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More than networks, America needs better cybersecurity

Foreign actors are waging a digital war on the backbone of the U.S. economy. The SolarWinds cyberattack, perpetrated by Russian hackers and undiscovered until nine months after it occurred, was a digital intrusion that had no precedent in our nation’s history. The hackers wormed their way into key federal agencies including the departments of State, Energy, Defense, Treasury and Justice.

The federal government was far from the only victim of SolarWinds. In Arizona, Ohio, California and Texas, the hackers targeted everything from state hospitals to prominent universities. The intruders were inside these computer systems for months — and we didn’t know the scale of the damage until long after the intrusion. With a different backdrop, cyber espionage of this magnitude would merit around-the-clock coverage.

But this attack was discovered amid social upheaval around a fraught presidential election and a raging pandemic. A computer breach of the nation’s most sensitive agencies in that crowded context took a backseat.

Cyber threats are not aimed solely at large companies; smaller operations face danger, too. Recently, Brandon Wales, executive director of the Cybersecurity and Infrastructure Security Agency (CISA), voiced concern about potential vulnerabilities: “[Smaller communications entities] should not assume that they’re … not in the crosshairs of a more sophisticated nation state.” Wales noted that smaller companies could give malicious cyber actors a foothold in the nation’s larger critical service operations.

An influx of federal funding for new broadband networks across the country is headed toward local governments, but this won’t significantly decrease the risk for community networks — municipalities are unlikely to spend the funds to prevent a modest community network from becoming a weak link that invites cybercrime.

Local governments are good at many things, but asking them to understand how to keep local networks safe and protect connections to the nation’s internet infrastructure is a stretch. Cybersecurity plans deserve more scrutiny at every level — especially given the possibility of local weaknesses in our network fabrics via government-owned and -operated broadband networks that often lack the tools to detect cyber intrusions.

Government-owned networks (GONs) were not a sound plan even before SolarWinds or the ransomware attacks that took down Colonial Pipeline and JBS Foods. For decades, municipal governments have tried and failed to build local broadband networks that provide community internet access. In nearly every case, the GONs failed to draw enough subscribers and taxpayers were left with a steep bill. The only winners were expensive broadband consultants who saw an opportunity to collect federal grant dollars for network buildout by persuading local leaders that their proposals would bring cheaper, faster internet. It’s hardly feasible for a municipality to build a local network; it’s even less likely they’ll spend the funds to maintain and secure it.

GONs’ poor economic track record, along with the need for improved cyber awareness, should have convinced the Biden administration that spending billions of dollars on municipal broadband operations would create numerous weak points in our network backbone. SolarWinds proved that federal agencies, with their massively funded cybersecurity programs, are still challenged with the remit to protect themselves from digital breaches.

What confidence can citizens have that a town, city or state, with a locally built and run internet network, isn’t equally or more vulnerable?

Consider also how hackers fooled a top-tier Department of Homeland Security (DHS) system into believing their hacks were ordinary computer activity in 2015. What hope is there, then, for a GON in a city like Knoxville, Tenn., which already suffered a ransomware attack and whose entire budget is less than 0.9 percent of that of the DHS? And yet, egged on by the Biden administration and consultants, Knoxville is flirting with running its own broadband system. Estimates suggest the network will take seven years to build — hardly the faster, cheaper internet option citizens have been promised by their city officials.

Commercial broadband providers, on the other hand, spend tens of billions of dollars annually to keep things running safely. They invest heavily in network security, pay hundreds of professionals to guard their network operations, and endlessly brainstorm ways to protect customers’ information.

We should build on what the COVID-19 work-from-home period has taught us: that our networks work extraordinarily well. Rather than overbuilding duplicative networks in areas that already have good broadband coverage, the state should partner with the private sector to close coverage gaps and build secure networks that give new internet users safe access. There is almost no question that the size and nature of these cyber threats will continue to escalate. We need to strengthen our network defenses — not build new, defenseless networks.

Shane Tews is a nonresident senior fellow at the American Enterprise Institute, where she focuses on cybersecurity issues and emerging technologies. She is president of Logan Circle Strategies, a strategic advisory firm. Follow her on Twitter @ShaneTews.

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The Hill's Morning Report — Nadler beats Maloney; more help on the way for Ukraine

This morning, victorious primary candidates in New York and Florida race ahead to Election Day while Ukrainians in the midst of war nervously celebrate their independence day. 

Before we dive into U.S. political contests, a look at a threatened ally: 

The United States today will publicly stand with Ukraine as it marks its sixth month of war with Russia. 

The administration is expected to commit another $3 billion in assistance to train and equip Ukrainian forces for years to come, according to U.S. officials (The Associated Press). The funding under the Ukraine Security Assistance Initiative will support contracts for drones, weapons and other equipment that may not see the battlefront for a year or two, officials told the news wire.

The Hill’s Laura Kelly, reporting from Kyiv, describes Ukrainians as determined to keep fighting even as the war’s horrors and uncertainties are never out of mind. 

The State Department and U.S. Embassy in Kyiv warned Americans to leave Ukraine immediately ahead of today’s independence day celebrations, describing Russia as stepping up efforts to launch attacks on civilian infrastructure and government facilities timed to events this week, which commemorate 31 years since Ukraine broke its ties with the Soviet Union (CNN).

Half a year of war has cost countless lives, upended families, turned parts of cities and homes into rubble, and transformed some small Ukrainian communities into graveyards. Russia initially believed Ukraine would fall within days (The Associated Press). The war, now at a standstill, has no end in sight. Russia, an international pariah because of its February invasion, appears to be weathering tough global sanctions that in turn are painful for European nations because of resulting energy shortages and rising costs. 

“The U.S. Embassy urges U.S. citizens to depart Ukraine now using privately available ground transportation options if it is safe to do so,” the embassy said on its website, citing unspecified advance “information.”

“The security situation throughout Ukraine is highly volatile and conditions may deteriorate without warning,” it added.

In Kyiv, there’s a ban on all big gatherings through Thursday. Ukrainian President Volodymyr Zelensky, who today said his country has been “reborn” six months into war (The New York Times),is among those warning that Moscow may carry out intense attacks, including missile strikes, today or this week (The Associated Press).

“We are fighting against the most terrible threat to our statehood and also at a time when we have achieved the greatest level of national unity,” Zelensky said during a Tuesday evening address (Reuters).

Zelensky and international officials, including the secretary general of the United Nations, continue to warn that a catastrophe could result from the Russian military’s seizure and occupation for months of the Zaporizhzhia nuclear power plant. All that stands between the world and nuclear disaster are dedicated Ukrainian operators working at gunpoint. (The New York Times). 

U.S. teacher Marc Fogel, who was sentenced to 14 years in a Russian penal colony in June after his arrest last year for possession of half an ounce of medical marijuana prescribed for pain in the U.S., once taught international history to children of U.S. diplomats (The Washington Post). His family wants him included in the potential prisoner swap being negotiated by the Biden administration to free WNBA star Brittney Griner and former Marine Paul Whelan, both currently serving long sentences in Russia. On Tuesday, nine senators urged the State Department to designate Fogel as “wrongfully detained” and also seek his release as part of diplomatic efforts (CNN).  

“The United States cannot stand by as Mr. Fogel wastes away in a Russian hard labor camp,” wrote Sens. Bob Casey (D-Pa.), Pat Toomey (R-Pa.), Marco Rubio (R-Fla.), Jon Tester (D-Mont.), Steve Daines (R-Mont.), John Hickenlooper (D-Colo.), Joe Manchin (D-W.Va.), Shelley Moore Capito (R-W.Va.) and Tim Kaine (D-Va.).

Related Articles

▪ The New York Times: Images chronicle the war’s toll (photographers’ slideshow from Ukraine since February). Also HERE. 

▪ Ukraine Minister of Defense Oleksii Reznikov, guest commentary, The Atlantic Council: “A strong Ukraine is the best solution to Europe’s Russia problem.”

▪ Reuters: Pope Francis today warned of potential “nuclear disaster” in Ukraine and called for “concrete steps” to safeguard its Zaporizhzhia plant.

▪ Newsweek: Zelensky at a Crimea Platform summit in Kyiv vowed on Tuesday that Ukraine’s forces will retake Russian-occupied Crimea. German Chancellor Olaf Scholz, Canadian Prime Minister Justin Trudeau and Japanese Prime Minister Fumio Kishida were among world leaders who addressed the virtual gathering in support of Ukraine.

LEADING THE DAY

➤ POLITICS

In a battle of two New York congressional stalwarts, it was a rout on Tuesday night as House Judiciary Committee Chairman Jerry Nadler (D-N.Y.) defeated House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-N.Y.) in one of the most anticipated primaries of the year. 

As of this morning Nadler raked in 55.4 percent to only 24.4 percent for Maloney, a 15-term member. The two lawmakers were squeezed into the same Manhattan-based district after an unanticipated redistricting ruling earlier this summer threw the Empire State’s maps into chaos, leading to a game of political musical chairs. The 2020 Census also played a role as New York lost a congressional seat after the decennial count. 

“It might have been so much easier to move away from this community and represent a different part of the city,” Nadler, 75, said at a victory party on the Upper West Side. “I have lived here for my entire adult life, I love the people of this community and what they represent. Why would I want to be any place else?”

Nadler, who twice played key roles in impeaching former President Trump, thanked Maloney for her “decades of service to our city.” The congresswoman rose to prominence in the fight to win health care benefits for Sept. 11 first responders (The Hill).

▪ The New York Times: Nadler defeated Maloney in one of several bitter primaries being decided in New York.

▪ The Hill: Democrat Pat Ryan wins bellwether special election for New York House seat previously occupied by New York Lt. Gov. Antonio Delgado (D). 

▪ The Hill: Former impeachment counsel Dan Goldman wins the crowded Democratic primary in New York’s 10th Congressional District. 

▪ The Washington Post: Democrats nominate established candidates; gain new traction on abortion.

▪ Axios: Rep. Sean Patrick Maloney (D-N.Y.) fends off progressive challenger.

▪ The Hill: New York’s state Republican Party chairman Nick Langworthy defeats GOP’s Carl Paladino in the 23rd Congressional District.

In Florida, Rep. Charlie Crist (D), the state’s former GOP governor, defeated state Agriculture Commissioner Nikki Fried for the Democratic nod to take on Gov. Ron DeSantis (R) in November. 

Crist, who lost a Senate bid as an independent in 2010 and a gubernatorial campaign four years later as a Democrat, won 60 percent of the vote. Fried, the lone Democratic statewide office holder who has been considered an up-and-coming candidate, was backed by only 35 percent of Sunshine State Democrats. 

Celebrating his win, Crist on Tuesday night took a swipe at DeSantis’ widely assumed 2024 hopes. 

“Our fundamental freedoms are literally on the ballot my friends. A woman’s right to choose: on the ballot. Democracy: on the ballot. Your rights as minorities are on this ballot. That’s what’s at stake in this election,” he said. “Make no mistake about it because this guy wants to be president of the United States of America and everybody knows it. However when we defeat him on Nov. 8 that show is over” (The Hill). 

▪ The Hill: Rep. Matt Gaetz (R) staves off a challenge in the Florida House primary.

▪ The Hill: Rep. Val Demings (D-Fla.) clinches the Democratic nomination to face Sen. Marco Rubio (R-Fla.) in November.

▪ The Hill: In Florida, 25-year-old Maxwell Alejandro Frost wins Democratic nomination to succeed Demings.

▪ Max Greenwood, The Hill: Five takeaways from primary night in New York, Florida.

▪ The Hill: In Oklahoma, Rep. Markwayne Mullin won the state’s Republican Senate runoff, advancing to November’s general election. 

Elsewhere on the political scene, the National Archives on Tuesday said that the FBI seized at least 700 pages of classified materials when the agency first searched former Trump’s Mar-a-Lago estate in January (The Hill).

Acting Archivist Debra Steidel Wall made the revelation in a letter to Trump’s attorneys in May, indicating that Trump’s team sought to invoke executive privilege over the documents. That claim was denied by the Archives after consulting with the Justice Department. 

“As the Department of Justice’s National Security Division explained to you on April 29, 2022: ‘There are important national security interests in the FBI and others in the Intelligence Community getting access to these materials. According to NARA, among the materials in the boxes are over 100 documents with classification markings, comprising more than 700 pages. Some include the highest levels of classification, including Special Access Program (SAP) materials,’” Steidel Wall wrote.

Twenty more boxes of items were seized from Mar-a-Lago in the search this month. Included in that batch were four sets of top-secret documents and seven other sets that are deemed classified (The Washington Post). 

As The Hill’s Rebecca Beitsch writes, Trump’s intransigence and refusal to turn over documents to the authorities could bolster the Justice Department’s case against the ex-president. In addition, it also raises the question once again of whether the delay in handing over the documents was harmful to national security. 

▪ The New York Times: Trump, without the presidency’s protections, struggles for a strategy.

▪ The Hill: Judge gives Trump until Friday to clarify his request for a special master on records seized by the FBI.

▪ The Hill: Karl Rove: Trump legal problems dampening Republican “enthusiasm” ahead of midterms.

▪ Axios: Sen. Rick Scott’s (R-Fla.) ill-timed Italian vacation.

Two men were convicted Tuesday of a conspiracy to kidnap Michigan Gov. Gretchen Whitmer (D), marking a big win for the Justice Department in a second trial for the pair of criminals. Adam Fox and Barry Croft Jr., were also found guilty of attempting to obtain a weapon of mass destruction. 

That weapon was a bomb intended to blow up a bridge in the event the kidnapping would have happened at Whitmer’s vacation home in an attempt to thwart police. Croft, 46, was also convicted of a separate explosives charge. In April, a jury was unable to reach a unanimous verdict, prompting the subsequent trial. 

“You can’t just strap on an AR-15 and body armor and go snatch the governor,” Assistant U.S. Attorney Nils Kessler told jurors (The Associated Press).

Politico: FBI Director Christopher Wray was hired to be boring. Now, he’s guiding the agency through threats and MAGA hate.

IN FOCUS/SHARP TAKES

➤ ADMINISTRATION

President Biden today is expected to announce his decision about student loan forgiveness, a judgment that will spark divisions within his party, invite harsh criticism from Republicans and put the White House on defensive hours before the president and first lady Jill Biden, an educator, launch an election-season drive at a Maryland high school on Thursday to gin up grassroots support for Democratic candidates.

Biden has mulled for more than a year what is becoming a no-win announcement. In the end, sources say he has opted for a targeted plan of up to $10,000 in debt relief for borrowers whose incomes fall below a certain threshold, likely $125,000 per year, according to reporting by The Hill, CNN and other national news outlets. He will package that with another temporary extension of the current moratorium on student loan debt repayments, which expires in a week and was put in place by his predecessor at the outset of the pandemic.

Taken together, the student debt relief will be a far cry from the $50,000 per borrower sought for years by progressives, a figure Biden said flatly during a town hall event last year was excessive and would not happen on his watch (USA Today).

“My point is: I understand the impact of debt, and it can be debilitating,” Biden told his audience a month into his term. “I am prepared to write off the $10,000 debt but not $50 [thousand], because I don’t think I have the authority to do it,” he added.

The issue does not cut cleanly along party lines with voters because many former middle- and lower-income students and their families signed loan documents for college and scrimped for years to pay off the debts. They say they would get no benefit retroactively if they have fulfilled those loans, no matter how much economic hardship they shouldered.

Economists argue over student debt forgiveness policies, believing that some beneficiaries choose expensive private schools, might not need the relief or could wind up seizing a windfall and spending it, which they argue could be inflationary. The Federal Reserve has reported that Americans owe about $1.75 trillion in student loan debt.

▪ The Washington Post: After delay, Biden readies student loan help for millions.

▪ The Hill: Biden student loan plans caught in inflation debate crosshairs. 

▪ The Hill: Biden’s job approval rating is 41 percent in a new Reuters/Ipsos poll (not great but a slight summer improvement. The survey has a margin of error of plus or minus 4 points).

The Hill: More than halfway through his term, Biden is still relying on a handful of Trump appointees in critical government posts. Some in his party have complained about long-running vacancies in key jobs.

The Hill: As Biden and Democratic candidates continue to argue that gasoline prices have dropped for 70 consecutive days and that the U.S. economy and the labor market remain strong despite high inflation, many in both parties will be listening Friday at 10 a.m. ET as Federal Reserve Chairman Jerome Powell speaks at a prominent economic forum in Wyoming. Will September’s rate hike by the central bank be as aggressive as its last two 75-basis-point decisions? Inquiring candidates, the president, economists, investors and business leaders are trying to figure out where monetary policy heads next.

Bloomberg News: Powell has a chance to reset market expectations at Jackson Hole.

OPINION

■ Why I won’t be masking my kids this school year, by Leana S. Wen, contributing columnist, The Washington Post. https://wapo.st/3dSMn5p 

■ The era of economic whiplash is just beginning, by Eduardo Porter, columnist, Bloomberg Opinion. https://bloom.bg/3PH7a9b

WHERE AND WHEN

The House will meet at 10 a.m. for a pro forma session on Friday. It will reconvene on Sept. 13.

The Senate convenes on Friday at 10 a.m. for a pro forma session during its summer recess, which ends Sept. 6.

The president returns to the White House from Rehoboth Beach, Del., at 10:55 a.m.

Vice President Harris has no public events scheduled. 

The White House daily press briefing is scheduled at 3 p.m.

🖥  Hill.TV’s “Rising” program features news and interviews at http://thehill.com/hilltv, on YouTube and on Facebook at 10:30 a.m. ET. Also, check out the “Rising” podcast here.

ELSEWHERE

➤ PANDEMIC, POX & HEALTH

The administration plans to offer the new tailor-made booster jabs, which scientists believe are effective against the highly transmissible BA.5 offshoot of omicron, to people 12 and older soon after Labor Day (The New York Times). 

Heading into another potential winter wave of COVID-19 infections and persistently low vaccination rates, the government will try again to encourage Americans to roll up their sleeves. Only about two-thirds of eligible Americans have been inoculated with the primary series of two shots, and far fewer have received booster doses. Deaths per day have averaged close to 400 people this summer. Existing vaccines continue to provide strong protection against serious illness and death from infections with the coronavirus’s BA.5 version, according to public health officials, and many other Americans have contracted COVID-19, recovered and gained some immunity along the way.

Moderna on Tuesday said it asked the Food and Drug Administration for authorization of its reformulated COVID-19 booster shot for adults 18 and older, which targets the BA.5 omicron subvariant. Moderna followed a similar request filed by Pfizer on Monday. The jab would be for individuals age 18 and older (NBC News).

The Washington Post: The Cayman Islands allows unvaccinated travelers to return.

Overall life expectancy in the U.S. dropped by 1.8 years from 2019 to 2020, according to a new National Vital Statistics report. The decline affected all 50 states and Washington, D.C., ranging from 0.2 years in some states to as many as 3 years in New York. The dip is attributed to COVID-19 and an uptick in drug overdose deaths, marking the largest year-to-year change in more than 75 years. Following New York’s 3-year decrease is Washington D.C., which saw life expectancy fall by 2.7 years (The Hill).

The Hill: Here are the states with the largest declines in life expectancy.

A new, fatal case of Ebola was confirmed in the Congolese city of Beni, the nation’s ministry of health announced Monday, linking it to a previous outbreak. Congo’s dense tropical forests are a natural reservoir for the deadly virus, which causes fever, body aches and diarrhea. The country has recorded 14 outbreaks since 1976. The 2018-2020 spread involved nearly 3,500 total cases, and the virus killed 66 percent of those infected. Since then, vaccines and monoclonal antibody treatments have proved effective against the virus where populations have access, according to the World Health Organization (The Associated Press).

Total U.S. coronavirus deaths reported as of this morning, according to Johns Hopkins University (trackers all vary slightly): 1,041,491. Current average U.S. COVID-19 daily deaths are 387, according to the Centers for Disease Control and Prevention.

➤ TECH

In an explosive whistleblower complaint filed last monthwith the Securities and Exchange Commission, the Department of Justice, and the Federal Trade Commission and obtained by The Washington Post, former Twitter security chief Peiter “Mudge” Zatko alleges the company misled regulators about lax security that opened the platform to embarrassing hacks, including the commandeering of accounts held by such high-profile users as Elon Musk, former President Obama and Trump.

The complaint has potential implications for Twitter’s legal battle with Musk, who is trying to get out of a $44 billion contract to buy the social media platform. The deal includes a pledge by Twitter that its shareholder filings are accurate.

Zatko also alleged the company prioritized user growth over reducing spam. Executives stood to win individual bonuses of as much as $10 million tied to increases in daily users, the complaint asserts, and nothing explicitly for cutting spam. 

Twitter denied the allegations, saying Zatko was fired 15 months ago “for poor performance and leadership.” The Post said it obtained a copy of the disclosure from a senior Democratic aide on Capitol Hill after a redacted version of the 84-page filing went to congressional committees. 

The Hill: Twitter whistleblower adds fuel to Musk’s allegations. 

Amazon is in the news because of heightened consumer privacy concerns tied to its expansion plans. The company announced it will spend billions of dollars in two gigantic acquisitions, one in health care and one in iRobot (maker of the Roomba vacuum), which if approved would expand its data collection and intimate impact on the lives of consumers (The Associated Press). For example, the newest Roombas include sensors that map and remember the floor plans of residences. 

THE CLOSER

And finally … 🇺🇦 ⚽On Tuesday, the Ukrainian soccer league started its new season in an empty, 65,500-seat Olympic stadium in Kyiv after a poignant ceremony paying tribute to those fighting in the war with Russia. Ahead of Independence Day today, large crowds are banned and the country is under martial law. 

In a defiant gesture of Ukraine’s search for regular life, two teams from the war-torn east, Shaktar Donetsk and Metalist 1925, competed to a draw without the cheers and revelry of spectators. It was the first top-level soccer match played in the country since Russia’s invasion (The Associated Press).

Stay Engaged

We want to hear from you! Email: Alexis Simendinger and Al Weaver. Follow us on Twitter (@alweaver22 & @asimendinger) and suggest this newsletter to friends!

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Calabasas celebrities among the worst water wasters, water officials say

(KTLA) – Some of Hollywood’s biggest celebrities are accused of using too much water while the rest of southern California tries to conserve amid a drought emergency. But water resource officials say it’s not just the stars who are using more than their fair share – thousands are being warned about using too much water.

They’re some of the biggest names in Hollywood: Sylvester Stallone, Kevin Hart, and Kim and Kourtney Kardashian. They’re also apparently some of the biggest water wasters in the Hidden Hills neighborhood of Calabasas.

Las Virgenes Municipal Water District officials say the stars, some of which aren’t even home, are among some 1,600 customers who have surpassed 150% of their monthly water budgets at least four times since the agency declared a drought emergency last December.

Now water officials say they may install a device that will restrict their water usage to their properties.

“They are in line to get a flow restriction device put on their water meters in order to limit how much water they’re continuing to use,” said Michael McNutt of the Las Virgenes Municipal Water District.

McNutt says the device will cause indoor faucets to trickle out and outdoor sprinklers will go from flowing freely to sputtering to a stop.

He explains the only surefire way to avoid getting a flow restriction device is to contact the water district and sign a commitment form that you’ll work with the district to come into compliance. If you don’t, you’ll get a flow restriction device put on for two weeks straight.

“If, once it’s removed, they continue to exceed their water budgets by 150%, it’s put back on for a minimum of a month,” McNutt said.

Violators will also get hit with some pretty pricey fines for each violation.

Representatives for Stallone and retired NBA star Dwyane Wade say the are taking measures to reduce their water usage. Las Virgenes officials say all the stars who have been publicly outed are taking some of the necessary steps.

“The great thing about the celebrities is they’re all working with us to get to where they need to be,” McNutt said.

District officials say people need to do away with thirsty lawns and replace them with drought-tolerant landscaping and install drip irrigation, which sends the water straight to the root to help save things like trees.

In the meantime, water officials say they’d love to work with high-profile people to demonstrate how to create a more drought-tolerant California.

“What I would love for them to do is contact me and work with me to put out public service messages, not only about what they’re doing, but how people can be like them and be a part of the solution,” McNutt said.

Water officials say that they have installed about 50 of those flow restriction devices to different homes. McNutt says none of those homes belong to celebrities because all of them are cooperating to bring down their water usage.

Source: TEST FEED1

Dip in inflation will likely be a cold comfort to Fed at Jackson Hole summit

Top Federal Reserve officials will spend three days plotting the next moves in their fight against inflation from a Wyoming ski resort as millions of Americans struggle with the rising cost of basic goods.  

The Fed’s annual summer policy summit in Jackson Hole, Wyo., kicks off Wednesday as the bank attempts to steer the U.S. out of high inflation and away from a recession.  

The event, which is closed to the public, begins with two days of panels and paper presentations focused on a central theme and concludes with a speech from Fed Chairman Jerome Powell.  

While only a few dozen attendees will witness Powell’s remarks, the text of his speech could give financial markets, Fed analysts and the American people a closer look at his views. 

“It’s a chance for the chair to speak his mind,” said Steve Englander, global head of North America strategy at Standard Chartered Bank, in a Tuesday interview.  

“He can reference whatever he thinks is important and kind of guide readers to see how he views the world,” Englander said, comparing the Jackson Hole speech to the president’s annual State of the Union Address. 

“There’s a feeling that it gives them greater insights,” he continued. 

Like his predecessors, Powell has used his past Jackson Hole speeches to frame his vision on the Fed’s approach to its biggest challenge of the moment, beyond the month-to-month speculation of what the bank will do to interest rates.  

Fed watchers generally don’t expect Powell to hint at what the Fed will do in September during its next monetary policy meeting — particularly with so much uncertainty facing the bank in its fight against inflation. 

“While the U.S. economy is not in recession, and we do not believe it will fall into one this year, the impact of inflation will not soon dissipate,” wrote Joe Brusuelas, chief economist at audit and tax firm RSM, in a Tuesday preview.  

“With inflation now permeating the housing sector, which will be difficult to unwind, Powell’s speech on Friday will almost certainly be one to remember and frame the domestic and global economic narrative into the beginning of the next business cycle,” he added. 

Annual inflation fell slightly in July and prices held even month-over-month, according to Labor Department data released earlier this month. The numbers were an encouraging break from months of steadily increasing price growth. Gasoline prices have also continued to fall through August, and supply chain issues that drove much of the rapid increase in the prices of goods are also appearing to ease.  

The combination of slowing price pressures and a steep decline in some sectors of the economy sensitive to higher interest rates — particularly housing — spurred speculation the Fed may soon ease up on interest rate hikes. Doing so could ease concerns of the Fed pushing the U.S. into a recession by raising rates to a point that stalls economic growth. 

But the brief dip in inflation is likely cold comfort to Powell and the Fed, who were caught off guard by the persistence of rapid price growth through much of the past two years. The Fed is still working to rebuild its credibility after expecting inflation to fall far sooner, only to watch it rise despite a series of sharp interest rate hikes earlier in 2022. 

“We are seeing some green shoots, but they don’t want to declare victory prematurely,” said Derek Tang, co-founder and economist at research firm Monetary Policy Analytics, in a Monday interview. 

Tang, like many Fed experts, expects Powell to reinforce the Fed’s commitment to bringing inflation down while acknowledging the pain likely to come with higher interest rates. While the labor market has remained strong and added 528,000 jobs in July alone, it is unclear how much longer U.S. households can keep powering the economy through spending with rates on the rise. 

“Even if inflation comes down, prices have still risen a lot over the last two years, so cost of living is still a big issue for many families,” he said. “Incomes are also rising, but they’re not necessarily keeping pace with inflation just so people feel for them. 

“They are very kind of sensitive to that potential disconnect there. Because otherwise, you’re going to feel gaslighted right?” Tang continued. “They’re gonna be really careful about the messaging around that.” 

Source: TEST FEED1

Biden student loan plans caught in inflation debate crosshairs

The Biden administration is expected on Wednesday to announce it is canceling a chunk of student debt, even as it faces criticism that going too far could hamper efforts to fight off inflation.

Some progressive Democrats have argued that forgiving student debt could help their party and Biden in the midterm elections given the crushing debt facing millions of students. Yet there is also reason to think the plan carries some real political risk.

Recent polling shows a majority of Americans are worried about the impact debt forgiveness plans could have on inflation, a huge issue in the midterms.

Under the potential forgiveness plan, borrowers earning less than $125,000 per year could see at least $10,000 in cancellation of their federal student loans. The amount is much lower than many progressives aimed for but would mark the most significant forgiveness in federal student debt for borrowers ever.

The idea has drawn pushback from Republicans, who have strongly come out against Democratic-led proposals for student debt relief in recent months, denouncing them as unfair and inflationary.

“The federal government does not ‘forgive’ or ‘cancel; student loans — they take the debt and give it to every American, including those without a degree. It’s just wrong,” Sen. Mike Braun (R-Ind.) tweeted on Tuesday.

An analysis released by the Penn Wharton Budget Model (PWBM) on Tuesday estimated the plan could run up about $300 billion in costs, with the potential to reach $330 billion if the effort is continued through the next decade for new borrowers and others who could qualify.

Kent Smetters, faculty director for PWBM, said the cost increase to continue the program for subsequent years would be much smaller in magnitude “because the assumption is that this is a one-time forgiveness per borrower.”

As for the impact the plan would have on inflation, Smetters estimated it to be more marginal in size, saying it would “basically barely show up in some sense in the standard inflation metric.” Though he added the plan could have future implications for inflation in higher education costs and “change how people finance college.”

“That could also change how colleges themselves price things,” Smetters said, asking, “Will colleges themselves actually increase tuition and capture a lot of the benefit?”

As for the impact the plan would have on inflation, Smetters estimated it to be more marginal in size, saying it would “basically barely show up in some sense in the standard inflation metric.”

Last month, annual consumer inflation hit 8.5 percent, easing from a four-decade high of 9.1 percent the prior month, though still much higher than what economists say is normal.

Republicans have pinned much of the blame on Democrats, specifically citing stimulus spending passed under the Biden administration as helping fuel inflation, as well as pandemic relief programs like the ongoing student loan pause. 

Although experts have said government spending under both the Trump and Biden administrations has had an impact on inflation, they also downplay the effects of the years-long payment freeze on the recent spike in costs.

But the Biden administration is still facing pressure to end the relief as government spending attracts more attention amid rising inflation.  

While Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, said the effects of extending a current pause on payments is “not gigantic,” he also said it’s one of the “most direct and instantaneous tools that the administration has” to combat inflation.

“It’s not large relative to the size of the inflation problem. But it’s large relative to the president’s tools to fight inflation,” Goldwein told The Hill last week.

However, advocates and Democrats pushing for forgiveness say rising prices underscore the need for continued relief to borrowers, citing economic hardship faced by lower income borrowers as inflation remains high.

“Inflation is most definitely a problem I think that we should be talking about, and it impacts student loan borrowers tremendously,” said Persis Yu, policy director for the Student Borrower Protection Center. “Especially low income student loan borrowers, who would really benefit from cancellation because they’re the folks who are spending more of their income right now on milk and bread.”

Advocates have also pushed back on plans by the White House to apply income restrictions to who is eligible for student loan forgiveness. But there are questions about whether the current income caps set at $125,000 are too high. 

The recent PWBM analysis estimated about 70 percent of the debt forgiven under the proposed $10,000 plan “accrues to households in the top 60 percent of the income distribution.”

Smetters said roughly 30 percent “would go to the bottom 40 percent of the income distribution.”  However, he also noted the analysis doesn’t account for racial demographics of borrowers, which advocates say is important to factor in.

Proponents of student loan relief often promote the effort as a means to promote racial equity, while noting the disproportionate burden faced by borrowers of color, especially Black borrowers, who experts say are more likely to borrow at higher rates and struggle with repayment.

“We often conflate income with wealth in that we’re not always capturing everybody who really needs assistance when we do means testing, in particular with income caps,” Yu said.

Yu particularly pointed to the yawning wealth gap between white and Black households, saying Black borrowers need higher incomes “to be able to afford homes, and to build savings, and retirement.”

Source: TEST FEED1

GOP PAC launches $1M in ads tying Kim Schrier and Elaine Luria to Biden

The Congressional Leadership Fund (CLF), a super PAC aligned with House Minority Leader Kevin McCarthy (R-Calif.), is launching ads targeting vulnerable Democratic Reps. Kim Schrier (Wash.) and Elaine Luria (Va.) on Wednesday.

The $615,000 in ads targeting Schrier and $395,000 aimed at Luria amount to over $1 million in additional ad buys for CLF, and are the PAC’s first ads in those districts, which the nonpartisan Cook Political Report rates as “toss-ups.”

Messaging in the ads centers on inflation and the economy, and on tying the two members to President Biden.

The ad targeting Schrier directly addresses a claim in one of her own ads that she was “taking on the Biden administration to suspend the gas tax.”

“Schrier votes with Biden 100 percent of the time,” a narrator in the CLF ad says. It charges that Schrier voted for bills that contributed to inflation despite her knowing that they would do so, playing audio from a June 2021 telephone town hall saying that Democrats knew there was a “possibility” that the American Rescue Plan stimulus package could cause prices to go up and lead to inflation.

The ad targeting Luria says she praised the economy despite inflation and fears of a recession, with a narrator accusing her of “spewing liberal talking points, making excuses for Biden and [House Speaker Nancy] Pelosi.”

The ads knock up CLF’s investments to $2.3 million in Virginia’s 2nd Congressional District where Luria is running, and over $4 million in Washington’s 8th Congressional District where Schrier is.

CLF announced in April that it has reserved $125 million nationwide in television and streaming service ad space through the November elections.

“Elaine Luria and Kim Schrier tell a different story back home, but in Congress they’re little more than loyal foot soldiers for Biden and Pelosi’s failed agenda,” CLF communications director Calvin Moore said in a statement. “With Americans suffering from record prices for gas and groceries, families can’t afford to send Luria and Schrier back to Congress.”

Schrier and Luria were both first elected to Congress in the 2018 “blue wave” that flipped their districts from GOP to Democratic control.

Schrier will face Republican businessman and former prosecutor Matt Larkin in November, while Luria will go up against Republican Virginia state Sen. Jen Kiggans.

Source: TEST FEED1

Five takeaways from primary night in New York, Florida

Voters in New York picked their representatives for two vacant House seats on Tuesday, while Florida Democrats chose their nominee to take on Gov. Ron DeSantis (R) this fall. 

The primaries and special elections in the two states were among the last to take place before the country enters the sprint toward the general election, and they offer some final clues about the political landscape heading into the fall.

Here are five takeaways out of New York and Florida:

Democrats make safe choice to take on DeSantis

Staring down the potential of four more years of Ron DeSantis in the governor’s mansion, Florida Democrats turned to a familiar face.

Rep. Charlie Crist (D-Fla.), himself a former Republican governor of Florida, beat state Agriculture Commissioner Nikki Fried on Tuesday for the Democratic nomination to take on DeSantis in November, setting up his second general election campaign to reclaim his old office in Tallahassee in less than a decade.

Heading into the primary, Crist appeared to have an edge over Fried. But his victory was still a blow to Florida’s only statewide elected Democrat and someone who had been heralded as the future of the state party. 

From the outset of her campaign for governor, Fried billed herself as “something new,” casting herself as part of a new generation of Democrats in the state that could bring the fight to DeSantis in November.

But Florida Democrats ultimately chose the establishment favorite in Crist, who argued that his “happy warrior” persona and compromise-minded brand of politics made him the best candidate to win over moderates and independents disenchanted with DeSantis’s combative style and culture war rhetoric.

The Democratic establishment held its own

It was a good night for the Democratic establishment. 

In New York, Rep. Sean Patrick Maloney (D-N.Y.), the chair of Democrats’ House campaign arm, prevailed in his primary over a progressive challenger. Former Rep. Max Rose (D-N.Y.) overcame a challenge from his left, giving him a chance to reclaim his old House seat in November. 

And Daniel Goldman, who prosecuted the first impeachment case against former President Donald Trump, beat out his main progressive rival, state Assemblywoman Yuh-Line Niou.

A similar case played out in Florida: Crist, who had the support of Democratic establishment heavyweights, beat out Fried in the party’s gubernatorial primary, while Jared Moskowitz, a former state representative and Florida emergency management director, defeated five other Democrats to win the nomination to succeed retiring Rep. Ted Deutch (D-Fla.).

Overall, Tuesday was a show of force for the party establishment, even amid signs that voters in both parties are irritated with their figureheads. 

As Democrats look to ward off a red wave in November, the primary results as a whole might just be a sign that voters aren’t ready to take any chances on less-experienced candidates.

Special elections in New York give Democrats new hope

Republican Joe Sempolinski pulled off a win for a vacant Western New York House district on Tuesday, holding a seat for the GOP after former Rep. Tom Reed (R-N.Y.) stepped down earlier this year.

His win was, naturally, a disappointment for Democrats. But it’s not all bad news for the party in power. Democrat Max Della Pia came closer than expected to pulling off an upset in the race. 

And Democrats scored an even bigger win in the special election to represent New York’s 19th District, where Democrat Pat Ryan defeated Republican Marc Molinaro in a race that was seen as a bellwether of the political environment ahead of November.

Della Pia’s closer-than-expected loss and Ryan’s narrow win add up to the latest evidence that Democrats may be on the verge of regaining some lost momentum in the runup to the November midterm elections. 

The party has so far faced a bruising political outlook this year, but with the Supreme Court’s decision earlier this summer to overturn Roe v. Wade, the seminal abortion rights case, Democrats have seen a burst of energy in recent weeks, raising their hopes of avoiding an electoral rout this fall. 

Maloney loss ushers end of political era in Manhattan

No matter who won the Democratic primary to represent New York’s Manhattan-based 12th District, the race was destined to end the political career of one Democratic heavyweight. In the end, that turned out to be Rep. Carolyn Maloney (D-N.Y.).

Maloney lost her primary on Tuesday to Rep. Jerrold Nadler (D-N.Y.). Both currently helm powerful committees in the House – Maloney is the chair of the Oversight and Reform Committee, while Nadler leads the Judiciary Committee – and both have served in Congress since the early 1990s. 

There was little animosity between Nadler and Maloney. The two members of Congress are ideologically similar and have a long history of working together. They were only pitted against one another as a result of New York’s redistricting process, which combined the cores of their Manhattan districts earlier this year.

Nevertheless, the results on Tuesday all but assure that Maloney won’t be returning to Washington next year for the first time since 1993. Nadler, meanwhile, is virtually guaranteed another term on Capitol Hill, given the district’s strong Democratic politics.

Particularly contentious primary season gives way to general election

The 2022 primary season isn’t over just yet, with a handful of states still waiting to choose their nominees for November. 

But the primaries in Florida and New York saw some of the final major showdowns before the general election campaign starts in earnest and marked the beginning of the end of a particularly contentious primary season that saw incumbents fighting incumbents, Democrats battling over the direction of their party and Republicans squabbling over their loyalty to Trump.

With the primaries nearly over, the focus will now turn to larger questions: Can Democrats defy history and stave off a midterm thrashing, even with President Biden’s approval ratings plumbing new lows? Can Republicans keep their base energized even without Trump on the ballot? 

And most importantly, which party do voters trust the most to control Congress for at least the next two years?

Source: TEST FEED1

Former impeachment counsel wins crowded Democratic primary in New York’s 10th District

Dan Goldman, an attorney who served as the lead counsel in the first impeachment trial against former President Trump, is projected to win the Democratic primary in New York’s 10th Congressional District.

The Associated Press called the race at 12:39 a.m. Wednesday.

Goldman was among a dozen candidates seeking the Democratic nod in the New York House district. 

Rep. Jerry Nadler (D-N.Y.), who currently represents the 10th Congressional District, wound up facing Rep. Carolyn Maloney (D-N.Y.) in the newly created 12th Congressional District due to redistricting. 

Other Democrats vying for seat included Rep. Mondaire Jones (D-N.Y.), who represents the 17th Congressional District but ran in the 10th to avoid a primary fight with another member of Congress; New York state Assemblywoman Yuh-Line Niou, New York City Council Member Carlina Rivera and former New York City Comptroller Liz Holtzman.

Goldman, a Levi Strauss & Co. heir, poured millions of dollars into his election bid, and he had received a coveted endorsement from The New York Times editorial board. Some candidates sought to portray the former federal prosecutor as attempting to “purchase” his seat and not being liberal enough for their party.

“He’s not [a] traditional politician. He hasn’t held elected office before, and it’s something that we’ve had to grow accustomed to, but it’s you know, it’s par for the course. And Dan, through all of it, is very much committed to keeping things positive … and, you know, let everybody else scrap it out and do whatever they want,” Goldman’s campaign told The Hill in an interview last week.

Source: TEST FEED1

Langworthy defeats Paladino in New York GOP House primary

New York State GOP Chairman Nick Langworthy is projected to win the party’s primary for the 23rd Congressional District on Tuesday, defeating Buffalo businessman Carl Paladino. 

The Associated Press called the race at 12:34 a.m. Wednesday.

While former President Trump did not endorse either candidate in the primary, both Langworthy and Paladino jockeyed for his support.

Langworthy has criticized Paladino for his past donations to New York Democrats, including Hillary Clinton. Paladino painted Langworthy as an establishment, career politician. 

Langworthy will likely coast through November’s general election in a district the Cook Political Report rates as “solid Republican.”

Source: TEST FEED1

Democrat Ryan wins bellwether special election for NY House seat

Democrat Pat Ryan is projected to defeat Republican Marc Molinaro in the special election for New York’s 19th Congressional District on Tuesday, giving Democrats a win in a swing district thought to be a bellwether for November. 

CNN and ABC called the race shortly before 11:55 p.m.

Tuesday’s special election garnered special attention as an indication of how voters could behave in November, and what issues could galvanize them to vote.

Molinaro zeroed in on the economy while Ryan looked to seize on anger surrounding the overturning of Roe v. Wade to drive their respective voters to the polls. The Democrat rolled out his first television ad of the campaign cycle, which focused on abortion, less than an hour after the Supreme Court announced its decision to strike down protections for the procedure. 

Democrats are likely to tout Ryan’s win as a positive sign going into the midterms in what is expected to be a tough year for the party.  

Ryan will represent the district through January, replacing former Rep. Antonio Delgado (D-N.Y.), who was appointed lieutenant governor earlier this year. Ryan was also projected on Tuesday to win the Democratic nomination for the November election for New York’s newly drawn 18th Congressional District. 

Source: TEST FEED1