Monday Morning Memo - Dec. 12 - O'Donnell & Associates

Good Morning from New York…

Governor Kathy Hochul announced she will hold her State of the State address on

January 10th at 1pm in the Assembly Chamber at the Capitol. Hochul has returned the address to the Capitol after Andrew Cuomo had moved it to the convention center at the Empire State Plaza to allow for more attendance (and control). On January 1st, Governor Hochul will hold her inauguration after which she becomes the first woman to be elected Governor of New York.

Hochul has been hinting at some of her priorities for the upcoming year; towards the top of the list is housing. In an interview with Politico, the Governor acknowledged the detrimental effect a lack of housing is having on the state, offering “People want to live here; they just can’t afford it anymore. The cost of housing is up 57 percent in the last seven years. Rent is up, depending on the part of the state, anywhere from 27 percent to 57 percent across New York. And so what that does is it creates a barrier for young people who are raised here, educated here, and want to live in the same neighborhood they grew up in — Long Island, Westchester, the City — and they can’t afford it. That’s a tragedy.”

While there is a consensus that something has to be done to address the housing crisis, there are strong disagreements regarding which programs and policies would best solve the problem. Housing advocates want to increase renter protections and push back on steep rent hikes through policies such as Good Cause Eviction, a new Housing Access Voucher Program, and the Tenant Opportunity to Purchase Act. Developers are hoping for a replacement of the 421-a tax abatement program that provided incentives for affordable housing creation and lapsed last year. Hochul proposed 485-w, a slightly modified version of 421-a, but it failed to garner the necessary support in the Legislature. Some people, particularly those on the left, saw the program as nothing more than a giveaway to wealthy developers and derided the notion that the program contributed to fixing the housing problem. Even when new units gain the necessary approval to be built, it takes months or even years before those units become available. To combat that lag time, some groups are focusing on making better use of the city’s existing housing stock and filling vacant, rent-stabilized apartments.

With rents still, as Jimmy McMillian would say, too damn high, a looming eviction crisis coming out of the pandemic, and rising interest rates, the Governor and the Legislature will have their work cut out for them to come up with viable housing solutions.

Hochul continues making her way through the hundreds of bills that are awaiting her ascent or veto before the end of the year. This past week, Hochul signed a bill requiring residential health care facilities to give residents, family members, and guardians timely notice when an infection is detected. The Governor also signed a bill cracking down on telemarketers, a bill to help homeowners throughout the State keep the heat on in times of emergency, as well as a measure that shores up the voting process in New York.

Hochul also vetoed bills last week: most notably, a measure that would have directed the Departments of Environmental Conservation and Health to establish standards for ambient lead and lead contamination in soils. In her veto message, the Governor said, “New York’s existing lead standards, as set out in regulations from the DEC and DOH, appropriately cover these specific lead levels in a way that is consistent with the most up to date understanding of the harmful impact of lead. Requiring the agencies to create additional standards while there are existing processes in place would not be a valuable use of State resources…”

Senate Majority Leader Andrea Stewart Cousins was unanimously reelected to the position she first assumed ten years ago. Since then, Steward Cousins has been shepherding the Senate Democrats into a supermajority and defended it during a difficult election cycle. The Majority Leader said “Since holding the majority, we have enacted historic legislation that helps and expands New Yorkers’ rights and builds a stronger and fairer state for all residents.

On the Assembly side, Bronx native Carl Heastie was re-nominated to serve as Speaker and should win the nomination easily when the Legislature reconvenes in January. Reflecting on his record as the top Democrat in the Assembly, Heastie stated, “In my time as speaker, we have worked together to advance a Families First agenda, fighting to bring down the cost of childcare and increase access, to put higher education within reach for more New Yorkers, to implement tax cuts that put families’ hard earned money back into their pockets.”

It has also been reported that state lawmakers are discussing a special session ahead of the scheduled first day of the new session on January 4th to vote on a pay increase for the Legislature. The measure would increase legislators’ salary from $110,000 per year to $130,000 per year starting in 2025 while also banning lawmakers from earning outside income. Governor Hochul indicated she supports the raise and offered her opinion that legislators have earned it. Expect plenty of public blow back on this one but for reference note that New York City Councilmembers make $148,500 per year.

The state’s public university system, SUNY, has named John King as the new chancellor. King had previously served as the New York State Education Commissioner from 2011-2014 before leaving to become Secretary of Education during President Obama’s second term. During his tenure as Education Commissioner, King came under intense scrutiny for his support of standardized testing. In 2015, he was dubbed the “Architect of New York’s Common Core Revolution” for implementing national standards for students and teacher evaluations based on student standardized test performance. Ultimately, the New York State United Teachers Union voted “no confidence” in King and requested his removal in 2014.

Still, King maintains the support of Governor Hochul who said in a statement “I applaud and congratulate the SUNY Board of Trustees on their selection of a truly outstanding chancellor in John King. His professional experience at every level of our education system, including as Secretary of Education to President Obama, combined with deep New York roots, make him an ideal leader for the SUNY system.” King also has two strong New York allies in Washington- Senator Majority Leader Chuck Schumer and soon-to-be Minority Leader Hakeem Jeffries. Jeffries sat on the SUNY search committee that hired King. Jeffries said, “As a child of New York, product of our public schools and educator and public servant, John King has the vision, intellect, experience and expertise needed to lead the system into the future.” King, who ran an unsuccessful bid for Governor in Maryland earlier this year, will receive a compensation package that some, including state Senate Minority Leader Rob Ortt, believe is overly generous. In addition to a $750,000 salary, King will receive $4,000 for travel expenses to cover transportation to and from his current home in Maryland, free housing in Albany, a SUNY-owned vehicle or a $1,000-a-month vehicle allowance, and a $12,500 monthly stipend for housing in New York City.

In Georgia, Senator Raphael Warnock defeated Herschel Walker in a runoff election, earning a full term in the Senate. More than 3.5 million voters cast a ballot in the runoff, with Warnock winning by just shy of 100,000 votes. In his victory speech, Warnock spoke to the promise of America, saying “I want to say thank you to my mother, who is here tonight, you’ll see her in a little while. But she grew up in the 1950s in Waycross, Ga., picking somebody else’s cotton and somebody else’s tobacco. But tonight she helped pick her youngest son to be a United States senator.” Raphael Warnock was first elected in 2021 and also serves as a pastor at Ebenezer Baptist Church in Atlanta, Rev. Martin Luther King Jr.’s former church and site of John Lewis’s memorial service.

Warnock’s victory does not give Democrats the clean 51-49 majority they would have hoped following Senator Kyrsten Sinema’s announcement that she was leaving the Democratic Party and declaring as an independent. Sinema, seemingly always eager to be the center of attention, said “nothing will change about my values or my behavior” and indicated that she will not be caucusing with Republicans. When asked how her decision will impact the structure or committee makeup of the Senate, she said that was Senate Majority Leader Chuck Schumer’s problem. “That’s a question for Chuck Schumer … I intend to show up to work, do the same work that I always do. I just intend to show up to work as an independent.”

The practical breakdown will still be 51-49, with Sinema joining Independent Senators Bernie Sanders of Vermont and Angus King of Maine, both of whom vote with Democrats the majority of the time. The win in Georgia will still tilt the balance of power in the Senate where even a one seat majority can make a big difference. The Biden Administration and Majority Leader Schumer will have more breathing room when it comes to nominations and passing legislation. More importantly, Democrats will now have a majority of members on committees (for the example, the Senate Judiciary Committee now has 11 Democrats and 11 Republicans. In January, that will be 12 Democrats and 10 Republicans) which will allow the Senate to conduct investigations of their own with subpoena power.

Like every college student this time of year, even the best and brightest that inhabit the halls of Congress fall victim to procrastination and now, with an upcoming deadline, it is time for them to cram. There are still a number of significant legislative packages that have been stalled over the past few weeks and may now drag into the Holidays or possibly even the next Congress. The main issue threatening the lawmaker’s holiday is the bill to fund the government. Senator Richard Shelby (R, Ala.), the top appropriator on the Republican side said “When will we get to yes? Might be right before Christmas. Might be right after Christmas.”

With a top-line number that will likely come in somewhere near $1.7 trillion, it is a difference in opinion over $26 billion that is holding up the bill. Republicans insist they will not agree to the non-defense spending increase because they argue, the Inflation Reduction Act that passed earlier this year already bolsters domestic spending. Other issues causing roadblocks are whether or not to include the cost of veterans’ healthcare under the domestic spending cap and an increase to the appropriations bill that funds the IRS. There seems to be an acknowledgment that Congress will be unable to work out their disagreements ahead of Friday’s deadline and will likely resort to a one-week Continuing Resolution to buy themselves time to iron out a permanent agreement. Senate minority leader Mitch McConnell suggested that they may even punt the issue to the new Congress where the GOP will control the lower Chamber. Commenting on that possibility, McConnell said “We’re running out of time, and that may end up being the only option left that we could agree to pursue. We don’t have agreements to do virtually anything, we don’t even have an overall agreement on how much we want to spend.” The comments are likely more a negotiating tool than they are a statement of McConnell’s desire to push the funding issue into the new Congress. For one thing, it would set up Kevin McCarthy, already looking politically fragile, for an intense budget fight right off the bat.

One item that lawmakers are closer to checking off their list is the National Defense Authorization Act (NDAA), which passed the House this past week. The $858 billion spending measure authorizes a 4.6% pay increase for members of the military, the purchasing of a variety of ships, aircraft, and other weapons, supports Taiwan against China, and provides support to Ukraine in their fight against Russia’s invasion. The bill also repeals the COVID-19 vaccine mandate for military members, which promised to be a main sticking point in the Senate negotiations. A few items that were dropped from the bill include a repeal of the 2002 Iraq War authorization, a marijuana banking bill, and Senator Joe Manchin’s (D-W.Va) energy permitting proposal. A less notable but equally important provision that did make its way into the final bill was Senator Chuck Schumer’s proposal to ban federal agencies and federal contractors from using semiconductors from three Chinese chip companies.

Aside from the larger ticket items like the NDAA and a government spending bill, Congress still has a few smaller items on their wishlists for lame duck. The House still needs to send the same-sex marriage bill that passed both chambers to President Biden’s desk. Democrats and some Republicans are hoping to pass a bill reforming the Electoral Count Act which, in response to January 6th, clarifies the process for registering presidential electoral votes. An immigration reform proposal has emerged at the eleventh hour with Senators Kyrsten Sinema (D*-AZ) and Thom Tillis (R-N.C.) leading the way. The agreement would provide a pathway to citizenship for 2 million undocumented immigrants who were brought here as children, also known as “Dreamers.” In exchange, Republicans would get a $25 billion increase in Customs and Border Patrol funding and a one-year extension of Title 42, which allows immigration authorities to quickly expel many migrants without allowing them to apply for asylum while in the U.S. With little time left and a number of other items that will likely take priority, the lawmakers face long odds of getting their agreement passed during the lame-duck session.

A group of Democratic lawmakers is holding out hope that they can get the Child Tax Credit across the finish line before time runs out. The “CTC Six”, made up of Senators Sherrod Brown (Ohio), Michael Bennet (Colo.), Cory Booker (N.J.), and Reps. Rosa DeLauro (Conn.), Ritchie Torres (N.Y.), and Suzan DelBene (Wash.) have offered Republicans a deal in which they would agree to the Child Tax Credit in exchange for Democratic support for a business R&D tax credit. Given that the status of the larger government spending deal is still in flux, this too faces an uphill battle to getting passed.

The Bidens and the White House hospitality staff can’t seem to catch a break these days. First, it was the Maine lobster fiasco (see last week’s memo) and now, guests who attended the Congressional Ball on Monday levied complaints about the portion sizes. D.C. reporter Jake Sherman tweeted that he “heard complaints about the food at the White House congressional ball last night. Yes. Members and staff complain about this. Apparently, there wasn’t enough and it wasn’t as good as the Obama years. Lots of people complaining.” Rep. Anna Eshoo (D-Calif.) told Politico the food was “very tasty— but I wouldn’t call it a dinner.” The President and First Lady will have plenty of opportunities to turn it around. The Holidays bring no shortage of White House events and perhaps the upcoming gatherings will see the return of the coveted buffet spread.

Finally, we say Goodbye to Bob McGrath, the beloved original cast member from Sesame Street who passed away last week at the age of 90. We leave you with the “Best of Bob McGrath.”

-Jack O’Donnell

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December 12, 2000

U.S. Supreme Court releases its decision in Bush v. Gore, settling the recount dispute in Florida’s 2000 presidential election in George W. Bush‘s favor and thus handing him the presidency.

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