Pelosi Makes Way for a New Generation

Plus: Fake unemployment fraud numbers ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Good evening. House Democrats are headed for a changing of the guard as Speaker Nancy Pelosi said Thursday she will step aside. Here’s what you need to know. Pelosi takes in the applause from her colleagues. (Reuters) Pelosi Says She’ll Step Down as House Democratic Leader In January 2003, when Nancy Pelosi first became the leader of the House Democratic caucus, George W. Bush was president, the Iraq War hadn’t yet started, Michael Jordan was [playing]( for the Washington Wizards and Eminem’s “Lose Yourself” was topping the charts. On Thursday, after nearly 20 years as leader of the House Democrats and two stints as one of the most powerful and successful House speakers in U.S. history, Pelosi, 82, said she would step aside from her party leadership role, though she will stay in Congress. “With great confidence in our caucus, I will not seek reelection to Democratic leadership in the next Congress,” Pelosi said in a speech on the House floor. “For me, the hour has come for a new generation to lead the Democratic caucus that I so deeply respect.” Republicans officially win a House majority: Pelosi’s announcement comes after Republicans on Wednesday night officially won a majority of House seats for the 118th Congress. Rep. Kevin McCarthy (R-CA), reelected as leader of the GOP caucus and hoping to be voted speaker in January, celebrated the win in an appearance on Fox News Wednesday night. “It is official,” he told host Sean Hannity. “One party Democrat rule in Washington is finished. We have fired Nancy Pelosi.” McCarthy reiterated an earlier pledge to try to roll back the $80 billion in extra funding for the Internal Revenue Service that Democrats enacted as part of the Inflation Reduction Act this year. Republicans have misleadingly claimed that money will be used to fund an army of 87,000 auditors who will target middle-class taxpayers. “On day one in the House, we will repeal 87,000 new IRS agents,” McCarthy said, adding, “We will use the power of the purse. The size of our [national] debt has got to stop. … We’ve got to cut back on this wasteful Washington spending.” House Republicans have also begun laying out a series of investigations and oversight hearings they want to pursue, including plans to [hunt]( for links between President Joe Biden and his son Hunter’s business dealings. McCarthy was notably [absent]( from the House floor during Pelosi’s announcement. If elected speaker, he will be leading a very slim majority in the House, meaning that a small group of his members would have the votes to potentially derail leadership plans or exert some leverage in pursuit of concessions. “We have to work as a team or we’ll lose as individuals,” McCarthy told Hannity. “And I believe this conference will rally together.” Pelosi is quite familiar with such headaches. She won plaudits for navigating such predicaments over the years and holding her members together to deliver historic results. “It’s been my privilege to play a part in forging extraordinary progress for the American people,” she said in her speech Thursday. “I have enjoyed working with three presidents, achieving historic investments in clean energy with President George Bush, transformative health care reform with President Barack Obama and forging the future from infrastructure to health care to climate action with President Joe Biden.” Pelosi pointedly left out the fourth president she overlapped with, Donald Trump, whom the House impeached twice under her leadership. The legacy she leaves: Pelosi will go down in history as the first woman to lead a major party in Congress and the first to be speaker of the House. Through her 12 years as minority leader and eight years a speaker, Pelosi has been a huge fundraising force for Democrats and built a tremendous political and legislative legacy. “History will note she is the most consequential Speaker of the House of Representatives in our history,” President Joe Biden said in a statement. “Because of Nancy Pelosi, the lives of millions and millions of Americans are better, even in districts represented by Republicans who voted against her bills and too often vilify her.” That means she won’t be easy to replace. Who’s next: Pelosi’s announcement was followed by one from House Majority Leader Steny Hoyer (D-MD), who also said he will be staying in Congress but will not seek a leadership position. Democratic Caucus Chair Hakeem Jeffries (D-NY), 52, is widely expected to succeed Pelosi as leader of the House Democrats. He would be the first Black politician to lead a congressional caucus for either party. Reps. Katherine Clark (D-MA), 59, and Pete Aguilar (D-CA), 43, also expected to seek top leadership jobs. Rep. Jim Clyburn (R-SC), currently the majority whip, said he will look to continue in leadership as assistant to the minority leader. Number of the Day: 5% + St. Louis Federal Reserve President James Bullard said Thursday that the central bank will need to raise its key interest rate to at least 5%, dashing hopes that the Fed would soon pivot to a less aggressive stance in its war against inflation. The current interest rate range of 4.75% to 5% “is not yet in a zone that may be considered sufficiently restrictive,” Bullard said. “To attain a sufficiently restrictive level, the policy rate will need to be increased further.” Based on current data, Bullard said the rates need to go to a range of at least 5% to 5.25%. “That’s a minimum level,” he said, “that would at least get us in the zone.” The upper level, he added, could be as high as 7% — far higher than most analysts currently expect. San Francisco Fed President Mary Daly also took a fairly hawkish view this week, telling reporters that a pause in interest rate hikes is “off the table” for now, even if future increases are smaller than the last four jumbo hikes of 75 basis points each. Tech Firm Made Up Unemployment Fraud Numbers to Win Contracts: Report In the summer of 2021, a relatively unknown tech firm publicly called ID.me claimed that roughly half of all emergency unemployment benefits provided during the Covid-19 pandemic — totaling at least $400 billion — had been stolen. According to a new report from Democrats on the House Oversight committee, the claim was fictitious, and part of an effort by ID.me to win government contracts to provide high-tech identity verification services. The false claim certainly gained plenty of news coverage. Axios, for example, cited the ID.me claim in [reporting]( that, “Unemployment fraud during the pandemic could easily reach $400 billion, according to some estimates, and the bulk of the money likely ended in the hands of foreign crime syndicates — making this not just theft, but a matter of national security.” For sure, there was significant fraud in the unemployment program during the pandemic, driven in large part by a huge surge of funding flowing through outdated and overwhelmed payment systems at the state level. But the level of fraud claimed by ID.me was anywhere from three to 10 times the size of government estimates. The lawmakers also found that verification services provided to at least 25 states by ID.me were faulty, delaying the processing of some unemployment claims while blocking payments on others. “The Committees’ investigation uncovered appalling new information about how ID.me’s identity verification services delayed benefits for Americans when they needed them most,” committee chair Rep. Carolyn B. Maloney (D-NY) [said]( in a statement. “I am also deeply concerned about ID.me providing inaccurate information to federal agencies in order to be awarded millions of dollars in contracts.” For more on the story, see reports at [Bloomberg]( [Politico]( and [Reuters](. --------------------------------------------------------------- An update: We told you yesterday about Sen. Rick Scott (R-FL) renewing his call for Republicans to lay out a conservative agenda for voters, including cuts to federal spending and substantial changes to Social Security and Medicare. In response to a request for more details, Clare Lattanze, a spokesperson for Scott, emailed: "In general, Senator Scott has been very vocal on the need for Congress to discuss and take real action to preserve Social Security and Medicare, which are on track for bankruptcy and need to be preserved, protected and made solvent for the American people who have paid into and rely on them. Congress regularly reviews essential programs and functions of the federal government— Social Security and Medicare should be no different." --------------------------------------------------------------- News - [Pelosi Stepping Down as Top House Democrat After 2 Decades in Leadership]( – Washington Post - [Hakeem Jeffries, Poised to Succeed Nancy Pelosi, Would Make History]( – New York Times - [Biden’s Top Aides Plan Exit as Economy Takes Center Stage in 2024 Election]( – Bloomberg - [House GOP Makes Clear It's Going After Joe Biden Via Hunter]( – Politico - [Defense Department Fails Another Audit, but Makes Progress]( – The Hill - [DHS Blocked Vital Research on Domestic Threats, Say Terrorism Experts]( – Washington Post - [Judge Grants Final Approval of $6 Billion Student Loan Settlement]( – Washington Post - [Biden Admin to Ask SCOTUS to Weigh In on Student Loan Relief Plan]( – Axios - [Inflation-Proof Demand Fuels Retail Spending]( – Axios - [‘Fix Congress’ Committee Says Farewell, but Not for Long, Members Hope]( – Roll Call - [Hospitals Often Don’t Help Needy Patients, Even Those Who Qualify]( – Wall Street Journal Views and Analysis - [Biden's Era of Big Government Is Over]( – Kate Davidson, Politico - [Senate, House Control Is Split. Can a Divided Government Make Progress?]( – Marc Fisher, Washington Post - [Nancy Pelosi Will Be a Hard Act to Follow]( – Matthew Yglesias, Politico - [Nancy Pelosi’s Strategies Were Flawed. Democrats Must Move On From Them]( – Perry Bacon Jr., Washington Post - [Nancy Pelosi, Badass]( – Michelle Cottle, New York Times - [Have Republicans Learned Anything From Their Dance With the Donald?]( – Frank Bruni, New York Times - [Freedom Caucus Members Want to Decentralize Power in the House. But What Does That Really Mean?]( – Jim Saksa, Roll Call - [Fed to Face Rising Tensions in Next Congress on Inflation and Jobs]( – Craig Torres, Bloomberg - [Medicare’s Drug-Price Negotiations Can Get More Ambitious. Here’s How]( – Bloomberg Editorial Board - [How Banks and Private Equity Cash In When Patients Can’t Pay Their Medical Bills]( – Noam N. Levey and Aneri Pattani, Kaiser Health News - [EARN Act Would Cost $80 Billion Without Gimmicks]( – Committee for a Responsible Federal Budget - [Republicans Don’t Have to Write a ‘Blank Check’ for Ukraine]( – Michael Allen, Politico - [The World Economy Catches Some Lucky Breaks]( – Daniel Moss, Bloomberg Copyright © 2022 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](