House Speaker Mike Johnson and Senate Majority Leader Chuck Schumer struck a deal on top-line funding levels for the rest of fiscal 2024 as the threat of a partial government shutdown loomed. In making the agreement, Johnson will incur the wrath of his right flank and may have put his Speakership in jeopardy. The first voters will weigh in on the 2024 Presidential nominating contest this month. There are numerous legal challenges in over a dozen states to prevent Trump from appearing on the primary and general election ballot. The latest inflation numbers complicate the picture for rate cuts in the first quarter of 2024. The situation along America’s southern border with Mexico is a humanitarian catastrophe and a policy and political headache for President Biden. US Supreme Court Chief Justice John Roberts released his end-of-year report, noting the perils and promise of technology, and omitting the role the Court may play in the 2024 election.
Members of the US House of Representatives and Senate returned to Washington following the Christmas and New Year break to a government funding fight with just days remaining before the first of two funding deadlines and the looming prospect of a partial government shutdown. In a move defying his right flank, House Speaker Mike Johnson agreed to a top-line spending deal with Senate Majority Leader Chuck Schumer to fund the federal government for the rest of fiscal year 2024 in accordance with the the statutory levels of the Fiscal Responsibility Act (FRA). Under the agreement, Congress will appropriate $1.590 trillion for fiscal 2024, $886 billion for defense and $704 billion for nondefense. Until now, the House and Senate had been far apart in how they had marked up their respective spending bills, with the House passing bills below FRA levels and the Senate marking up bills above FRA levels. Now that there is a top-line agreement, the two chambers can work to reconcile those differences in the underlying legislation and pass appropriations before the funding deadlines. In order to allow time for apprioriators two write and pass their respective measures, Johnson unveiled a new short-term spending plan—another “laddered” continuing resolution (CR) to move the pair of short-term funding deadlines to March 1 and March 8. A handful of House Republicans have already expressed their opposition, a block that is expected to grow into the dozens. Ninety three Republicans voted against Johnson’s two-tier spending plan last year and, amid fierce backlash, Johnson promised conservatives at the time that he wouldn’t use put forward another short-term government funding bill.
This scene is very similar to the circumstances that led to former Speaker Kevin McCarthy’s outster, Johnson’s predecessor. Given that there is a block of hard-right Republicans on the House Rules Committee who would prevent the CR from going forward under regular order, Johnson must bring the measure up under a procedure called “suspension of the rules.” This procedure requires that legislaiton has 2/3s support in order to pass—as such, Johnson will have to rely on Democrats to pass the measure. Last fall, McCarthy faced a similar government funding deadline and used the same procedural meneavour to pass a CR. Republicans, led by Matt Gaetz of Florida, wanted to use a potential shutdown to insist on large spending cuts and McCarthy lost his job, mostly as punishment for working with Democrats to pass a bill keeping the government open. It takes only one Member of Congress to call for a motion to vacate the chair and some House Republicans have already called for Johnson’s sacking—with a 220 to 213 majority, Johnson’s hold on the Speakerhsip is exceptionally fragile.
The 2024 Presidential contest is officially underway. On January 15, Iowans braved historically low temperatures to pick their Republican presidential nominee and ignite the 2024 White House race. Former President Doland Trump has been the clear front-runner in the Hawk-eye state and finished first with more than 50 percent of the vote, far surpassing the previous record of margin of victory for a non-incumbent Republican candidate. Ron DeSantis and Nikki Haley were battling to finish second and came in with 21 and 19 percent, respectively. Days prior to the caucuses, former New Jercey Governor Chris Christie suspended his campaign and, after finishing a distant fourth in Iowa, Vivek Ramaswamy followed suit, dropping out of the race and endorsing Trump.
Next on the horizon will be the New Hampshire primary on January 23—Trump currently enjoys a 21% advantage in the RealClearPolitics average of polls, but some polls have Nikki Haley within striking distance. President Biden is not on the primary ballot in New Hampshire, after the Democratic National Committee overhauled its calendar to put South Carolina first instead. As such, Democrats expect low turnout for their own contest. ABC and CNN have more scheduled debates right before the vote, on Thursday January 18 and Sunday January 21, respectively.
Beyond January, South Carolina Democrats will hold their primary on February 3. In Nevada, the presidential primary will be on Tuesday, February 6 and Republicans, ignoring the non-binding primary results, will hold a caucus there on February 8. This portends some drama and confusion as Haley is the only active candidate on the Tuesday ballot; she didn’t file for the caucuses, but Trump, DeSantis, and Vivek Ramaswamy did. The 50th annual Conservative Political Action Conference (CPAC) will be held just outside Washington Febuary 21-24—once a required stop for Republican politicos, CPAC has come under scruitny due to a sexual misconduct lawsuit incolving it’s chair, Matt Schlapp, and the costs associated with the confab. On February 24, South Carolina Republicans will hold their primary—while Haley’s extensive ties to the state as a former governor would lead many to think she would be a very strong candidate, the RealClearPolitics average of polls shows Trump with a commanding lead. Michigan is set to hold its earliest primary in years, on February 27. Following the January-February gauntlet all eyes will be on Super Tuesday, March 5, which effectively ended the last presidential primary and where voters in over a dozen states will head to the polls.
While we know the primary dates, ballot deadlines, and convention schedules, what is still unclear is Trump’s legal calendar. At present, the federal case in Washington, D.C. charging the former president with trying to overturn the results of the 2020 election is set to start on Monday, March 4 and a number of other trial dates are to be determined. There are also efforts in a number of states to prevent Trump’s name from being on the ballot (see next section).
As 2023 drew to a close, two states found that former President Donald Trump is disqualified from holding public office under section 3 of the 14th Amendment, a 155-year-old constitutional provision enacted after the Civil War. Specifically, the disqualfication clause provides that:
“No Person shall be a Senator or Representative in Congress, or elector of President and VicePresident, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.”
In short, Section 3 disqualification appears to apply to any covered person who has taken an oath to uphold the Constitution of the United States and thereafter either (1) engages in insurrection or rebellion against the United States or (2) gives aid or comfort to the enemies of the United States. On December 19, in a 4-to-3 ruling, the Colorado State Supreme Court found that Trump should not be allowed to appear on the primary ballot because he engaged in insurrection; they did not address the question of the general election. The Colorado Republican Party subsequently asked the United States Supreme Court to hear an appeal of the decision. In Maine, Secretary of State Shenna Bellows said that Trump did not qualify for the ballot because of his role in the January 6 attack on the Capitol and that his actions that day, and in days prior, incited an insurrection and he was thus barred from seeking the presidency again under Section 3. Trump has since challenged the decision. Hours after the Maine announcement, the California Secretary of State said that Trump would remain on the ballot—election officials have limited power to remove candidates in the nation’s most populous state. Courts in Michigan and Minnesota have found that election officials cannot prevent Trump from appearing on Republican Party primary ballots, but left the door open to challenges to bar him from appearing on the general election ballot. Legal challenges to Trump’s eligibility under the measure have been brought in federal and state courts in more than two dozen states; while some have been dismissed, there are active challenges in Alaska, Arizona, Florida, Louisiana, Nevada, New Hampshire, New Mexico, New York, North Carolina, Oregon, South Carolina, Texas, Vermont, West Virginia and Wisconsin. The US Supreme Court is widely expected to take up the issue, and experts say the scope of the decision would determine if the challenges are quickly handled or play out for months.
The latest Consumer Price Index (CPI), a key inflation reading released by the Department of Labor, indicated that prices went up 0.3% on the month and 3.4% from a year ago, a tick higher then the 0.2% reading economists had expected amid an easing of inflationary pressures. The November data showed CPI rose 0.1% from the previous month and 3.1% from the year-ago period. The slightly higher inflation rate has challenged the market’s pricing of rate cuts starting in the first quarter of 2024 and the Federal Reserve may remain a bit more hawkish and policymakers are not likely to change interest rates when they meet later this month. Fed officials anticipated at least three rate cuts this year at their December meeting but New York Fed president John Williams said in a speech earlier this month that rate cuts will only be in play once the central bank is sure inflation is cooling. Overall, the progress made on inflation has been impressive and price pressures have fallen faster than expected in 2023, but we are still not at the Fed’s 2% target rate. The rapid cooling of inflation has raised hopes of a soft landing, where inflation can be tamed without a surge in unemployment or a recession. Nevertheless, Atlanta Federal Reserve President Raphael Bostic recently warned that inflation could “see-saw” if policymakers cut interest rates too soon and that such a scenario “would undermine people’s confidence in where the economy is going.”
The situation along America’s southern border with Mexico is a political and humanitarian catastrophe. According to preliminary data from the Department of Homeland Security, border authorities encountered more than 225,000 migrants along the US-Mexico border in December, overwhelming already-stretched resources. There have been over 2.5 million encounters along the southern border in 2023, a new historic high. Earlier in December, senior US officials met with Mexican President Andrés Manuel López Obrador to address the root causes of the migration crisis and urged Mexico to take new enforcement actions to reduce the number of border crossings—the meetings came as Congress has been unable to reach a consensus on funding border security. A bipartisan group of Senators has been working for months to craft a deal over border policy changes that would also unlock funding for Ukraine and Israel. While negotiations among the Senators and the White House are ongoing, and those involved cite “progress,” there are serious difficulties in getting an agreement, not the least of which is the Republican-led House of Representatives. House Speaker Mike Johnson (R-LA), who recently led a delegation of over 60 House Republicans to the southern border, has effectively said that he won’t accept anything less than H.R. 2, the hardline House-passed GOP border and immigration bill. Senate Majority Leader Chuck Schumer has indicated that H.R. 2 would never pass the Senate and that he would not even bring it up for a vote. This stalemate will be difficult to reconcile, and, in essence, border security and immigration policy are holding assistance for Ukraine hostage.
US Supreme Court Chief Justice John Roberts annual end-of-year report on the federal judiciary was notable for what was included, as well as what was omitted. Roberts devoted significant attention to the perils and promise of artificial intelligence, predicting that the judicial system “will be significantly affected by AI.” Roberts also praised the efficiency gains provided by the technological innovations the courts adopted during the coronavirus pandemic, including holding hearings by videoconference—but the Chief Justice chose not to mention the Court’s cybersecurity practices, a matter that came under scrutiny following the 2022 publication of a draft opinion overturning the landmark Roe v. Wade decision. Strikingly absent from the report were the ethics controversies that have plagued several Supreme Court justices, leading to calls for new ethics requirements for those serving on the bench. Additionally, Roberts did not even make a passing mention to the significant role the court is set to play in the 2024 presidential election, including Trump’s immunity-from-prosecution claim and efforts in several states to prevent Trump from appearing on the ballot (see previous section).
Department of Defense – Former US Ambassador to Israel Dan Shapiro is now the Deputy Assistant Secretary of Defense for the Middle East.
Department of Health and Human Services – Stacy Sanders is now Counselor to the Secretary and Chief Competition Officer.
Department of Justice – Christopher Charles Fonzone is now the Assistant Attorney General in the Office of Legal Counsel.
Department of the Interior – Melissa A. Schwartz is now Senior Counselor to the Secretary.
Department of State – Special Presidential Envoy for Climate (SPEC), former Secretary of State John Kerry is leaving the administration to help with Biden’s campaign. The following Ambassadors have been confirmed by the Senate: Tobin Bradley for the Republic of Guatemala; Lisa Johnson for the Lebanese Republic; and Elizabeth H. Richard as Ambassador-at-Large and Coordinator for Counterterrorism.
Federal Trade Commission – Hannah R. Garden-Monheit is the director in the Office of Policy Planning. Sarah Miller in now the Chief of Staff to the Chair.
Social Security Administration – Former Maryland Governor Martin J. O’Malley was confirmed as Commissioner.
United States Agency for International Development (USAID) – Paul K. Martin is now the Inspector General.
United States Trade Representative (USTR) – Nelson Cunningham is the nominee for Deputy USTR.
The White House – Dennis W. Cheng is now the Deputy Assistant to the President and Deputy Director of Political Strategy and Outreach in the Office of Political Strategy and Outreach. Jon Donenberg is now Deputy Assistant to the President for Economic Policy and Deputy Director and Advisor for Strategic Economic Communications in the National Economic Council staff. Jessica L. Kosmider is now Director for Strategic Communications in the National Security Council (NSC) staff. Laura F. Daniels is now Director for Western Europe at Europe and Russia on the NSC staff.
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