August Washington D.C. Preview

QUICK FIX — Moms for Liberty brings its annual celebration to Washington in August, as Republican organizations have sued to trip up the implementation of President Joe Biden’s Title IX regulations.   — Vice President Kamala Harris’ surprise ascension to the top of the Democratic ticket has scrambled how Wall Street CEOs are thinking about the presidential race.   — As crude oil prices drop, Republicans’ plan to use gas prices as a campaign weapon against Democrats seems to be fizzling. Agriculture — Progress on ag priorities stalls: The infighting among lawmakers on agriculture policy intensified in July, dousing hopes that Congress was finally making progress on the massive legislative package.   Last week saw House Agriculture Chair G.T. Thompson (R-Pa.) and Senate Agriculture Chair Debbie Stabenow (D-Mich.) trade scathing critiques on their farm bill approaches, starting with the Senate Ag Committee's Democratic staff releasing a new report bashing the House's farm bill draft, which Thompson shepherded through his committee in May. “Its investment is unbalanced and skewed heavily toward just a few of the tools that make up the broad farm safety net,” the report says of the House bill, which passed out of committee with the support of all the panel's Republicans as well as four Democrats.   Thompson responded in remarks at a committee hearing on July 23, blasting Stabenow as “a meddling Senate Democrat” who does “not seem to appreciate the dire circumstances in farm country.”   “She needs to stop criticizing our bill and actually write a bill,” Thompson added in a brief interview the same day.   Ag interests had expressed hope that the House Ag Committee’s approval of their bill would finally kick-start negotiations on the farm bill, which has been delayed for nearly a year. But the latest salvos between Stabenow and Thompson underscore the deep divides that remain in the farm bill talks — and growing frustrations between the two parties.   — Adding to the farm bill’s woes is the House’s failure to advance most of its appropriations bills before leaving for August recess — including the Ag-FDA spending package — ensuring they will continue to eat up floor time in the fall. Thompson has been hoping the House can bring the farm bill to a floor vote once it gets through its appropriations bills.   “I've been very patient, I didn’t want to get in the way of appropriations,” he said in an interview last week, before adding, “I'll be ready to go when we get back in September.” — Grace Yarrow, Meredith Lee Hill Trade — WTO considers quick reappointment of its current leader: The World Trade Organization is weighing whether to try to speed up its selection process for the trade group’s next leader, which would require action this fall.   The move was first proposed last month by the African Group of 44 nations on the continent as a way to quickly reappoint current WTO Director-General Ngozi Okonjo-Iweala to a second term. The African countries argued that would prevent the director-general selection process from interfering with plans for the next WTO Ministerial Conference, which will be held in Cameroon in late 2025 or early 2026.   — However, it most likely would also deny Trump the opportunity to block Okonjo-Iweala, should he be reelected in November. The Trump administration opposed her selection in 2020.   The former Nigerian Finance Minister indicated in July that she was interested in serving a second term after more than one-third of the group's members expressed support for the idea of reappointing her early.   The U.S., however, has not publicly endorsed the idea of giving Okonjo-Iweala an early second term. — Doug Palmer Education — Parent politics: Moms for Liberty brings its annual celebration of conservative education policy to Washington late this month. The collective built a reputation as one of the country’s fastest-growing Republican-allied organizations in recent years and welcomed former President Donald Trump as its 2023 convention keynote speaker in Philadelphia. Lately, it has joined a cluster of like-minded organizations that have sued (successfully, so far) to trip up implementation of President Joe Biden’s Title IX regulations. But the group’s clout has encountered skepticism after its allied school board candidates frequently lost elections across the country last year.   August’s convening, from the 29th to Sept. 1, could raise new questions about how Republicans embrace the Moms for Liberty brand for a general audience ahead of the fall election. Other GOP presidential candidates, including Nikki Haley and Florida Gov. Ron DeSantis, addressed the group last year, but the full lineup of Republican celebrities who will grace the stage this month is still being announced.   — Title IX turbulence: The Biden administration’s rule boosting protections for transgender students is now in full effect — sort of. A slate of court orders has created a legal patchwork dictating where the Education Department can and cannot enforce its new regulation that amends Title IX, the federal law that bars sex-based discrimination. At least 21 states have successfully blocked the department from enforcing the rule, four states failed to enjoin the reg, and a handful of conservative groups have convinced the courts to block it in hundreds of schools across the nation where they have members. (This includes schools in places like California or Massachusetts, states that didn’t sue over the rule.) The Supreme Court could also weigh in sometime this month.   Students and school administrators are reeling over the ever-evolving policy field — especially as they navigate how best to implement the rule without opening themselves up to lawsuits or charges of noncompliance ahead of the new school year in a matter of weeks. They’re also urging the Education Department to unveil more guidance to help them out.   — Unstable connection for school internet: FCC Chair Jessica Rosenworcel’s expansive learning initiative could be imperiled after a federal appeals court ruled in late July that the setup of the Universal Service Fund is unconstitutional. A host of FCC programs are paid for using the Fund, including its “E-Rate” program that provides telecommunications and internet subsidies to schools and libraries. The commission voted to expand the program at its July meeting, allowing schools and libraries to use E-Rate dollars to provide students with hotspots to take home, capping off Rosenworcel’s education plan. The effort, known as the Learn Without Limits initiative, expanded money for Wi-Fi on school buses and a $200 million school cybersecurity pilot. — Juan Perez Jr., Bianca Quilantan, Mackenzie Wilkes Financial Services — Harris agenda: Vice President Kamala Harris’ surprise ascension to the top of the Democratic ticket has scrambled how Wall Street CEOs are thinking about the presidential race. As her campaign hones her economic messaging over the coming weeks — she’s emphasized bolstering elements of the “care economy” in recent remarks — and investors will look for signs of how she might approach financial regulation. Top Democratic donors like LinkedIn founder Reid Hoffman and IAC Chair Barry Diller are publicly urging her to drop FTC Chair Lina Khan, whose strict approach to antitrust enforcement has rankled corporate leaders. Meanwhile, progressives and financial watchdogs urge her to continue the Biden administration’s leftward tilt on market regulation.   — Capitol Hill: Lawmakers are out on August recess, but on the other side of the break, work is expected to continue on major pushes to advance cryptocurrency legislation in the Senate Agriculture Committee after plans for a markup in the last week of July were scrapped. In the Senate Banking Committee, Chair Sherrod Brown (D-Ohio) hopes to advance nominees for key banking regulators, including to replace outgoing FDIC Chair Martin Gruenberg. The Biden administration's pick to replace Gruenberg, Christy Goldsmith Romero, is struggling to attract Republican support.   — Harris and crypto: Separately, as Harris moves toward the Democratic convention later this month, she will continue to face pressure from some in her party to break with the Biden administration and take a friendlier approach to regulation of the crypto industry. The push from pro-crypto Democrats comes as Trump embraces crypto and the industry plans to spend more than $160 million to influence this fall's elections.   — Private funds rule: The clock is ticking on the final decision on a pillar of Securities and Exchange Commission Chair Gary Gensler’s agenda. In June, a panel of judges on the Fifth Circuit Court of Appeals struck down the SEC’s sweeping new rules for private equity firms and hedge funds after finding that the agency was overshooting its authority. Now, the Wall Street regulator has one chance left at salvaging its rules: the Supreme Court. Whether it plans to — particularly on the heels of a series of rules knocking back agency powers — is unclear. But if the agency does decide to petition the justices to take up the case, it’s expected to do so in the coming weeks.   — Housing: The Biden administration is still expected to release a final version of a fair housing rule as early as this month. Nearly 300 organizations signed on to a letter to Biden in April urging the administration to “follow through on its commitments and release the final [Affirmatively Furthering Fair Housing] rule as soon as possible.” Under the proposed rule, states and localities would be required to submit “equity plans” to HUD every five years detailing their analysis of, and strategies to combat, fair housing problems in their communities. They would then be required to submit annual progress evaluations on implementing those strategies. The proposal would allow the public to file complaints with HUD about local governments that fail to comply. — Sam Sutton, Declan Harty Energy — Gasoline prices head south: Republicans’ plan to wield gasoline prices as a campaign weapon to bash Democrats seems to be fizzling, with the average national price at the pump sagging below $3.50 a gallon this week. Crude oil prices — the biggest factor behind gasoline costs — have slumped about 10 percent from their early July highs. Barring a hurricane tearing into refineries along the Gulf Coast, chances are slim that prices will see a steep climb, market analysts said.   That could ease some pressure on Harris’ campaign, which seems to be tacking to the center by saying she does not favor a ban on fracking, a move she had advocated for five years ago when she was trying to carve out a path among the progressive Democrats in primaries.   — After years of pandemics and wars playing havoc with the oil market, the world may be taking a bit of a breather from the geopolitics that have helped keep the market inflated, analysts said. Vikas Dwivedi, global energy strategist for Macquarie Group, pointed to more efficient gasoline motors and the growing number of electric vehicles — and natural gas-powered ones — as contributing to the moderating prices.   Demand for fuel “is really struggling — could be worse than struggling,” Dwivedi told Morning Energy. “Heading to the end of the year, gasoline will get cheaper.” — Ben Lefebvre Defense Washington digests Pentagon budget clash: Lawmakers are gone until September, and both sides of Capitol Hill are leaving town with wildly different takes on the Pentagon budget.   — At issue is whether to boost military spending beyond the $895 billion that the White House requested, which is also the maximum amount allowed under last year’s debt limit deal.   The Senate Appropriations Committee is slated to approve its annual defense spending bill on Aug. 1 that will use $21 billion in emergency spending to pad the budget. The Senate Armed Services Committee in June already approved a defense policy bill with a price tag that is $25 billion more than the administration sought, an increase orchestrated by Republican defense hawks with the help of a handful of Democrats.   But the GOP-led House has made no moves to increase defense spending in any of its plans, despite concerns that more is needed to meet the worldwide demands on the military.   — Lawmakers will begin to take stock of the chasm between the two chambers in August and September, as the House and Senate Armed Services panels begin preliminary work on reconciling their competing policy bills — while deciding whether a compromise bill should endorse more defense spending.   But an agreement on defense spending is unlikely to gain traction until after the November elections. And any deal that boosts the Pentagon will almost certainly hike domestic spending as well to win Democratic support. — Connor O'Brien Technology — Eyes on broadband grants: August could be a consequential month for the Biden administration’s $42.45-billion broadband expansion effort known as Broadband Equity Access and Deployment Program. All states and territories submitted their plans for using this money at the end of 2023, a key condition for tapping into the money, but many are still pending approval.   It’s go time: Commerce Secretary Gina Raimondo has told lawmakers she wants staff to have all these plans approved by fall, so August could be a busy time for these BEAD plan approvals. This pledge comes amid sharpening GOP critiques about the lack of progress in BEAD broadband buildouts underway, years after the program was created as part of the 2021 infrastructure law.   A quicker pace of approval: The administration began signing off on more plans throughout the summer, including some states where there had been impasses over BEAD requirements around affordability. By late July, federal officials had approved more than 20 states. The approval means that states can start accessing some of their grant money and begin the process of picking providers to build out the internet infrastructure.   The success or failure of BEAD is likely to be a major legacy marker for Biden. It’s unclear how the possible reelection of Trump could affect its implementation.   — Regulators weigh AI-generated robocall rules: The Federal Communications Commission is set to vote Aug. 7 to open a rulemaking around robocalls generated by artificial intelligence. Chair Jessica Rosenworcel says bad actors are already using this novel technology to sway the public, and she wants to put rules in place to create more transparency around the use of AI.   If commissioners vote to open the rulemaking, the agency would then collect public comment on how to proceed.   — August for CHIPS: Coming up on Aug. 9 is the second anniversary of the CHIPS and Science Act, which funded billions of dollars in semiconductor subsidies and authorized applied research in a range of emerging technologies to stay competitive with China.   So far, the administration has announced 14 preliminary grants to companies, totaling more than $30 billion in funding that all still need to be negotiated and contracted. The 2022 law initially handed Commerce $39 billion for manufacturing grants to encourage new factory construction, but in a controversial move, appropriators siphoned off $3.5 billion into a Pentagon project for defense chips. That leaves just a little more than $5 billion remaining.   As with last year, expect the administration to tout its progress, while lawmakers and industry experts take a hard look at the implementation, especially as members with pending projects in their districts may call on the Commerce Department to hit the gas.   — California aims to pass new AI rules: The California Legislature resumes Aug. 5, and lawmakers aim to pass a handful of bills on artificial intelligence.   One of the most-watched bills this session has been Democratic state Sen. Scott Wiener’s SB 1047, which would require large AI models to undergo risk assessments before being released and hold companies liable for “critical harms” caused by their technologies. The state Senate passed it in May, and the Assembly will likely approve it, too — but the tech industry has pushed back on Wiener’s proposal, arguing the strict rules could stifle AI innovation. On July 25, Wiener said he was open to amending the bill following a letter from AI company Anthropic, which cautioned against overregulation.   The state Senate is set to vote on a bill from Democratic Assemblymember Rebecca Bauer-Kahan that would regulate the private sector’s use of AI in decisions like education or health care services. Bauer-Kahan’s measure passed the Assembly in May.   Still TBD: whether Democratic Gov. Gavin Newsom will sign the bills if lawmakers pass them.   — AI in August: With lawmakers on recess for most of August, bipartisan members of the Senate put their pedal to the metal at the end of July to advance several key pieces of AI legislation out of committee. Their ranks include a bill to formally authorize the U.S. AI Safety Institute and a bill to reshape how federal agencies buy and use AI systems. But those bills passed with partisan fissures, with Republicans largely voting against any measures that would constrain industry activity. Now the behind-the-scenes work begins to get these bills to a floor vote.   Meanwhile: August 2 starts the clock for a number of EU AI Act provisions. AI model providers and users with an EU presence have between one to three years to fully comply with the law depending on whether their systems are high risk and/or general purpose. — John Hendel, Christine Mui, Mallory Culhane, Mohar Chatterjee   Transportation — Boeing report looms: The National Transportation Safety Board is expected to hold a fact-finding hearing on an Alaska Airlines flight earlier this year where a plugged over door blew away from the plane in mid-air. No one was seriously injured, but the alarming incident sparked multiple probes into Boeing and its quality assurance and manufacturing processes.   The factual information gathered at the hearing will be used to inform a report expected to be released in the coming months that will determine the cause of the incident and outline recommendations for how to avoid a repeat. It will be up to Congress, the administration and even Boeing itself to implement them once that report is out.   House Transportation Chair Sam Graves (R-Mo.) has said he wants to wait for the report before contemplating legislation. Sen. Maria Cantwell (D-Wash.) has said the matter deserves a legislative response, though she hasn’t offered many details. In any case, a legislative response — if there is one — will almost certainly wait until next year. — Kathryn A. Wolfe Health Care The health care team is eyeing several moving storylines in August:   — FDA action: The FDA is slated to decide by Aug. 11 whether to approve Lykos Therapeutics’ combination regimen of talk therapy and the psychedelic ecstasy to treat post-traumatic stress disorder in adults. The agency’s independent advisers overwhelmingly voted against the proposed therapy in June, finding its risks outweigh the benefits. While the FDA doesn’t have to follow its advisory committees’ recommendations, it typically does.   — Social media impact: As POLITICO has reported, a coalition of little-known groups persuaded statehouses in California, Colorado, Connecticut, Maryland and New York to advance new laws regulating social media for minors before it set its sights in Washington. Now, the nonpartisan coalition has managed to kick a famously do-little Congress into bipartisan motion: The Senate passed the Kids Online Safety Act on July 30, a bill that would make companies responsible for the ill effects of design features like content recommendation and pop-up notifications that encourage engagement. Now action moves to the House, where Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) plans a committee vote. Speaker Mike Johnson has expressed sympathy for the cause but hasn’t explicitly endorsed the bill.   — Telehealth rules: The House Energy and Commerce Committee won’t meet a pledge from chair Rodgers to mark up legislation to extend eased Medicare telehealth rules before Congress’ August recess. The pandemic-era rules expire at the end of the year, but it is widely expected they will be extended.   — Presidential campaign: The Democratic National Convention begins Aug. 19 in Chicago. And although the news of Harris’ 2024 candidacy has sunk in, the party has yet to adopt a platform. The party’s support for reproductive health — including abortion, in vitro fertilization and abortion pills — is all but certain to come through loud and clear. POLITICO’s health care team has sized the five VP contenders who are health care VIPs. — Pro Health Care Team Tax — Laying the groundwork for the big 2025 tax debate: August will likely end with a whimper on tax policy. The Senate is set to take a much-anticipated vote Thursday on a bipartisan tax bill, which includes an expansion of the child tax credit and restored tax benefits for business.   It has been stuck in the chamber for months over the objections of Republicans and is expected to get shot down by the Senate GOP. But the vote will get GOP members on the record against the package, which Democrats will likely exploit in campaigns over the summer and beyond.   With the tax legislation in the rear-view mirror, expect tax writers on both sides of the aisle to start outlining their plans to address the 2025 expiration of the Trump tax cuts. House Majority Leader Steve Scalise (R-La.) says he wants to extend those tax cuts in the first 100 days of the next Congress, and GOP leaders have already begun bicameral discussions on how to use budget reconciliation if the party sweeps in November.   Likewise, we can expect more activity from House Ways & Means Chair Jason Smith (R-Mo.) tax teams, which focus on topics ranging from supply chains to manufacturing and have been hosting roundtables nationwide.   — Meanwhile, Trump has been emphatic about his “no tax on tips” idea off the ground.   We don’t know as much about Harris’ plans, except that she’s sticking with Biden’s plans to not raise taxes on those making less than $400,000 a year.   Harris put out notable proposals on rent tax relief and bigger, refundable credits for low-income workers, so we’ll be keeping our ears peeled for mention of those and any deviation by Harris from Biden’s tax agenda. — Benjamin Guggenheim Employment and Immigration — D.C. policies meet Texas bandsaw: August is poised to be a pivotal month for independent federal agencies attempting to defend progressive Biden administration labor policies.   The National Labor Relations Board is facing an existential crisis after a pair of Texas judges in late July issued rulings declaring that the agency’s set-up is fundamentally flawed and violates the Constitution’s separation-of-powers doctrine.   So far the NLRB is blocked only from pursuing enforcement cases against SpaceX and a Texas energy company, the companies that brought the respective lawsuits. But it raises the possibility of a march on courthouses from businesses hoping to clip a perpetual thorn in their side.   The NLRB plans to ask the conservative-leaning 5th Circuit Court of Appeals to step in later this month, though the issue will likely end up at the Supreme Court at some point.   — Elsewhere in Texas, the Federal Trade Commission is awaiting a final ruling from Judge Ada Brown over the fate of its near-total ban on noncompete agreements. In early July, Brown, a Trump appointee, temporarily blocked the rule from taking effect in September and said she intends to resolve the case by Aug. 30.   Brown has indicated she believes the FTC lacks authority to enact such a sweeping policy, though a judge in Pennsylvania came to the opposite conclusion in a parallel challenge to the noncompete ban.   — Separately, the Equal Employment Opportunity Commission is struggling to overcome several setbacks across multiple legal challenges to the Pregnant Workers Fairness Act brought by Republicans and religious groups due primarily to abortion-related language the commission’s Democratic appointees adopted as part of regulations tied to the statute. — Nick Niedzwiadek