Good morning. Here’s your Daily SITREP for Wednesday, 15 November 2023.
- READ TIME: 5 Minutes, 47 Seconds
- Inside the Beltway
- (1) Democrats Bail Out Johnson on CR Vote
- (2) House Republicans Question EPA “Sue and Settle” Policy
- Domestic INTSUM
- (3) Federal Reserve Warns Congress of Banking Risks
- (4) Fink: Acceleration of Supply Chain Fragmentation
- (5) UAW to Target Foreign Car Makers in the South
- (6) New York Redistricting Case to Hand Dems More Seats
- (7) Outgoing Louisiana Dem Gov Wants Voting Districts Redrawn
- Global SITREP
- (8) U.S.-China Commission: China Has Tech to Track Our Subs
- (9) Erdogan: Designate Israeli Settlers as Terrorists
INSIDE THE BELTWAY
- (1) DEMOCRATS BAIL OUT JOHNSON ON CR VOTE: The House passed Speaker Mike Johnson’s (R-LA) “laddered” continuing resolution (CR) in a 336-95 vote, with 93 Republicans voting against.
- Rep. Matt Gaetz (R-FL) filed an ethics complaint against former Speaker Kevin McCarthy (R-CA) after a physical confrontation between McCarthy and Rep. Tim Burchett (R-TN) erupted ahead of the vote.
- Why It Matters: House Republicans are divided again, but so far, no Freedom Caucus Members have threatened a Motion to Vacate against Johnson. The Democrat-controlled Senate will likely pass the CR, and Biden is likely to sign it after walking back a veto threat on Monday. – R.C.
- (2) HOUSE REPUBLICANS QUESTION EPA “SUE AND SETTLE” POLICY: In a letter to Environmental Protection Agency (EPA) administration Michael Regan, Reps. James Comer (R-KY) and Pat Fallon (R-TX) said secretive “sue and settle” cases between environmental activists and the EPA have expanded under the Biden administration.
- Comer added that “sue and settle” litigation has “plagued the federal regulatory system for decades,” allowing special interest groups to dictate federal policy.
- Why It Matters: “Sue and settle” cases happen when an environmental activist group sues the EPA after the EPA misses a legal deadline to take action or review existing regulations, and the EPA settles with the activist group. This allows the EPA to circumvent Congressional oversight and environmental groups to impose desired environmental policies and collect tens of thousands in legal fees. – R.C.
- (3) FEDERAL RESERVE WARNS CONGRESS OF BANKING RISKS: Michael Barr, the Federal Reserve’s Vice Chair for Supervision, told the U.S. Senate Banking Committee on Tuesday that supervisory officials are focused on banking risks that could spread to the broader economy.
- Fed officials are “conducting targeted reviews at banks exhibiting higher interest rate and liquidity risk profiles and conducting focused training and outreach on supervisory expectations about these risks,” according to Barr.
- The central bank is also “monitoring for potential credit deterioration, particularly within the consumer and CRE [commercial real estate] lending segments,” Barr said.
- Why It Matters: Federal Reserve officials describe the U.S. banking system as “sound and resilient” with adequate capital and liquidity levels, but another round of regional bank failures – and even a broader financial crisis – is possible if interest rates remain high. – H.B.
- (4) FINK: ACCELERATION OF SUPPLY CHAIN FRAGMENTATION: “We’re going to see an acceleration of fragmentation of the supply chains because of geopolitical issues. As we advance AI [artificial intelligence] and robotics, there is such an enormous opportunity for nearshoring,” BlackRock CEO Larry Fink said.
- Why It Matters: BlackRock is the world’s largest asset management company, which gives Larry Fink unmatched insight into emerging investment and geopolitical trends. Companies supported by either government spending or the breakdown of globalization – and especially those supported by both trends – should perform well this decade. – H.B.
- (5) UAW TO TARGET FOREIGN CAR MAKERS IN THE SOUTH: During a Senate Health, Education, Labor, and Pensions (HELP) Committee hearing yesterday, United Auto Workers (UAW) Union President Shawn Fain said the UAW will now target foreign automakers with plants in the southern United States.
- Fain said decades of non-union auto companies “using fear, uncertainty, and division to break unions in our industry” are over, and UAW victories against GM, Ford, and Stellantis scared Honda and other automakers into offering raises to their employees.
- Why It Matters: The UAW is now looking to expand union building and possibly strike actions to foreign automakers on the heels of their success against the Big Three automakers. Other industry unions are watching the UAW’s actions and could move to implement similar strategies for contract negotiations, like the Teamsters and the Culinary Workers Union in Nevada. This is another step in expanding the Summer of Strikes into the winter. – R.C.
- (6) NEW YORK REDISTRICTING CASE TO HAND DEMS MORE SEATS: The New York Court of Appeals, the highest court in the state, will hear oral arguments in the Congressional redistricting case Hoffman v. Hochul today to decide if an independent panel will be required to redraw Congressional districts before the 2024 election.
- Former Rep. John Faso (R-NY) said the redistricting push is “a crass exercise in political power” and “has nothing to do with the public good.”
- Why It Matters: The 2022 New York Congressional map was slightly favorable to Republicans, allowing the GOP to pull off a five-seat flip during the midterm election. The Democrats will likely prevail in this redistricting case, as they have in Alabama and Louisiana, which will increase their lead heading into next year’s election and their chances of flipping control of the House. – R.C.
- (7) OUTGOING LOUISIANA DEM GOV WANTS VOTING DISTRICTS REDRAWN: Outgoing Louisiana Democratic Governor John Bel Edwards said he will call the state legislature into a special session to redraw Louisiana’s Congressional district map if federal Judge Shelly Dick refuses to extend the 15 January deadline for the new map.
- The 5th Circuit Court decision gave Judge Dick the “discretion to provide modest additional time” for the Louisiana legislature to redraw the district map to include two new majority black seats.
- Why It Matters: Outgoing Democrat Edwards argues that incoming Republican Governor-Elect Jeff Landry won’t have enough time to call his own special legislative session and redraw the map before the 15 January deadline. However, Edwards could be moving to prevent Landry and state Republicans from drawing a new map that, while required to include two black-majority districts, could tighten Republican control over the remaining Congressional seats. Edwards could also be concerned that Landry will delay the redistricting. – R.C.
- (8) U.S.-CHINA COMMISSION: CHINA HAS TECH TO TRACK OUR SUBS: According to the U.S.-China Commission’s latest report, China has all of the technological pieces to track the U.S. Navy’s submarine force.
- “AI advances in underwater vehicles, combined with accelerated Chinese research on satellite-mounted light detection and ranging (LiDAR) technology, could enable China to locate submarines at depths of up to 500 meters,” according to the report.
- The Navy uses a test depth of 2/3s maximum hull pressure, according to the Federation of American Scientists. The Ohio-class submarine has a disclosed test depth of 240m, meaning its entire operating depth would be visible.
- Why It Matters: China is rapidly closing its technology gap with the U.S. and has exceeded it in some ways. This revelation will likely push Congress for further military AI applications and restrictions on AI and associated technology exports. Of note, the report does not specify that the Chinese can track our submarines, but they have all the pieces to gain that ability. This does not mean the tracks have targeting quality data. Enemy ships would still have to use their own SONAR to target submarines. This technology could provide significant early warning for a blockade as the U.S. outclasses China in submarine technology and warfare. – J.V.
- (9) ERDOGAN: DESIGNATE ISRAELI SETTLERS AS TERRORISTS: Turkish President Recep Tayyip Erdogan said in a speech this morning that he will work on the international stage to ensure that Israeli settlers in the West Bank are recognized as terrorists.
- Erdogan added that if Israeli’s onslaught into Gaza continues, Israel will be denounced as a state-sponsor of terror due to the alleged genocide of Palestinians and war crimes.
- In his speech this morning, Erdogan also asked Israeli Prime Minister Benjamin Netanyahu if Israel had an atomic bomb, adding that he (Erdogan) believes Israel does have nuclear weapons.
- Why It Matters: Erdogan has previously called for a pan-Islamic response to the Israel-Hamas conflict, igniting concern that Islamic countries could agree to a military intervention against Israel. Erodgan’s pledge to pursue diplomatic pressure may cool fears of foreign military intervention in the near term, but labeling Israel as a terrorist state only supports a broader conflict. Increased diplomatic pressure from Jordan and Egypt, mounting civilian casualties in Gaza, and U.S. material support for Israel’s campaign could spur Hezbollah to open a second front along the Israeli-Lebanese border through a catastrophic attack. Historically, Hezbollah officials have publicly stated that Palestinian resistance against Israel is the only conflict that requires pan-Islamic jihad. Israel is in a no-win situation, as their goal to root out Hamas threatens to pull the U.S. and Middle East region into the conflict. – M.S.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge