Washington Weekly: Harris in Charge

The Senate approved various Biden administration nominees. The House passed a fiscal year 2025 government funding bill (Interior-Environment), legislation to authorize infrastructure projects to improve US waterways and a resolution to condemn Vice President Kamala Harris’ performance as the nation’s “border czar.” It also unanimously voted to establish a bipartisan task force to investigate the attempted assassination of former President Trump (see below). Both chambers held a joint meeting of Congress with Israeli Prime Minister Benjamin Netanyahu (see below).

The Senate will vote on legislation to improve safety and privacy protections for children on social media platforms (see below). The House will be out of session and return to Washington on September 9.

Harris in Charge.

Vice President Harris had a good week. After weeks of infighting among Democrats about President Biden’s status, she quickly consolidated support among Democratic leaders and is well-positioned to receive the Democratic Party’s presidential nomination next month. She has raised over $126 million since the Biden announcement. Her nomination was unofficially secured quickly through the pledges of a majority of convention delegates. Potential challengers for the nomination demurred, whether in the interest of party unity or their own potential ambitions in 2028 (or both). Having unified Democratic leaders, she now has to do the same with the party’s rank-and-file. Her progress in building unity among Democrats has enabled her to focus squarely on former President Trump. This honeymoon period likely will continue through the party convention next month. The Democratic National Committee will likely vote for her to become the nominee next week before turning their attention to the Vice-Presidential nominee and the convention in August.

Does it Matter?

President Biden’s announcement provides a dramatic development just three months before Election Day, but the reality is that most voters already know who they will vote for and are unlikely to move from their positions. Harris has generated greater energy and enthusiasm among the many Democratic voters who had soured on Biden. It remains to be seen how much appeal she will have with more moderate Independent voters. To narrow the gap with Trump, Harris will have to not only reclaim a more solid unity among Democratic voters. She also has to win a majority of the small percentage (around 10%) of voters who haven’t made up their minds. We’ll learn over the next three months whether she has the political ability to make up this considerable ground, particularly in the seven battleground states that will determine the race.

25th Amendment.

Many Republicans are questioning President Biden’s fitness to continue to serve the last six months of his presidency following his decision to get out of the presidential race, a decision that was prompted by concerns about his age. There is a process under the 25th Amendment to the Constitution to remove the President, but it requires executive branch action, not legislative action. Specifically, VP Harris and a majority of cabinet members must agree that the President is no longer fit to serve and submit that declaration to Congress. There is clearly no support by the vice president and cabinet officials to trigger this action, so while the issue raises an interesting question, it is not a serious option at this point.

Secret Service Fiasco.

It was a horrible week for the Secret Service that included the resignation of its director, Kimberly Cheatle. On Monday, she was grilled mercilessly by a House committee over the agency’s preparations for the Trump rally two weeks ago and its response to the attempted assassination. With a flood of calls for her to resign from both Republican and Democratic lawmakers (and the threat of impeachment proceedings), she had little choice to make that decision on Tuesday. The agency has released very little information about activities relating to the assassination attempt. Most of what the public knows has come from other agencies that had less prominent roles to ensure security that day. The damage to the Secret Service comes at a time when it is needed the most -- during a presidential campaign when candidates are in public in potentially vulnerable situations. Congress further piled on this week by passing a resolution to establish a bipartisan task force to investigate what happened. This will parallel various other executive branch investigations, and the general public will we be learning of additional details on a rolling basis over the next several weeks and months.

Netanyahu Speech.

Israeli Prime Minister Benjamin Netanyahu’s fiery speech to a joint session of Congress underscored the political divide in Washington, especially among Democratic lawmakers and voters, about Israel’s prosecution of the war in Gaza. Vice President Harris, who also serves as the president of the Senate, skipped the event, as did Republican Vice-Presidential nominee JD Vance, along with about 130 members of Congress (mostly House Democrats). The Vice President’s position on the war going forward will be worth watching. Two of her major goals as a presidential candidate are to unify the Democratic Party and then to win more independent voters in the general election. A position aligned with the pro-Palestinian cause would help her with the former, while a position more aligned with Israel would benefit her with the latter. This has been President Biden’s political dilemma for many months, and how or whether Harris adopts his position or another remains to be seen.

Kids’ Online Safety.

The Senate plans to vote next week on bipartisan legislation to address online safety needs for children. This would be one of the most significant regulations for the technology industry in over two decades. The bill would make it mandatory for social media platforms to default to the strongest privacy settings (instead of being an “opt-in” option) for users under the age of 17. It also would require social media companies to provide additional parental controls and options for minors to protect their personal information and opt out of personalized algorithms. It also would require them to disable addictive features. The bill creates a “duty of care” for social media companies, putting the burden on the companies to prevent and mitigate harm from addictive and dangerous behaviors and topics. While the bill has strong bipartisan support, it faces some challenges in the House. Opponents of the bill argue it is too broad and could lead to excessive use of online censorship. While Senate passage of this legislation will mark a major move for children’s online safety, it still faces hurdles in the House that put final passage in doubt.

Biden Versus Harris on Taxes.

President Biden and Vice President Harris generally have a similar philosophy on federal tax policy, but there are some differences. Two in particular stand out to us. First, Harris has supported a financial transaction tax (FTT) on trades of stocks and bonds. In the 2020 Democratic presidential primary election, Biden distinguished himself as the only candidate among the major Democratic contenders who did not endorse a FTT. Second, while both Biden and Harris have advocated an increase in the corporate tax rate of 21%, there are differences in the level of increase. President Biden’s budget has called for an increase to 28%, while Harris previously called for an increase to 35%. That is a sizable gap in the tax rate that would have a real impact on corporations. As her campaign evolves, Harris will start to emphasize a few areas where she differs from her current boss. Tax policy could be one such area, and it will be an important one to watch given that the debate around taxes will be front and center in 2025 regardless of who wins.

Payment Fraud.

In recent years, there’s been a significant uptick in usage of peer-to-peer payment systems like Zelle and Venmo. For months, Democratic Senators have raised concerns about scams and fraud on Zelle, which is owned by a consortium of large banks. That culminated this week with a Senate subcommittee both issuing a report that investigated the issue and holding a hearing that featured bank executives. Under federal law, payment platforms must reimburse customers for loss of money in unauthorized fraudulent transactions (such as through a hack). However, there is no explicit requirement for reimbursement on authorized transactions involving scams where an individual is tricked into sending money under false pretenses. The report, which was led by Senator Richard Blumenthal (D-CT), called for a change in law to cover scams. Bank executives voiced caution about such a change in policy. In addition to noting that virtually all Zelle transactions are completed without any reports of fraudulent activity and that Zelle already provides reimbursement for some scams, they expressed concern that a broader requirement actually could invite more fraudulent activity. While there’s no consensus on any change in law, there will continue to be rumblings around this issue from lawmakers.

Gubernatorial Limitations.

The Harris campaign is currently considering numerous Democratic governors to be her running mate. One overlooked consideration is each state’s limits to gubernatorial authority. Every state sets their own laws for whether or not governors retain their power when they are physically outside of their states. Some states with governors under consideration by Vice President Harris allow their governors to retain power when they travel outside of their state. These include Kentucky (Governor Andy Beshear), Pennsylvania (Governor Josh Shapiro) and Minnesota (Governor Tim Walz). However, North Carolina Governor Roy Cooper and Michigan Governor Gretchen Whitmer are both required to be within their home states in order to wield the executive power. In Whitmer’s case, this is largely superfluous as the Lt. Governor is also a Democrat. However, in the case of North Carolina, Cooper’s Lieutenant Governor is Mark Robinson. He won the Republican gubernatorial nomination and hopes to take the governor’s mansion this November. This dynamic has already led to Cooper sticking around his home state full-time. If he is chosen as the VP nominee, could he leave the state without the lieutenant governor taking advantage of his absence and taking certain actions? This is unlikely to be the deciding factor in Harris’ choice, but it will certainly be taken into account.