the one hand, the inflation gauge of 3.4 percent on an annual basis in December, (released Thursday as the consumer price index), signals continued saner conditions for consumers, at least compared with 9.1 percent inflation in 2022. Economists see a robust jobs picture with unemployment at 3.7 percent and a soft landing with no recession on the horizon. But the inflation gauge rose slightly last month, complicating expectations and predictions.

Many Americans continue to say they’re downbeat about the economy, including painful prices for food, gasoline, utilities, clothing, auto insurance and housing.

Investors eager to see the Federal Reserve proclaim victory and begin cutting interest rates suspect they might have to wait longer than they hoped.

“This uptick in CPI is a critical reminder of the unpredictable nature of economic recovery and the murkiness of the macro-economic data,” Global X asset manager Jon Maier said in an analysis. “It suggests that investors might need to temper their expectations and remain vigilant.”

▪ The Wall Street Journal: Inflation edged up in December after rapid cooling in most of 2023.

▪ CNBC: Why the U.S. may extend its run as the world’s leading economy.

▪ CNBC: The U.S. government ran up another half a trillion dollars in red ink in the first quarter of its fiscal year (October through December 2023), the Treasury Department reported Thursday. The jump in the deficit pushed total government debt past $34 trillion for the first time. If the current pace continues, 2024 would end with a deficit of more than $2 trillion.

OPINION

■ The voters finally get their say, by Peggy Noonan, columnist, The Wall Street Journal.

■ The woman who believes in Jewish lasers is behind the impeachment of Secretary Mayorkas, by former Rep. Steve Israel (D-N.Y.), opinion contributor, The Hill.

THE CLOSER

And finally … 👏👏👏 Bravo to winners of this week’s Morning Report Quiz! We asked puzzlers about the first presidential nominating contests while thinking about Monday’s Iowa caucuses and the New Hampshire primary on Jan. 23.

Here’s who went 4/4: Harry Strulovici, Larry Anderson, Patrick Kavanagh, Luther Berg, Terry Pflaumer, Steve James and Jack Barshay.

They knew that the Iowa Democratic Party’s handbook uses a coin toss to resolve ties.

In 1976, then-Gov. Jimmy Carter finished second in the Iowa caucuses. “Uncommitted” came first.

By going door to door meeting New Hampshire voters, then-Sen. Estes Kefauver (D-Tenn.) pioneered the art of retail politics.

Six people will vote at midnight on Jan. 23 in Dixville Notch, officially kicking off the New Hampshire primary.

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