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The Early 202

An essential morning newsletter briefing for leaders in the nation’s capital.

SCOOP — Schiff makes moves in race to replace Pelosi

The Early 202

An essential morning newsletter briefing for leaders in the nation’s capital.

Good morning, Early Birds. Tonight is the Congressional Baseball Game. Will the climate activists still protest now that Sen. Joe Manchin (D-W.Va.) has agreed to add climate to their reconciliation bill? Thanks for waking up with us. Tips:

In today’s edition … The Manchin-Schumer shocker … Biden to speak with Xi and tensions build around Pelosi's potential trip to Taiwan … New endorsements from Democratic Majority for Israel’s super PAC … What we're watching: GDP numbers … but first …

On the Hill

SCOOP: Adam Schiff is exploring a bid for top House Democrat

The shadow campaign to lead House Democrats next year has been underway for months — and in many ways years — as a new generation of leaders quietly makes a play for the top positions. But an eleventh-hour push by Rep. Adam Schiff (D-Calif.) in recent weeks has taken Democrats by surprise and raised questions about how the caucus wants to mirror the diversity that makes up its party’s base, Marianna Sotomayor and Leigh Ann report.

Schiff, who gained notoriety investigating Russia’s involvement in the 2016 election before leading the first impeachment of President Donald Trump, is exploring a bid to lead the House Democratic caucus if Speaker Nancy Pelosi (D-Calif.) retires after the midterm elections, according to more than a dozen House members and top aides who have spoken directly with the congressman.

  • If he can amass enough interest in his candidacy, Schiff would upend a race that was considered largely set, challenging a variety of Democrats gunning for the top spot, including possibly Majority Leader Steny H. Hoyer (D-Md.) and Rep. James E. Clyburn (D-S.C.), and Rep. Hakeem Jeffries (D-N.Y.), who has positioned himself among members as Pelosi’s heir apparent and represents a new generation of Democrats.

Schiff’s overtures, which began in earnest earlier this year, have focused on consolidating support among his home base, the expansive California delegation, according to members of that group. And though he has not made an explicit ask for endorsements, he is gauging members’ interest and planting the seed that leading the caucus is his goal.

Schiff has also reached out to members in a variety of key blocs in the vast Democratic caucus, including the minority tri-caucuses made up of the powerful Congressional Black Caucus, the Congressional Hispanic Caucus and the Congressional Asian Pacific American Caucus. He has also reached out to the ideological factions within the Democratic caucus: both the large Progressive Caucus and the centrist New Democrat Coalition, of which he is a member, according to several people with knowledge of the outreach.

Schiff’s trial balloon has been met with surprise and skepticism that he could earn enough support to win, according to several lawmakers. Jeffries, for example, has spent years assembling broad support among the House Democratic caucus.

  • “I told (Schiff) I thought it would be a difficult thing because of the lead that Hakeem has,” said one member of the California delegation, who had spoken with Schiff.

And while the California delegation is a powerful bloc, often sticking together in party leadership votes, its response to his outreach has been tepid, according to several members. Several are unsure Schiff can make the necessary inroads.

When asked about Schiff’s desire to seek the top spot in leadership, spokeswoman Cate Hurley said his “time and energy are focused” on reelecting Democrats.

Pursuit of the CBC

Schiff’s pursuit of leadership was a topic of conversation this past weekend at a Congressional Black Caucus fundraiser in New York City, according to multiple people in attendance. One person said lawmakers, including several from the New York and California delegations, were “infuriated” that anyone mulling a run for leadership would consider splintering the caucus.

“Anyone whose strategy is that they’re going to split the CBC is going to fail,” the person said.

What does Schiff offer?

Schiff is a prolific fundraiser, which is a necessary requirement for the leader of the party. He has hired political fundraiser Bruce Kieloch, who Pelosi uses for the House Majority PAC. He has $19 million cash on hand in his personal campaign account and his leadership PAC has raised $7 million this year for candidates and the DCCC, according to FEC filings.

Several Democratic members said they are thankful for the intense work he’s put in over the years, but note a leadership position takes a different type of work: years of visiting member districts, fundraising on their behalf, countless dinners with colleagues, getting to know the names of spouses and children, and learning a member's struggles and strengths.

Build Back Better is BACK… but don't call it that

Well that was unexpected. 

Five hours after the Senate passed the semiconductor chips manufacturing bill, Sen. Joe Manchin III (D-W.Va.) dropped a bombshell, saying that he and Senate Majority Leader Chuck Schumer (D-N.Y.) had agreed on a bill to address climate change, lower health care costs and reduce the deficit. It's a “massive potential breakthrough for President Biden’s long-stalled economic agenda,” our colleague Tony Romm reports

  • “Under the deal, Schumer secured Manchin’s support for roughly $433 billion in new spending, most of which is focused on climate change and clean energy production — the largest such investment in U.S. history,” Tony adds.

It's now called the Inflation Reduction Act of 2022. 

Schumer, in a statement to reporters Wednesday night, said he expects to be able to have the package ready for a vote next week. Senate Democrats will also meet this morning to discuss the new agreement.

Sen. Kyrsten Sinema (D-Ariz.) hasn't yet stated her position, but in his statement Schumer implied her support when he thanked Manchin for reaching an agreement “that can earn the support of all 50 Senate Democrats.” 

House Speaker Nancy Pelosi (D-Calif.) endorsed the proposal, writing to her colleagues: “This agreement is a victory for America’s families and for protecting our planet.”

“It’s like two brothers from different mothers, I guess. He gets pissed off, I get pissed off, and we’ll go back and forth,” Manchin told Politico's Burgess Everett and Marianne LeVine

The timing of the announcement coming hours after the passage of the chips bill … is interesting. Senate Minority Leader Mitch McConnell (R-Ky.) earlier this month said he would derail the chips bill if the Democrats moved forward on their nearly trillion dollar version of President Biden's Build Back Better agenda, which when originally proposed included funding a wide swath of programs spanning education, climate and health care but had been steadily whittled down to win Manchin's support.

At the time, sources told The Early Manchin was furious that McConnell would tie the two unrelated bills together. “If they want to play politics and play party politics, shame on them,” Manchin said of McConnell's threat. With the chips bill through the Senate, McConnell's threat had lost its teeth when Manchin and Schumer put out their announcement late Wednesday.

But while the chips bill passed the Senate, it now heads to the House where Republican leadership is aggressively whipping against it despite earlier saying they would let members vote how they wanted. That could send House Democratic leaders searching for votes from more members of their caucus.

The announcement of the deal between Manchin and Schumer might be enough to persuade Democrats on the fence about the manufacturing bill, especially progressives, to get behind the measure so the party can rally around a bigger agenda ahead of the midterms with everyone getting some of what they want.

The SALT caucus? The northeastern Democrats who had been demanding an increase in the state and local tax deduction on primary homes in any deal appear to be softening their demands. “I've got to understand the impact that has on families in my district. Until I see specifics, it's hard to know,” said Rep. Josh Gottheimer (D-N.J.). When NBC News' Haley Talbot noted that he didn't say he would oppose the Manchin-Schumer deal, Gottheimer said again he needs to see specifics.

Just two weeks ago Manchin said he couldn't agree to an already slimmed down version of the Build Back Better proposal because the latest data showed inflation at a 40-year high. But after a weekend of cooling off, Schumer and Manchin met that Monday. Last weekend, Sen. Christopher A. Coons (D-Del.) ran into Larry Summers, the economist who Manchin listens to and who raised concerns early on about inflation. Coons asked Summers to call Manchin to walk him through the anti-inflationary components of the latest version of the Build Back Better proposal. On Wednesday, Manchin focused on the more than $300 billion in deficit reduction as he promoted the bill, arguing it will help tame inflation.

Republicans trashed the deal and began making it part of their pitch to voters ahead of the midterms. “First they killed your family's budget. Now they want to kill your job too,” McConnell tweeted, arguing that the bill will raise taxes.  

At the White House

Should Pelosi stay or should she go?

President Biden is expected to speak with Chinese President Xi Jinping for the first time in four months today, amid escalating tensions over Taiwan. The call comes as House Speaker Nancy Pelosi gears up for an early August trip to Japan, Indonesia and Singapore, and mulls a stop in Taiwan. Pelosi, who is third in line to the presidency, would be the most senior U.S. lawmaker to visit the island since Speaker Newt Gingrich (R) in 1997.

Former administration officials wary of igniting a wider conflict with China have recommended that Pelosi cancel or postpone her trip, while Republicans, including Gingrich, have thrown their support behind her. The mixed reactions – coupled with Biden’s warning that “the military thinks it’s not a good idea right now” – underscore its volatility.

“I think Pelosi should cancel the trip,” former USAID advisor Larry Diamond told the Early. “What we do with and for Taiwan should be focused on hard achievements to improve its security and to deter the People’s Republic of China from taking military action.”

“I wouldn’t spend the capital we have mainly on symbolic gestures,” Diamond added.

But Republicans find themselves in the position of doing something they rarely, if ever, do: Cheerleading for Pelosi.

They argue it’s too late to back out now, after details of her trip have become public. “It would be a disaster,” Gingrich said in an interview. Committing to the trip to Taiwan “would mean that we are not intimidated by or afraid of” China. 

And former defense secretary Mark T. Esper warned that allowing “another country to dictate where U.S. officials travel” would set a poor precedent.

“Do we honestly think they’re going to start a war or do something because the speaker of the House travels to Taipei?” Esper said during a speaking engagement Tuesday. “If we allow Beijing to start dictating who can or cannot travel, then where does that end?”

Former U.S. ambassador to China Max Baucus disagreed. “Of course, no country should dictate where American officials should travel, but life is not black and white – life is shades of grey,” he said. “You may want to travel to a country … but is it proper at this time? Is that the right thing to do?”

What will China do?

China views a trip to Taiwan as the latest in a series of escalating provocations from the U.S., former defense department official Bonny Lin said.

“I do not expect the Pelosi visit to trigger, for example, a Chinese invasion of Taiwan, or any Chinese attacks on Taiwan,” Lin said. “We’re likely to see something that is quite more escalatory and out of the normal for China.”

That could include a spike in “direct, aggressive, unsafe” behavior against U.S. and partner military forces in the skies above the South China Sea, per our colleague Karoun Demirjian.

Any decision Pelosi makes will be closely watched and scrutinized. “There’s really no good alternative,” Diamond said.

The campaign

First in the Early: Democratic Majority for Israel’s super PAC is endorsing five Senate candidates and 50 House candidates as it prepares to turn its focus toward the general election.

They include Sens. Catherine Cortez Masto (D-Nev.) and Raphael Warnock (D-Ga.); Rep. Tim Ryan (D-Ohio), who’s running for an open Senate seat; and John Fetterman, the Democratic nominee for an open Senate seat in Pennsylvania. 

DMFI PAC has spent more than $6.1 million this year backing candidates who support Israel in Democratic primaries, according to campaign finance reports. The super PAC’s spending — along with expenditures by the American Israel Public Affairs Committee’s super PAC, which is generally aligned with DMFI in Democratic primaries, and J Street Action Fund, which backs Democrats who support Israel but take a more critical view of its government than DMFI — has reshaped several Democratic primaries this year.

Mark Mellman, DMFI’s president, declined to say how much the group plans to spend in the general election. But DMFI plans to endorses even more candidates. “Nobody should interpret the absence from this list as a failure to endorse,” he said.

What we're watching

The Bureau of Economic Analysis will release its preliminary estimate of how much gross domestic product grew or fell in the second quarter. A negative number would mean the economy has contracted for two quarters in a row — often seen as a sign of a recession.

The Biden administration has been making the case in recent days that there’s no recession, regardless of what today's numbers say. Federal Reserve Chairman Jerome Powell — first nominated by former president Donald Trump and tapped for a second term last year by Biden — backed Biden up on Wednesday.

“I do not think the U.S. currently in a recession,” Powell said. “There are just too many areas of the economy that are performing too well.”

Republicans, meanwhile, have been ramping up talk of a “Biden recession.”

Treasury Secretary Janet Yellen and Biden each will speak about the economy this afternoon after the numbers come out.

The Media

Early reeeads


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