Sen. Rick Scott (R-Fla.) threatened Wednesday to delay President BidenJoe BidenJapan to possibly ease COVID-19 restrictions before Olympics 14 Republicans vote against making Juneteenth a federal holiday China supplies millions of vaccine doses to developing nations in Asia MORE’s national security nominees, saying he would place a hold on Department of Homeland Security (DHS) positions until the president visits the southern border.

Scott’s comments came as he noted his support for forwarding Biden’s nominee to lead DHS’s Cybersecurity and Infrastructure Security Agency (CISA).

“I clearly support Jen Easterly to be the director of CISA — she’s got the right background to be able to do the job. It has no reflection on her nomination, but I am going to hold all nominations including hers until the president visits the border, and I think the president needs to visit the border and tell us how he is going to address the crisis,” he said in a Senate Homeland Security and Governmental Affairs Committee meeting where two nominees were advanced in a unanimous vote.

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Scott’s team clarified the hold would only apply to DHS nominees, largely requiring the Senate to eat up floor time. While the move precludes a unanimous consent vote, few DHS nominees leave committee without some opposition.

But Scott’s move could mean delays for other DHS picks, including the nominee to lead U.S. Immigration and Customs Enforcement, along with those tapped to lead the U.S. cyber security response amid increasing hacks.

“Why would he do that? These are incredibly qualified people, and this is one of the most urgent problems facing this country; that’s bizarre,” Sen. Angus KingAngus KingOn The Money: Yellen, Powell brush off inflation fears | Fed keeps rates steady, upgrades growth projections GOP rep: If Biden doesn’t evacuate Afghan interpreters, ‘blood will be on his hands’ Bipartisan infrastructure group grows to 20 senators MORE (I-Maine), a member of the Senate Intelligence Committee, told The Hill of the nominations hold. 

“That’s ridiculous. To put the national security of this country in jeopardy for a totally separate question is the height of irresponsibility,” said King, the co-chair of the Cyberspace Solarium Commission. 

The hold could also affect DHS deputy secretary nominee John Tien; Jonathan Meyer, who has been nominated to serve as general counsel for the department; Robert Silvers, the nominee for under secretary for strategy, policy and plans; and Chris Inglis’s nomination to be National Cyber Director.  

Sen. Tom CarperThomas (Tom) Richard CarperSenate confirms Radhika Fox to lead EPA’s water office Rick Scott threatens to delay national security nominees until Biden visits border Senate panel unanimously advances key Biden cyber nominees MORE (D-Del.) also pushed back on Scott’s comments, noting that Biden has developed familiarity with the region over his long career in government. 

“President Biden, formerly Vice President Biden, formerly Senator Biden, has probably been to the U.S.-Mexico border more than anybody on this committee, and my guess is he’ll go again. He’s probably been to Central America more times than anybody on this committee,” Carper said during the hearing.

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Happy Thursday and welcome back to On The Money, where we want to know who shrunk all the whales. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

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THE BIG DEAL—Jobless claims fall to 385,000, nearing pre-pandemic levels: New applications for unemployment insurance dropped to 385,000 last week, according to data released Thursday by the Labor Department, setting another post-lockdown low and edging even closer to pre-pandemic levels.

• In the week ending May 29, initial weekly jobless claims fell by 20,000 from the previous week’s revised total of 405,000 applications. 
• Last week marked the lowest total of jobless claims since 225,000 applications were filed in the week ending March 14, 2020 — days before the COVID-19 pandemic derailed the economy.

I break it down here.

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Rising tide, falling claims: After plateauing during the winter, jobless claims have dropped steadily since the end of April and have trended downward since the beginning of 2021 with a major economic rebound in sight. The U.S. has replaced roughly 8 million of the 21 million jobs lost to the onset of the pandemic and is expected to have added another 500,000 in May. 

ADP surprises: The Labor Department is set to release the monthly jobs report for May tomorrow, but we also got some encouraging private sector data today: The private sector added a whopping 978,000 jobs in May, according to payroll company ADP, well above the 680,000 economists expected and the highest level since last summer.

“Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery,” said ADP’s chief economist, Nela Richardson. “Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the pandemic and economy.”

The Hill’s Niv Elis has more here.

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LEADING THE DAY

JBS attack unlikely to cause major meat disruption: USDA: The Agriculture Department (USDA) said Thursday that the ransomware attack on meat conglomerate JBS SA is unlikely to cause major disruptions but exposed the risks created by food industry consolidation.

• JBS USA is responsible for 25 percent of beef and 20 percent of pork and poultry sold in the U.S. 
• The company said Tuesday it expected to regain full production capacity by the end of Thursday.

In a Thursday statement, the USDA said beef and pork production have begun to rebound after a weekend attack forced the country’s second-largest meat producer to shut down its plants. 

“Our daily market data shows a strong rebound in cattle and hog slaughter, which we expect to continue through the week, while poultry numbers are higher this week than last. All in all, the market is moving toward normalization and, if the situation continues to resolve quickly, we don’t expect this incident to have lasting effects on wholesale and retail prices,” the USDA said.

But while the damage from the attack may be limited, the narrow aversion of a potential disaster for the U.S. food system still sent shockwaves across the country.

“The cyberattack on JBS USA underscores the risks of a consolidated food system. If there are lessons to be learned from the COVID-19 pandemic and this latest incident, it is that we need to invest in a food system that is durable, distributed and better equipped to withstand 21st century challenges, including cybersecurity threats and other disruptions,” the USDA said.

 

Biden bars US investment in Chinese companies linked to surveillance: President BidenJoe BidenWHO warns of continent-wide third wave of coronavirus infections in Africa 30 House Democrats urge Biden to do more for global vaccine distribution Manchin isn’t ready to support Democrats passing infrastructure on their own MORE signed an executive order Thursday to prohibit investments in Chinese defense and surveillance firms that produce or use technology to facilitate human rights abuses, expanding a Trump-era order issued last year.

• The new order is designed to bar U.S. investments in Chinese companies that produce or deploy surveillance technology used to repress individuals such as Muslim majority Uyghurs in Xinjiang and activists in Hong Kong or others throughout the world.
• The order lists 59 Chinese firms that are subject to the prohibitions, but the White House said that it would update the list “as appropriate,” meaning more companies could be added to it. 
• The order takes effect on Aug. 2, approximately two months from the date that Biden signed it.

“This E.O. allows the United States to prohibit – in a targeted and scoped manner – U.S. investments in Chinese companies that undermine the security or democratic values of the United States and our allies,” said a White House fact sheet accompanying the order.

The Hill’s Morgan Chalfant walks us through the order here.

 

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GOOD TO KNOW

• President Biden proposed enforcing a minimum corporate tax of 15 percent as a possible way to fund his infrastructure proposal as he and Republican negotiators make a final push for common ground.
• A federal court on Thursday sided with Sen. Ted CruzRafael (Ted) Edward CruzOn The Money: Jobless claims fall to 385,000, nearing pre-pandemic levels | Private sector added 978,000 new jobs in May: ADP Court sides with Ted Cruz in campaign finance lawsuit Republicans target Trump critic’s role at DOJ MORE (R-Texas) in his lawsuit against the Federal Election Commission (FEC), striking down rules limiting how much money candidates can raise after an election to pay off loans.
• A coalition of progressive lawmakers is calling for electric power to be publicly owned in a new resolution unveiled Thursday.

 

ODDS AND ENDS

• Walmart announced that it will give 740,000 of its employees smartphones as part of a new app initiative. 
• Op-Ed: “Pity the central bankers: No easy way to stop rising inflation or bubble-bursting”

Researchers discovered a flaw in a 2G mobile encryption algorithm that leaves cellphones vulnerable to attackers. 

The GEA-1 algorithm, which has been in phones for more than 20 years, makes it easy for attackers to see data traffic on phones, and the researchers from Germany, Norway and France believe it was done on purpose, the paper released on Wednesday said, ABC News reported.

“According to our experimental analysis, having six correct numbers in the German lottery twice in a row is about as likely as having these properties of the key occur by chance,” Christof Beierle, a co-author of the paper, said.

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The authors believe this flaw was put in place because of laws against strong encryption tools and to give a “back door” to police, according to ABC News.

The authors said cellphone manufacturers have been informed about the issue and told to fix it.

The algorithm is still found in phones today, although most people in the U.S. have 4G or 5G standards.

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Happy Tuesday and welcome to Overnight Defense. I’m Rebecca Kheel, and here’s your nightly guide to the latest developments at the Pentagon, on Capitol Hill and beyond. CLICK HERE to subscribe to the newsletter.

THE TOPLINE: The U.S. withdrawal from Afghanistan is more than halfway done.

So reported U.S. Central Command (Centcom) on Tuesday in its weekly update on the progress of the withdrawal, which said the command “estimates that we have completed greater than 50 percent of the entire retrograde process.”

The progress includes shipping out about 500 cargo planes worth of material and giving more than 13,000 to the Defense Logistics Agency (DLA) for “disposition.”

Centcom for the first time noted the equipment given to the DLA so far is mostly “federal excess personal property” and not “defensive articles” nor “major equipment.”

Less information to come: Up until Tuesday’s release, Centcom had been putting out ranges of the progress of the withdrawal, declining to get more specific out of security concerns.

But now that the withdrawal is more than 50 percent done, Centcom said in Tuesday’s release it won’t be updating the percentage at all going forward because of “operational security reasons and to preserve force protection.”

What’s next: Even as the withdrawal continues apace, questions remain about how the United States will tamp down on terrorist threats emanating from Afghanistan without a troop presence.

Speaking at a Center for New American Security event Tuesday, Deputy Defense Secretary Kathleen Hicks said the department expects to provide President BidenJoe BidenHouse Judiciary Democrats call on DOJ to reverse decision on Trump defense Democratic super PAC targets Youngkin over voting rights Harris dubs first foreign trip a success amid criticism over border MORE with options this summer for so-called “over the horizon” capabilities.

“We are working through all of that right now,” Hicks said. “We have to take into account regional aspects and allied approaches. We will have, over the course of this summer, proposals to give to the president in terms of what that over-the-horizon capability should be.”

War reports: Meanwhile, the White House on Tuesday formally sent Congress the national security waiver to get around restrictions on withdrawing from Afghanistan that were in last year’s defense policy bill.

And the White House also released the annual war powers report on U.S. military operations around the globe. As was started during the Trump administration, the latest report does not have specific troop numbers for Afghanistan, Iraq or Syria.

Read more here.

 

SENATE REPORT FINDS INTEL FAILURES AHEAD OF JAN. 6

A pair of Senate committees on Tuesday released their much-anticipated report on the Jan. 6 Capitol attack.

The 127-page report outlined a spectacular series of intelligence and communication failures leading up to the attack.

The joint effort from the Senate Rules Committee and Senate Homeland Security and Governmental Affairs Committee blames bureaucratic delays in getting assistance to Capitol Police officers getting “chaotic, sporadic, and, according to many front-line officers, non-existent” instruction from commanders. 

About the Guard: The report also outlines the degree to which the Capitol Police Board — consisting of the House and Senate sergeants-at-arms along with the architect of the Capitol — were split over whether to call for National Guard assistance. 

“Capitol Police Board members also disagreed as to whether unanimity was required to approve a request from USCP for assistance from the District of Columbia National Guard,” the report noted, adding that the group “did not appear to be fully familiar with the statutory and regulatory requirements for requesting National Guard support.” 

Once the request for National Guard assistance made it to the Pentagon, Defense Department officials told lawmakers that its hesitance to use a quick reaction force to respond to events was “informed by criticism it received about its response to the civil unrest after the murder of George Floyd.”

Recommendations: Among the defense-related recommendations in the report is to allow the Capitol Police chief to request National Guard assistance in emergencies.

The report also recommends the Pentagon develop standing “concept of operation” scenarios and contingency plans for responding quickly to civil disturbance and terrorism incidents and that the National Guard practice mobilizing members from neighboring states to immediately respond to emergencies.

Other Guard-related recommendations include enhancing communications between Pentagon and National Guard officials, clarifying the chain of command to prevent delays in authorizing a National Guard deployment and, if a quick reaction force has been approved for an event, ensuring it’s staged so that it can actually quickly respond.

One thing that’s not in the report is the idea of a permanent National Guard quick reaction force to respond to emergencies in D.C., something that was in the Capitol security bill passed by the House last month.

Read more here.

 

PENTAGON WINDING DOWN MASS VAX MISSION

By the end of Tuesday, all but five of the mass COVID-19 vaccination sites the Pentagon opened with FEMA will be closed as the demand for the shot slows down, the Defense Department’s top spokesperson said.

Earlier this year, as many as 35 mass vaccination sites were operated by thousands of active-duty and National Guard troops, but the number has since dropped to eight with three of those locations to close by Tuesday’s end, Pentagon press secretary John Kirby told reporters. 

The vaccine centers, in coordination with FEMA and state and local officials, “will be mission-complete or will begin reducing personnel as the sites reassess the size of the DOD vaccination support teams needed,” Kirby said.

The sites have helped administer more than 16 million vaccines, he added.

Read more here.

 

ON TAP FOR TOMORROW

Defense Secretary Lloyd AustinLloyd AustinOvernight Defense: Afghanistan withdrawal more than halfway done | Senate report details intelligence failures before Jan. 6 | Pentagon shuttering most mass COVID-19 vaccination sites The Biden administration continues to send mixed messages on China Overnight Defense: Supreme Court declines to hear suit challenging male-only draft | Drone refuels Navy fighter jet for the first time | NATO chief meets with Austin, Biden MORE will speak at the Pentagon’s annual LGBT Pride Month celebration at 9:30 a.m. https://bit.ly/2RzwlCC

The Senate Foreign Relations Committee will hold a hearing on U.S. policy in Belarus with testimony from the U.S. ambassador-designate to Belarus at 10 a.m. https://bit.ly/3gmfWJZ

A House Foreign Affairs Committee subpanel will hold a hearing on democratic values in the Indo-Pacific with testimony from State Department officials at 11 a.m. https://bit.ly/35eIujP

Gen. Tod Wolters, commander of U.S. European Command will speak at an Atlantic Council online event at 2:15 p.m. https://bit.ly/2Sjm5Pi

The Senate Foreign Relations Committee will hold a confirmation hearing for the nominees to be ambassadors to Somalia, Lesotho, Angola, Algeria, Congo and Cameroon at 2:30 p.m. https://bit.ly/3w5MuPg

The Senate Intelligence Committee will hold a confirmation hearing for the nominees to be director of National Counterterrorism Center and inspector general of the CIA at 2:30 p.m. https://bit.ly/3xcV9Qd

Army Chief of Staff Gen. James McConville, and Gen. John Murray, commanding general of Army Futures Command, will speak at an American Enterprise Institute web event at 3 p.m. https://bit.ly/3ggmA4M

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A House Armed Services Committee subpanel will hold a hearing on the budget request for military readiness with testimony from the vice chiefs of the Army, Navy, Air Force, Marines and Space Force at 3 p.m. https://bit.ly/2T9nqsa

A Senate Armed Services Committee subpanel will hold a hearing on missile defense programs with testimony from defense officials and outside experts at 4:30 p.m. https://bit.ly/3uZsrRj

 

ICYMI

— The Hill: Five key parts of the Senate’s sweeping China competitiveness bill

— The Hill: Senate passes long-delayed China bill

— The Hill: Opinion: Pledges to restore Israel’s defenses must go beyond the Iron Dome

— Roll Call: Biden would slash Pentagon money for pandemic prevention

— New York Times: Unloved by generations of soldiers, the MRE finds a fan base

— Defense News: Delivery of new Air Force One planes could be delayed until 2025

— Associated Press: German military to ship surplus beer back from Afghanistan

The number two official at the Centers for Disease Control and Prevention is warning that without consistent, long-term funding of public health, the U.S. won’t be any better prepared for the next pandemic.

In an interview with The Hill on Wednesday, Anne Schuchat, the CDC’s principal deputy director, said the U.S. was not prepared for COVID-19 due to years of inadequate investment in public health infrastructure.

Emergency funding has helped public health agencies fight back against the coronavirus, Schuchat said, but unless that level of spending can be sustained, the country is in danger of repeating the same mistakes.

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“I think the critical learning about how to do better next time is the need to greatly invest in public health, and not just respond to emergencies,” Schuchat said. “This is a big job, and it can’t be like Ebola or H1N1 where there’s emergency funding and then everything goes away. This needs to be sustained or we will be exactly where we were last year.”

Schuchat is set to retire this month after 33 years at the agency. She doesn’t have the same public profile as Anthony FauciAnthony FauciWHO official: Delta variant ‘poised to take hold’ in Europe Lindsey Graham: Dismissal of Wuhan lab leak theory cost Trump 2020 election Overnight Health Care: US to donate 500 million Pfizer doses to other countries: reports | GOP’s attacks on Fauci at center of pandemic message | Federal appeals court blocks Missouri abortion ban MORE, but she has spent her career in the upper echelons of America’s public health agency, including six years as principal deputy director.

Another lesson learned the hard way, Schuchat said, was that the nation’s Strategic National Stockpile was ill-equipped to handle the sudden surge in demand for personal protective equipment and ventilator supplies when COVID-19 took hold.

“It’s been a wake-up call,” Schuchat said.

Experts have said that early in 2020, the officials in charge of overseeing the stockpile warned Department of Health and Human Services officials about supply shortages, but were ignored.

Schuchat said such shortages are still a concern, but she’s grateful Congress is now paying attention to the issue.

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“I think that this is one of those big issues that we’re already seeing major progress on that we were not ready for,” Schuchat said.

During her tenure at the CDC, Schuchat also served two short stints as acting director during the Trump administration; once at the start, and then again after Trump nominee Brenda FitzgeraldBrenda FitzgeraldThe hollowing out of the CDC Overnight Health Care: Drug company under scrutiny for Michael Cohen payments | New Ebola outbreak | FDA addresses EpiPen shortage CDC director to take pay cut of more than 5k MORE resigned after seven months due to a scandal about purchasing tobacco stocks.

Like other top public health officials, Schuchat faced criticism from the former president and his allies over her warnings about the potential for a global pandemic as the coronavirus began spreading last year.

As the CDC ramped up its response, the Trump administration began bringing to bear political pressure on what has been an historically apolitical agency.

Public health experts and former agency officials have said there’s an inevitable mix of politics and public health at the CDC, and the agency works best when there’s collaboration between staff and White House officials.

Still, “this was a whole other level” of pressure, Schuchat said, without elaborating on specifics.

“The more coordinated, science-based and learning or response you have, you know, a response that’s committed to continual improvement, the more effective the prevention will be. And so a fragmented response or one that isn’t well coordinated is likely to be less effective,” Schuchat said.

Broadly, she said she was “disappointed” with how politicized public health has become recently.

“It was going to be a very difficult pandemic regardless of the cultural or political or social issues,” Schuchat said.

“Politicization has not helped, and you know, there have been times where I’ve been so grateful of solidarity, and the community that I’ve seen in people coming together, and there have been times I’ve been very disappointed in really, the politicization of the efforts that potentially made things worse.”

Schuchat said she thinks the U.S. is in a “good place” right now, as the numbers of new COVID-19 infections, deaths and hospitalizations are all declining.

Still, she urged people to stay vigilant and get vaccinated against the coronavirus as a number of more readily transmissible and potentially deadly strains begin to circulate through the country.

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“The more of us that are vaccinated, the less likely the variants are to win. And you know, around the world, there’s a lot of places where the variants are winning. So we have pretty much all of those scary variants here in the U.S. but in low numbers” because the vaccines are effective against them, Schuchat said.

She also warned that the situation is very different in other parts of the world.

“It’s really important that we remember the global situation. This is a global pandemic, countries have been hit at different times in different ways, and none of us are finished with this particular virus,” Schuchat said.

President BidenJoe BidenJill Biden, Kate Middleton to meet this week Al Gore lobbied Biden to not scale back climate plans in infrastructure deal White House briefed on bipartisan infrastructure deal but says questions remain MORE set a target of July 4 to get at least 70 percent of U.S. adults partially vaccinated. The country is at risk of missing that target, as nationwide demand for vaccines has dropped considerably.

Officials have reached the “low hanging fruit” of people most willing to get vaccinated, and so the effort has now shifted to reaching the people who were unable, or unwilling, to get vaccinated earlier.

Schuchat said the declining demand was concerning, though she acknowledged her agency had planned for the drop-off.

“We expected three general phases to the vaccination effort: an initial phase where demand greatly exceeded supply; a phase where supply would be able to keep up with the demand; and then a phase where supply would exceed demand. So, that phase that we’re in right now in the United States is not at all surprising to me,” she said.

“I’m encouraged by the progress we’ve made so far, and recognize we’re in a phase where things [are] quite different. Not, you know, big stadiums, vaccinating thousands a day, but mobile efforts and pharmacists and primary care docs and faith based leaders and others really bringing the vaccine to where people are making it super easy for people and helping with their vaccine confidence.”

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Some congressional Democrats who forcefully advocated for emergency unemployment benefits earlier this year are now signaling they’re willing to let a weekly supplement expire in early September.

The shift in tone from Democratic lawmakers comes as 26 states, nearly all led by Republican governors, have moved to cut off the $300 benefit early, arguing it has discouraged many residents from seeking employment, particularly for jobs that end up paying less than the combined state and federal benefits.

Any effort to extend the benefit beyond its September expiration date would likely run into fierce political headwinds, not to mention an economy that’s struggling with both inflation and modest job growth.

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House Budget Committee Chairman John YarmuthJohn Allen YarmuthDemocrats shift tone on unemployment benefits The Hill’s Morning Report – Dems to go-it-alone on infrastructure as bipartisan plan falters Democratic patience runs out on bipartisan talks MORE (D-Ky.) said Wednesday that the politicization around the weekly supplement would make it difficult to renew.

“I wouldn’t be surprised if it doesn’t get extended. But we’ll see over the next couple of months what the job reports show,” he said.

On the Senate side, Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenDemocrats shift tone on unemployment benefits Grassley meets with moderate House Democrats on lowering drug prices Four states emerge as test case for cutting off jobless benefits MORE (D-Ore.) also signaled the challenges to renewal.

“I’ve long said pandemic unemployment programs should be tied to economic conditions on the ground,” said Wyden, who has been a major advocate for the expanded benefits during the pandemic.

“If that had been done in the [COVID-19] rescue plan there wouldn’t be these concerns about the arbitrary September cut off. But the way the budgetary effects of these policies are scored is an obstacle,” he added.

Republicans argued vociferously against the additional weekly supplement from the early days of the pandemic. Sen. Lindsey GrahamLindsey Olin GrahamOn The Money: Yellen, Powell brush off inflation fears | Fed keeps rates steady, upgrades growth projections Democrats shift tone on unemployment benefits Bipartisan infrastructure group grows to 20 senators MORE (R-S.C.) in March of last year sought to offer an amendment that would strip the weekly supplement, then at $600, out of the $2.2 trillion CARES Act, the first major coronavirus relief bill that was passed with overwhelming bipartisan support.

That benefit lapsed over the summer amid fierce partisan battles over how to approach further relief, leading then-President TrumpDonald TrumpNorth Carolina Senate passes trio of election measures 14 Republicans vote against making Juneteenth a federal holiday Border state governors rebel against Biden’s immigration chaos MORE to find a temporary workaround to provide $300 in additional funds through the Federal Emergency Management Agency.

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The benefit was then restored in a bipartisan December bill, and extended under President BidenJoe BidenJapan to possibly ease COVID-19 restrictions before Olympics 14 Republicans vote against making Juneteenth a federal holiday China supplies millions of vaccine doses to developing nations in Asia MORE’s $1.9 trillion rescue plan in March.

But as the economy improved and more Americans got vaccinated, COVID-19 case counts retreated, and states began lifting coronavirus restrictions. When employers struggled to find workers, GOP-led states moved to cut off the benefit, with the first four states ending the program this past weekend.

Wyden castigated GOP states last month for prematurely moving to cut the benefits, saying it would “pull the rug out from under jobless workers” and “sabotage the economic recovery.”

But Republicans argue that weaker-than-expected jobs data prove that the benefits are keeping would-be workers on the sidelines collecting government checks instead of earning a paycheck.

“As people are rational, as long as they can make more money not working than working, they’re going to choose not working,” said Sen. John KennedyJohn Neely KennedyMORE (R-La.), noting that the labor participation rate remained significantly depressed.

“We’re not going to have a full recovery until we get back to at least pre-COVID levels,” he said.

Labor experts say the expiration of federal unemployment benefits in September may have a muted impact if the economy keeps growing, as it’s projected to do.

“If the economy continues to grow at the rate that people are expecting, the unemployment rate will come down to around 5 percent and the lapse in the benefits won’t be nearly as serious,” said Wayne Vroman, a senior fellow at the Urban Institute.

The jobless rate in May was 5.8 percent, according to the Labor Department.

Economists also point to schools reopening as a likely improvement to the labor market.

With schools expected to reopen with in-person learning in the fall, parents, and women in particular, may find it easier to rejoin the workforce.

Rep. Ro KhannaRohit (Ro) KhannaDemocrats shift tone on unemployment benefits Khanna outlines how progressives will push in climate infrastructure proposal Fresh hurdles push timeline on getting China bill to Biden MORE (D-Calif.), a progressive leader, said it’s important to gauge the economic conditions on the ground when it comes to unemployment benefits.

“We have to look at the data then and make a decision then,” he said. “We don’t know where the data is going to be and where inflation is, so I think all of that has to be considered.”

Some economists see the unemployment benefits, combined with multiple stimulus checks, playing a role in driving inflation since they’ve allowed more Americans to boost spending, contributing to higher prices. Others, however, argue that the size of the unemployment benefits makes them marginal in the inflation debate.

The Federal Reserve on Wednesday increased its inflation expectations for 2021, and indicated that it could raise interest rates twice in 2023 to counter it, a departure from earlier guidance.

Other proponents of a wait-and-see approach on unemployment benefits argue that an unexpected resurgence in COVID-19 cases caused by new variants could upend the entire calculus.

“The expansion of unemployment insurance benefits was as much a public health measure as an economic relief measure, allowing people to stay home instead of venture off to work,” said Alex Arnon, an associate director of policy analysis for the Penn-Wharton budget model.

While the question of what to do with the $300 in additional weekly benefits remains unclear, Wyden says he wants to ensure that other emergency programs remain in place.

He is primarily focusing on extending Pandemic Unemployment Assistance (PUA), a program that offers benefits to the self-employed and gig economy workers who had no access to unemployment before the pandemic. Wyden also wants to extend a program providing extra weeks of unemployment insurance for those who have exhausted the 26 weeks typically offered by states.

Shai Akabas, director of economic policy at the Bipartisan Policy Center, said the pandemic laid bare parts of the unemployment system that need to be fixed, but warned against simply extending emergency programs.

“Those programs were established on an emergency basis to respond to the pandemic, so I’m not sure that exact policy reflects what we should have in place permanently,” he said. “But it does point to the need for permanent solutions for these workers.”


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For Democrats, the question is now shifting from whether to provide additional unemployment benefits to the need for overhauling a patchwork, state-by-state program they say proved inadequate on unemployment insurance (UI) when the pandemic first hit.

“We’ll see where the PUA specifically ends up, but I think we need to make more investments in UI generally and increase and make more effective the ability for all people to access UI,” said Rep. Pramila JayapalPramila JayapalDemocrats shift tone on unemployment benefits Pelosi picks Democrats for special panel tackling inequality White House to Democrats: Get ready to go it alone on infrastructure MORE (D-Wash.), chair of the Congressional Progressive Caucus.

“Right now, as you know, so many people are left out of unemployment assistance,” she added.

Yarmuth said advancing such a fix would take time, setting the timeline as “post-pandemic.”

“Probably not this year,” he said.

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The IRS is back in Republicans’ crosshairs following a ProPublica report based on the confidential tax records of the wealthiest Americans.

Republicans have long disliked the tax-collection agency, and have been critical of President BidenJoe BidenEx-Biden adviser says Birx told him she hoped election turned out ‘a certain way’ Cheney rips Arizona election audit: ‘It is an effort to subvert democracy’ News leaders deal with the post-Trump era MORE’s proposal to give the IRS significantly more resources. Now, GOP lawmakers are amplifying their attacks on the IRS in light of an unauthorized disclosure of tax data to ProPublica, arguing that it undermines taxpayers’ ability to have confidence in the agency.

“This is an astonishing breach of trust that should make taxpayers very concerned,” Rep. Kevin BradyKevin Patrick BradyTo address labor shortages, Congress should try a return-to-work bonus Ireland, loved by Biden, is obstacle to tax deal ‘SECURE 2.0’ will modernize retirement security for the post-COVID American workforce MORE (Texas), the top Republican on the House Ways and Means Committee, told reporters Friday.

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He said he expects to bring up the disclosure this coming week with Treasury Secretary Janet YellenJanet Louise YellenWhy the Democrats need Joe Manchin On The Money: Democrats wary of emerging bipartisan infrastructure deal, warn of time crunch New report reignites push for wealth tax MORE, who is scheduled to testify at an annual hearing on the president’s budget.

ProPublica published a report Tuesday detailing how prominent U.S. billionaires like Jeff BezosJeffrey (Jeff) Preston BezosSeat on Bezos-backed space flight sells for million at auction Researchers: Wealth accumulation at Ivy League presents ‘fundamental threat to our democracy’ Democrats reintroduce bill to create ‘millionaires surtax’ MORE and Elon MuskElon Reeve MuskSeat on Bezos-backed space flight sells for million at auction Tesla begins delivery of high-performance Plaid model Democrats reintroduce bill to create ‘millionaires surtax’ MORE in certain years have paid little-to-no federal income taxes. The article also found that the richest Americans paid little in taxes when compared to their wealth gains.

It is unclear who provided the tax information to ProPublica or how it was obtained.

“We do not know the identity of our source. We did not solicit the information they sent us,” ProPublica wrote. “The source says they were motivated by our previous coverage of issues surrounding the IRS and tax enforcement, but we do not know for certain that is true. We have considered the possibility that information we have received could have come from a state actor hostile to American interests.”

It is illegal for federal employees to make unauthorized disclosures of tax-return information. Administration officials said the matter has been referred to several agencies, including the inspectors general for the Treasury Department, the FBI and the U.S. Attorney for the District of Columbia.

While lawmakers on both sides of the aisle have raised concerns about the nature of the disclosure, Republicans in particular have been hammering the issue.

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Prior to the ProPublica report, Republicans had been criticizing proposals in Biden’s $1.8 trillion American Families Plan to increase compliance with tax laws by providing the IRS with an additional $80 billion over a decade and to increase the amount of information that financial institutions report to the agency about account activity. Republicans are using the ProPublica article to step up their criticisms of those proposals.

“This most recent publication of taxpayer data is especially concerning in light of the Administration’s proposal to provide the IRS with a massive amount of unprecedented mandatory funding aimed partly at mandating collection of additional private and personal information from everyday Americans through financial institutions, including detailed information about their checking and savings accounts,” Senate Finance Committee Republicans said in a letter Friday to the Treasury Inspector General for Tax Administration (TIGTA).

Conservatives predicted that the disclosure of the tax documents would doom Biden’s IRS enforcement proposal.

“I think this kills the effort,” said Americans for Tax Reform President Grover Norquist.

Brady said the disclosure to ProPublica has “close to dealt a death blow” to the White White House’s plans.

Republicans said that the recent disclosure of wealthy Americans’ tax records is not the first time that there has been an unauthorized disclosure of tax information.

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GOP lawmakers also speculated about the motivations behind the disclosure, given that the article comes as Democrats are pushing to increase taxes on the wealthy and corporations to pay for Biden’s infrastructure proposals. Republicans generally are opposed to Democrats’ proposals to raise taxes on the rich and corporations.

“It looks political at this time when this information is being used even today to advance the Democrats’ narrative that the wealthy individuals don’t pay enough of their taxes,” Rep. Lloyd SmuckerLloyd Kenneth SmuckerHouse GOP fights back against mask, metal detector fines Sixth House member issued ,000 security screening fine On The Money: Pelosi wants infrastructure done by August | Powell warns US is reopening to a ‘different economy’ | McConnell vs. Big Business MORE (R-Pa.) said at a Ways and Means Committee hearing on Thursday.

It’s not new for Republicans to criticize the IRS, particularly when a Democrat is in the White House.

The agency was a major target of conservatives during the Obama administration following a 2013 report from TIGTA that found the agency had subjected Tea Party groups’ applications for tax-exempt status to extra scrutiny.

A subsequent report in 2017 from the inspector general found that there were also left-leaning groups subjected to extra scrutiny.

Republican strategist Ford O’Connell said the Tea Party controversy of the Obama era is still on the minds of many GOP voters, and that attacking the IRS in the wake of the ProPublica report makes sense politically for Republicans.

“If the goal is to fire up the base before 2022, certainly just uttering the letters I-R-S will do that,” he said.

Many working-class Republicans are no fans of the rich, but “they do believe it’s only a matter of time before the taxman cometh for them,” O’Connell said. 

Democrats have also expressed concerns about the disclosure of tax information, and are supportive of investigations. But they have also sought to put a focus on the contents of the ProPublica article, arguing that its findings highlight the need to raise taxes on the rich.

Administration officials have defended the White House proposal to increase the amount of information banks report to the IRS, saying it would help collect more of the taxes already owed.

Mark Mazur, deputy assistant secretary for tax policy at Treasury, said at Thursday’s Ways and Means hearing that the proposal would help the IRS better focus on “situations of gross noncompliance that deserve some attention.”

Democrats also pushed back on GOP suggestions that there was a politically motivated leak of tax data.

“This fits a pattern of trying to stoke distrust of the IRS and limit its ability to fully and fairly administer the tax laws,” House Ways and Means Committee Chairman Richard NealRichard Edmund NealIreland, loved by Biden, is obstacle to tax deal Bottom line On The Money: Inside Biden’s T budget | Key inflation metric higher than expected MORE (D-Mass.) said in a statement.

“It is disheartening that such unsubstantiated accusations are being made at a time when we are seeking to provide the IRS with funding and staffing to address noncompliance by the wealthiest taxpayers.”

Texas Gov. Greg Abbott (R) signed two bills into law Tuesday aimed at improving the operation and oversight of the state’s power grid after broad criticism over the handling of a deadly winter storm.

One of the bills Abbott signed would require the weatherization of power generation facilities, natural gas facilities and transmission facilities to be better prepared for severe weather and would mandate that the Texas Railroad Commission and Electric Reliability Council of Texas (ERCOT) inspect the facilities, with fines of up to $1 million for failure to properly weatherize them.

The new laws also establish the Texas Energy Reliability Council to boost harmonization between state agencies and industry during long power outages and bouts of extreme weather.

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The laws do not include requirements regarding consumer infrastructure such as homes and pipes and do not mandate that weatherization occur until 2022.

“During the winter storm, too many Texans were left without heat or power for days on end, and I immediately made reforming ERCOT and weatherizing the power system emergency items,” Abbott said in a statement. “We promised not to leave session until we fixed these problems, and I am proud to say that we kept that promise.”

“These laws will improve the reliability of the electric grid and help ensure these problems never happen again,” he added. 

The signing of the new laws follows withering criticism leveled at Abbott and other state lawmakers after a devastating winter storm killed more than 150 people and left nearly 4.8 million homes and businesses without power.

The federal government stepped in to help Texas during the storm, funneling money to dozens of the state’s 254 counties and allowing individuals and businesses to apply for federal aid, low-cost loans to cover uninsured property losses, and grants to help support temporary housing and repairs for home damage.

Abbott was panned for the state’s lack of preparation for the freezing temperatures, criticism that was amplified after he touted the Texas power grid’s independence from federal energy sources and blamed the Green New Deal, which has not passed Congress, for the struggles.

Sen. Ted CruzRafael (Ted) Edward CruzTexas governor signs bills to improve power grid after deadly winter storm Trump allies set for bitter brawl in Texas AG primary Sunday shows preview: Infrastructure expected to dominate as talks continue to drag MORE (R-Texas) also drew sharp rebukes after he was seen leaving his Houston home with his family for a vacation in Cancun during the storm.

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Happy Thursday and welcome to Overnight Defense. I’m Rebecca Kheel, and here’s your nightly guide to the latest developments at the Pentagon, on Capitol Hill and beyond. CLICK HERE to subscribe to the newsletter.

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THE TOPLINE: Defense Secretary Lloyd AustinLloyd AustinOvernight Defense: Austin and Milley talk budget, Afghanistan, sexual assault and more at wide-ranging Senate hearing Austin says he’s ‘concerned’ about Iranian ships in Atlantic Pentagon chief: Military has already started ‘over-the-horizon’ operations in Afghanistan MORE and Chairman of the Joint Chiefs of Staff Gen. Mark MilleyMark MilleyOvernight Defense: Austin and Milley talk budget, Afghanistan, sexual assault and more at wide-ranging Senate hearing Pentagon chief: Military has already started ‘over-the-horizon’ operations in Afghanistan Trump dismisses climate change, calls on Biden to fire joint chiefs MORE testified before the Senate Armed Services Committee on Thursday in their first hearing since the fiscal year 2022 budget request was released.

(It’s the pair’s second budget hearing this year, but the first happened before the budget was actually released.)

As with most hearings with the defense secretary and the Joint Chiefs chairman, the topics ran the gamut.

Here are some of the highlights:

On sexual assault: Milley reiterated his openness to removing sexual assault prosecutions from the chain-of-command, but stopped short of endorsing a more sweeping reform pushed by Sen. Kirsten GillibrandKirsten GillibrandOvernight Defense: Austin and Milley talk budget, Afghanistan, sexual assault and more at wide-ranging Senate hearing Top general: Military justice overhaul proposed by Gillibrand ‘requires some detailed study’ Cher apologizes for confusing Sinema, Gillibrand MORE (D-N.Y.).

“The bright line of all felonies, for example, I think that requires some detailed study before we completely overhaul the entire [Uniform Code of Military Justice], but the focused area of sexual assault and sexual harassment, I’m completely open minded to some very significant changes, and I think that’s also true of most of the senior leaders in uniform,” Milley said.

An independent commission established by Austin has recommended removing sexual crime prosecutions from the chain of command, but Gillibrand wants to go further and remove commanders from prosecutorial decisions on all serious crimes.

Austin has been more tight-lipped about his stance as he reviews the commission’s recommendations, but did stress Thursday he thinks any changes to the Uniform Code of Military Justice (UCMJ) should be “scoped to the problem.”

“As I’ve said before, what we are doing is not working and we need to fix it,” Austin said. “And I want to be sure that whatever changes we make to the UCMJ, or whatever changes to the UCMJ that I recommend to the president and ultimately to this committee, that they are scoped to the problem that we are trying to solve and have a clear way forward on implementation and ultimately restore the confidence of the force and the system.”

On Afghanistan: Austin told senators the U.S. military has already started conducting so-called over-the-horizon operations as it withdraws from Afghanistan.

He declined to confirm a report in The New York Times that the military is considering continuing to provide air support to Afghan forces if Kabul or another major city starts to fall to the Taliban after U.S. troops leave.

But he said that capabilities such as intelligence, surveillance and reconnaissance (ISR) have already started to be flown into Afghanistan from outside the country during the withdrawal.

“In terms of our efforts to establish over-the-horizon capability, I would just point to the fact that, as we have retrograded a lot of our capability out of country, we are doing a lot of things over-the-horizon now,” Austin said. “ISR is being flown from [Gulf countries]. A lot of our combat aircraft missions are being conducted from platforms in the Gulf. And so we have the capability now to do that.”

On diversity and inclusion: Sen. Tom CottonTom Bryant CottonOvernight Defense: Austin and Milley talk budget, Afghanistan, sexual assault and more at wide-ranging Senate hearing Cotton, Pentagon chief tangle over diversity training in military Media continues to lionize Anthony Fauci, despite his damning emails MORE (R-Ark.) and Austin tangled over the Pentagon’s efforts to bolster diversity, equity and inclusion in the military.

Cotton repeatedly cut off Austin, the nation’s first Black Defense secretary, as the Pentagon leader sought to provide context on racial issues in the armed forces during the hearing.

Cotton asked Austin to answer yes or no to several questions that Austin insisted required more elaborate answers.

For example, Cotton asked Austin for a yes-or-no answer on whether he believes the military is a “fundamentally racist organization.”

“I won’t give you a yes-or-no answer on that, senator, because it deserves more than a yes or no,” Austin said. “The military, like any organization, will have its challenges, but I do not believe it is a fundamentally racist organization.”

Cotton then cut Austin off, saying “our time is limited,” and proceeded to ask other similar yes-or-no questions.

On climate change: Milley was also asked several times by Republican senators to answer for President BidenJoe BidenJill Biden, Kate Middleton to meet this week Al Gore lobbied Biden to not scale back climate plans in infrastructure deal White House briefed on bipartisan infrastructure deal but says questions remain MORE’s remarks Wednesday that the Joint Chiefs once told him when he was vice president that the greatest threat facing America is climate change.

“Climate change is a threat. Climate change has significant impact on military operations, and we have to take it into consideration,” Milley said in one exchange. “Climate change is going to impact natural resources, for example. It’s going to impact increased instability in various parts of the world. It’s going to impact migrations and so on. And in addition to that, we have infrastructure challenges here at home, witness some of our hurricanes and stuff.

“But the president is looking at it at a much broader angle than I am. I’m looking at it from a strictly military standpoint. And from a strictly military standpoint, I’m putting China, Russia up there. That is not, however, in conflict with the acknowledgement that climate change or infrastructure or education systems — national security has a broad angle to it. I’m looking at it from a strictly military standard,” he added.

On the budget: Austin and Milley defended the $715 billion Pentagon budget request that Republicans have sought to cast as insufficient to face threats posed by China.

“This budget stays true to our focus on matching the pacing challenge that we clearly see from the People’s Republic of China,” Austin said in his opening statement.

Milley, meanwhile, said that “China is increasing its military capability at a very serious and sustained rate, and we must ensure that we retain our competitive and technological edge against this pacing threat, as Secretary Austin has directed.”

Austin, though, appeared to acknowledge the department’s request for a counter-China fund known as the Pacific Deterrence Initiative missed the mark. The department requested $5.1 billion for the fund — more money than had been sought by Indo-Pacific Command (Indo-Pacom) — but the funding includes some big-ticket procurement items such as F-35s rather than some of the priorities Indo-Pacom’s commander laid out such as more money for a missile defense system on Guam.

“My staff is currently working with the committee to clarify and adjust any perceived misalignments,” Austin said about the fund. “A great deal of the department’s budget is invested in capabilities and activities that concentrate on deterring China. And I would further say that I’m committed to working with the committee to making sure that we get it right and answer the needs of the commander.”

On nukes: Republicans also fumed at the hearing about a memo from the acting Navy secretary that recommends defunding the new sea-launched cruise missile in 2023.

Both Austin and Milley said they hadn’t seen the memo yet. But Austin downplayed its significance, calling it “predecisional” since the Biden administration has not conducted its nuclear posture review yet.

“We will be true to our posture review and make sure that that drives the process,” Austin said.

On Iran: Austin said he’s “concerned” about the two Iranian ships that are crossing the Atlantic Ocean.

While it is unclear where the two vessels are headed, Austin expressed worry that they could be transporting weapons, potentially to Venezuela, which has had an acrimonious relationship with the U.S. for years.

“The precedent of allowing Iran to provide weapons to the region causes me great concern,” Austin said.

“I am absolutely concerned about the proliferation of weapons, any type of weapons, in our neighborhood,” he added.

 

IN OTHER NEWS … AIR FORCE NOMINEE ADVANCES

The Senate Armed Services Committee took a quick moment at the beginning of the Austin and Milley hearing to approve seven nominations, including Frank Kendall’s nomination to be Air Force secretary.

The voice vote sent the nominees to the full Senate for approval.

Kendall previously served in the Pentagon as its top weapons buyer during the Obama administration.

 

ON TAP FOR TOMORROW

A House Armed Services Committee subpanel will hold a hearing on the defense intelligence enterprise with testimony from defense officials at 11 a.m. https://bit.ly/2Sh974J

A House Foreign Affairs Committee subpanel will hold a hearing on LGBT rights in Europe and Eurasia with testimony from outside experts at 11 a.m. https://bit.ly/3zgmyCp

 

ICYMI

— The Hill: Two service members die in noncombat-related incidents

— The Hill: Air Force: Disorientation, faulty GPS caused deadly F-16 crash in Michigan

— The Hill: US sanctions network with ties to Houthis, Iran

— The Hill: Biden, Johnson announce updated Atlantic Charter focused on protecting democracies

— The Hill: Fresh hurdles push timeline on getting China bill to Biden

— The Hill: Opinion: Military justice reform, ‘pink courts,’ and unit cohesion

— Washington Post: Kim Jong UnKim Jong UnOvernight Defense: Austin and Milley talk budget, Afghanistan, sexual assault and more at wide-ranging Senate hearing North Korea calls U.S.-South Korea missile development hostile policy Biden’s invisible foreign policy success MORE appears to have lost some weight — and that could have geopolitical consequences

— Reuters: NATO needs to know who its enemies are, says Macron

— Military Times: Top VA health official stepping down next month

— Associated Press: As Iran prepares to vote, its battered economy a major worry

The Environmental Protection Agency on Thursday announced a slate of actions aimed at a class of toxic chemicals called PFAS, including the revocation of a Trump-era guidance that it said weakened regulations for the substances. 

The agency additionally proposed a reporting requirement for manufacturing PFAS chemicals and finalized a rule requiring polluters to report releases of three types of the chemicals.

PFAS chemicals have been linked to health issues including cancer and immune system problems. They can be found in a variety of household goods, as well as drinking water. 

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They are sometimes referred to as “forever chemicals” because they are persistent in the human body and environment and can accumulate over time. 

“These actions will help us harness the best available science to develop policies and programs that can improve health protections for everyone, including those living in historically underserved communities,” Michal Freedhoff, principal deputy assistant administrator for the Office of Chemical Safety and Pollution Prevention, said in a statement.

The removed guidance, issued at the end of the Trump administration, sought to clarify a 2020 rule issued by the agency that prohibits companies from importing certain types of PFAS as part of an object’s “surface coating” without EPA approval. 

Such objects may include  automotive parts, carpets, furniture and electronic components. The guidance limited what would have been subject to the rule, providing exemptions for “unintentionally present” impurities as well as for those who process chemicals. 

The Biden administration said Thursday that the guidance “was never deemed necessary by career staff and its development was directed by political officials serving in the last Administration.”

Its new PFAS reporting proposal would require those that have made or imported PFAS chemicals since the start of 2011 and those who do so going forward to report information on its uses, quantity, disposal exposure and hazards to the agency. 

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