Patrick McHenry on Govt. Funding Vote, Kevin Warsh

Funding the Government & Federal Reserve Nominee: A Detailed Analysis

Key Concepts:

• Continuing Resolution (C.R.): A temporary funding extension allowing the government to continue operating when a full appropriations bill isn’t passed.
• Appropriations Bill: Legislation that allocates government funds to specific programs and agencies.
• DHS Funding: Funding for the Department of Homeland Security, currently a point of contention due to policy disagreements.
• Senate Banking Committee: A key committee responsible for overseeing financial institutions and nominees to the Federal Reserve.
• Bespoke Process: A highly customized and individualized process, particularly referring to White House negotiations for nominees.
• Macroeconomic Agenda: The overall economic goals and policies of a presidential administration.

I. Government Funding & DHS Bill – A Race Against Time

The discussion centers on the ongoing efforts to fund the government and specifically address the Department of Homeland Security (DHS) funding bill. The immediate challenge is avoiding a government shutdown. A two-week Continuing Resolution (C.R.) has been proposed, giving Congress a short window to finalize a longer-term solution. The speaker’s decision to recall House members on Sunday, rather than Monday, is viewed as strategically sound, allowing time for pressure to build and facilitate a “reasonable conclusion” to the vote.

The initial Senate package faced opposition from five Republican senators (Rand Paul, Mike Lee, and Ted Barrett), but these votes were primarily driven by broader concerns about government spending rather than specific issues related to ICE (Immigration and Customs Enforcement). The quick deal-making in the Senate – described as “lightning speed” – is commendable, demonstrating a willingness to compromise and maintain governmental function. However, the “sticky stuff” of fully funding DHS remains unresolved.

The two-week timeline, while seemingly short, is considered standard operating procedure in Washington, designed to concentrate pressure and limit the scope of policy riders attached to the funding bill. A deal is anticipated by Wednesday, Thursday, or Friday, with the alternative being a “disaster” for DHS. The process requires 60-80 votes in the Senate and a similar, though potentially more fractured, vote in the House, potentially excluding both the far-left and conservative dissidents.

II. Historical Precedents & The Art of the Deal

The current situation echoes past funding battles, specifically referencing Speaker Boehner’s negotiations with the Obama administration regarding DHS funding and immigration policy. The strategy employed then – passing a full government funding package with a continuing resolution for DHS – is being replicated.

The speaker highlights the importance of understanding the “art of the deal,” noting that the White House has historically been successful in getting nominees through a divided Senate, even those facing significant opposition. This suggests a confidence that President Trump will ultimately secure confirmation for his nominees.

III. The Warsh Nomination & Federal Reserve Independence

The conversation shifts to the nomination of Kevin Warsh to the Federal Reserve. Elizabeth Warren’s opposition is anticipated, with accusations of “flip-flopping” and being a “sock puppet” for the President. The key obstacle is securing votes within the Senate Banking Committee, which currently has a narrow one-vote Republican majority.

Senator Thom Tillis (R-TN) is identified as a crucial, and currently unyielding, vote. His retirement from the Senate gives him significant leverage, as he is not subject to political repercussions. He has stated he will not vote on any nominee until the investigation into Jay Powell concludes.

French Hill, the current Chairman of the House Financial Services Committee, expressed hope for a swift resolution to the investigation, framing it as a “distraction” hindering the President’s macroeconomic agenda. The speaker believes Tillis’s position will expedite the investigation’s conclusion.

The discussion suggests a potential scenario where a hearing is held for Warsh, but a vote is delayed until the investigation is complete. However, it’s unlikely the nomination will fail in committee, as that would not be in the interests of Republicans, Tillis, or the White House. The ultimate outcome is predicted to be a more independent Federal Reserve, with a clear statement affirming its independence from political interference.

IV. Jay Powell’s Position & Ongoing Negotiations

The speaker suggests that Jay Powell’s future at the Fed is also subject to negotiation. He frames this as part of the “art of the deal,” implying a potential trade-off or agreement.

V. House Dynamics & Senate Leadership

The speaker describes the House as currently “riding shotgun” – being reactive to the Senate’s actions. The Senate’s deal-making has put the House in a difficult position, and Monday will be a “rough day” for the Speaker as they navigate the fallout. Bloomberg News confirmed a House vote will take place on Monday.

Notable Quotes:

• “Time is a key element and pressure is a key element to have a solid House vote and the Speaker's managing that fairly well.”
• “A week's time in the Senate is is like lightning speed.”
• “This White House, interestingly enough, got all their nominees through to the cabinet, even the ones that that looked the most challenged…”
• “When you're riding shotgun, it means you're the crank yelling at the driver.” – Describing the House’s current position relative to the Senate.

Data & Statistics:

• Five Republican senators voted against the initial funding package.
• One-vote Republican majority in the Senate Banking Committee.
• Two-week Continuing Resolution proposed.
• 60-80 votes anticipated for a DHS funding mechanism in the Senate.

Conclusion:

The situation surrounding government funding and the Warsh nomination is complex and fluid. While a short-term solution (the two-week C.R.) appears likely, the long-term funding of DHS and the confirmation of Federal Reserve nominees remain uncertain. The key to success lies in continued negotiation, strategic pressure, and a willingness to compromise from all parties involved. The speaker’s analysis emphasizes the importance of understanding the unique dynamics of the legislative process and the “art of the deal” in Washington. The expectation is that, despite the challenges, a deal will be reached, and the Federal Reserve’s independence will be reinforced.