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SVB’s Political Fault Lines
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SVB’s Political Fault Lines

Plus: Trump steps up his retail politics game and House Republicans demand answers over the unauthorized release of military records.

Sen. Mitt Romney speaks to reporters Tuesday about the government reaction to the collapses of Silicon Valley Bank and Signature Bank. (Photo by Drew Angerer/Getty Images)

Happy Wednesday! The Hill reported Monday that “the most partisan member of Congress, Rep. Marjorie Taylor Greene, generated nearly 10 times as much press coverage in the 2022 election cycle as the least partisan member, Rep. Don Bacon, according to a new study of ‘hyper-partisan’ politics.” More on Bacon in a moment … 

Up to Speed

  • Senate Minority Leader Mitch McConnell was discharged from the hospital on Monday after he suffered a concussion from a fall last Wednesday. McConnell also fractured a rib and “the next step will be a period of physical therapy at an inpatient rehabilitation facility before he returns home,” according to a McConnell spokesman. 
  • Former New York Gov. Andrew Cuomo, who resigned in 2021 amid a sexual harassment scandal, announced Monday evening he is launching an organization called Progressives for Israel. “I am going to call the question for Democrats,” he said in a video announcement. “Do you stand with Israel? Or do you stand against Israel? Because silence is not an option.”

The Politics of SVB’s Collapse

The bank bailouts following the 2007-08 financial crisis were an all-hands-on-deck affair. President George W. Bush, Federal Reserve Chairman Ben Bernanke, and both houses of Congress worked to pass a bill that would stabilize America’s tottering financial sector. Yet the federal actions taken in the wake of Silicon Valley Bank’s collapse last week were a spectator sport for most in D.C.

The bank run started Thursday and SVB was in receivership by Friday. The White House, Federal Reserve, and Federal Deposit Insurance Corporation emerged Sunday night to announce that all affected depositors would maintain uninterrupted access to their money courtesy of the FDIC’s deposit insurance fund. (Disclaimer: The Dispatch was a Silicon Valley Bank customer.)

By the time most of the political class punched back on Monday morning, the only role left for most to play was pundit. (Though Rep. Kevin Hern, who chairs the influential Republican Study Committee, reportedly warned members and their staff to stop doing TV hits and tweeting about the situation if they didn’t have a good grasp on what was going on.)

SVB largely fell apart because it was unusually vulnerable to federal interest-rate hikes, thanks to its startup-heavy client portfolio and reliance on long-term fixed-rate investments like Treasury bonds and mortgage-backed securities. For most congressional Republicans, the bedrock message was straightforward: “Biden’s reckless spending caused record inflation and rapid interest rate hikes that broke family budgets and banks too,” tweeted House Speaker Kevin McCarthy. “We must restore fiscal sanity.”

Less easy to see on the right is a consensus on solutions. Sen. Mitt Romney publicly called for all affected depositors to be made whole—right before the Fed announced it would do just that. But several Republican presidential candidates attacked the move as a bailout for well-connected Silicon Valley types at the expense of the rest of America. (While the White House has said taxpayer money won’t be used to make depositors whole—true in the strict sense, as the money is coming from an insurance fund funded by the banking industry—others rightly point out that higher bank fees means more fees and fewer returns passed along to anybody who banks in America.)

“Private investors can purchase the bank and its assets,” former South Carolina Gov. Nikki Haley tweeted on Saturday. “It is not the responsibility of the American taxpayer to step in. The end of big government and corporate bailouts must end.”

“If you want to prevent a run on other banks, increase the FDIC guarantee,” Vivek Ramaswamy, an investor and presidential candidate, tweeted. “But SVB screwed up by utterly failing to take interest rate risk into account, in two ways—both in terms of client concentration risk among startups and investing in interest rate-sensitive securities. So did the many startups who blithely did business with them. It’s not the U.S. taxpayer’s job to now coddle them.”

President Donald Trump weighed in as only he can. “WE WILL HAVE A GREAT DEPRESSION FAR BIGGER AND MORE POWERFUL THAN THAT OF 1929,” he wrote on his social media platform Truth Social. “AS PROOF, THE BANKS ARE ALREADY STARTING TO COLLAPSE!!!”

House GOP Investigating Unauthorized Military Records Release

House Republicans are still waiting for a response from Defense Secretary Lloyd Austin about the Air Force’s “unauthorized release” of the private military records of at least 11 House Republican members and former candidates to Democratic research firm Due Diligence Group LLC. 

The Air Force began investigating the releases five months ago, but thanks to new reporting this week House Armed Services Chairman Mike Rogers and House Oversight Chairman James Comer now know they were right to broaden the scope of their mid-February inquiry beyond just the Air Force.

Politico’s Olivia Beavers reported Monday that Due Diligence co-founder Abraham Payton tried to access the military records of Colin Schmitt, a sergeant in the New York Army National Guard and 2022 Republican congressional candidate, under the guise of an employment-related inquiry. 

Payton had Schmitt’s Social Security number at the time he made the request for his private records last August and cited “employment,” “benefits,” and “services, awards, disciplinary history/records relevant to applicant’s qualifications for (potential) position’s dulles, pay, and benefits,” according to a copy of the request form.

The incident raises new questions about Due Dilligence’s legally questionable requests during the 2022 cycle—including how many other candidates were targeted and how many times military personnel improperly released records.

“Are we just giving out random information to random people who say they’re potential employers?” GOP Rep. Jen Kiggans, a Navy veteran who flipped a Virginia Beach seat in November, said in an interview.

It’s also unclear whether congressional Democrats’ official campaign committees used the records for campaign purposes. The Democratic Congressional Campaign Committee (DCCC) paid more than $100,000 last cycle to Due Diligence for consulting and research services, Federal Election Commission (FEC) reports show. 

The Democratic Senatorial Campaign Committee (DSCC) paid six figures to Due Diligence during the 2022 midterm cycle as well, according to FEC records, though no GOP Senate members or former candidates have yet alleged any improper records releases.

Neither the DCCC nor the DSCC responded to requests for comment.

Meanwhile, at least three House Armed Services Republicans—Kiggans of Virginia, Don Bacon of Nebraska, and Nancy Mace of South Carolina—told The Dispatch they’re urging Rogers and Comer to subpoena all relevant parties, including Payton of Due Diligence, the DCCC, and the DSCC.

“Since they won’t respond to media questions, we should put them under oath and do depositions,” said Bacon, a swing district Republican and Air Force veteran whose service records were improperly released to the group last year.

Mace, who is also a member of the Oversight and Veterans Affairs Committees, also wants congressional hearings on the matter. “Those who served our country are literally willing to take a bullet and the DCCC uses this firm that uses illegal means to require their military records,” the South Carolina Republican said.

“I believe we’re just at the tip of this,” Schmitt, who lost to Democrat Pat Ryan by 1.5 points in November, said in an interview Tuesday. He’s urging other Republicans to investigate their own records releases.

Others seem to be waiting on Austin’s response to Rogers and Comer. “But the thought’s crossed my mind to personally reach out to the Navy as well,” Kiggans said.

“I haven’t been notified, but would not at all be surprised given I was on [DCCC’s] target list,” Iraq Army veteran and former Michigan GOP Rep. Peter Meijer told The Dispatch Tuesday.

Trump Shops Retail

As a new candidate for the Republican presidential nomination in 2016, Donald Trump did everything big. Big rallies; big entrances; big airplanes. Ditto his reelection bid four years later. Trump, a television celebrity, filled arenas to capacity and traveled in his own Boeing 757 with his name splashed all over it.  

Today, Trump still has the plane, nicknamed Trump Force One, and he still draws crowds, as happened Monday when more than 2,000 people showed up to see him in Davenport, Iowa. But now a former president attempting a comeback, Trump has decided that bigger isn’t always better. Before the big show Monday, the 45th president made a surprise stop at a Machine Shed restaurant to chit-chat with patrons and purchase some to-go fare.

Expect to see more of that, as Trump looks for fresh ways to excite voters and dominate media coverage of the 2024 campaign, Republicans close to the former president told The Dispatch. “He enjoys it,” a Trump World insider said of the gladhanding and kibitzing. “There’s been a recognition, too, that more isn’t always more.”

“It’s Donald Trump with regular folks at a McDonald’s line. It’s hard for the fake news media not to cover him,” added Matt Schlapp, chairman of the Conservative Political Action Coalition and top Trump ally.

As Trump fought Democrat Hillary Clinton for the White House in 2016, he made several unscheduled visits to restaurants and other businesses. Sometimes referred to as OTRs—”Off-The-Records”—by political professionals because they are not on any official itinerary and therefore don’t require the same level of security as publicized events, Trump did them in the 2020 campaign as well, in his loss to now-President Joe Biden.

But the focus on retail over mega-rallies in the early primary states as a non-incumbent presidential candidate is new

There are reasons for this everything-old-is-new-again strategy, explained a half-dozen Republicans operatives in Trump’s orbit. (His campaign did not respond to a request for comment.) The big rallies have lost their shock-and-awe effect with voters. Plus, news coverage of the rallies is no longer ubiquitous—most cable networks don’t take them live, let alone from start to finish. Finally, the emphasis on personal interaction with voters in small settings is a recognition Trump needs to broaden his appeal. 

“He’s adapting to the environment,” said Brian Lanza, a Republican operative who worked on Trump’s 2016 campaign. “And it’s working, because those images are just gold. Or in Trump’s case, they’re platinum.”

GOP 2024 Contenders Clash Over Ukraine

Even political junkies would have to strain through the lens of the James Webb Space Telescope to spot sharp disagreements among likely Republican White House contenders so far. But now that Florida Gov. Ron DeSantis has staked out a position on Ukraine eerily similar to former President Donald Trump’s, other hopefuls are highlighting their differences.

DeSantis told Fox News host Tucker Carlson in a questionnaire to current and potential GOP presidential candidates that the “territorial dispute” in Ukraine is not a “vital” U.S. interest. The implication was that American financial and military support for Kyiv could dry up in a DeSantis presidency. 

Other candidates—declared or likely—eagerly shared how they diverge from the Florida Republican. Nikki Haley, the former South Carolina governor and ex-United Nations ambassador who launched her campaign last month, mocked DeSantis for mimicking Trump: “Republicans deserve a choice, not an echo.” Former New Jersey Gov. Chris Christie, who is mulling a 2024 bid, chimed in with his own criticism.

Haley and Christie—along with former Vice President Mike Pence and former Secretary of State Mike Pompeo, among other Republican hawks—believe just the opposite of Trump and DeSantis. Ensuring Ukraine repels Russia is vital to U.S. national security because of the message it sends globally, especially to China.

But when it comes to winning the support of Republican base voters—those most likely to show up in presidential nominating caucuses and primaries, does DeSantis have it right?  “I think it’s fair to say the base is confused or at least sending confusing signals,” said Michael Meyers, a veteran Republican strategist in Michigan. “Probably for good reason, as the leadership of the party is also divided and confused.”

DeSantis’ comments were widely condemned on the right. Conservative talk radio host Mark Levin, typically critical of the GOP establishment, wasn’t happy; many Senate Republicans also weren’t happy (and not just of the Trump-hating variety.) On the other hand, the party’s dovish, populist wing is lately ascendant. Trump is the Republican frontrunner in part because of his hostility to American involvement in Ukraine—and elsewhere. This could bode well for DeSantis.

“The base has turned against the idea that the territorial integrity of Ukraine is a big issue for America,” a GOP operative active in grassroots Republican politics said. “Voters who are more hawkish don’t actually vote on this issue. That’s the problem supporters of increased intervention and more aid face.”

The Republican split over Ukraine is partly the product of a generational divide. 

Politicians and voters who came of age in the Cold War, when the U.S. was locked in an existential geopolitical battle with the Soviet Union, are prone to see Russia’s invasion of Ukraine, and view dictator Vladimir Putin, through that prism. Politicians and voters who were formed by the post-9/11 era, and particularly the Iraq war, are more circumspect of U.S. global leadership. (Though many are less skeptical of deploying American power to counter China.)

Some Republican insiders say the real culprit is President Joe Biden. 

True, they concede, some GOP opposition is reflexive—base voters are predisposed to assail any major Biden initiative. And the party’s coalition has long included isolationist elements. But they argue it’s Biden’s mishandling of the issue stoking a backlash by grassroots Republicans that needn’t have happened. For instance, the president’s collaboration with U.S. allies in Europe and an off-handed remark from last year that some U.S. aid to Ukraine could finance “pensions and social support.” 

“In the post Cold War Era there is no Republican support for multinational foreign policy. All foreign policy needs to be bilateral or unilateral. And, that applies to guns and butter—to make sure America always gets the best deal,” GOP strategist Brad Todd said. “I fully support us defeating Russia here, by the way, but Joe Biden is botching it up.”

Eyes on the Trail

  • Vulnerable House Dem fundraising numbers: Last month, Punchbowl reported that the DCCC raised $8.1 million in January to the NRCC’s $4.5 million.* House Democratic Minority Leader Hakeem Jeffries is largely responsible for Democrats’ fundraising haul: “According to internal party data, Jeffries took in $5.2 million of the DCCC’s January total. In other words, Jeffries himself raised more than the entire NRCC. House Democrats raised or gave $1.8 million.” Between the lines, many of House Democrats’ most vulnerable members kicked off this year with a long way to go in the fundraising department. We’ll get a first quarter update on fundraising numbers soon, but FEC reports show that as of January 1: Yadira Caraveo (CO-08—won by less than 1 point in ‘22) had less than $18,000 on hand after raising $3.5 million last cycle; Susan Wild (PA-07—won by 1 point in ‘22) had $54,000  on hand after raising $7 million last cycle; Gabriel Vasquez (NM-02—won by less than a point in ‘22) had $23,000 on hand after raising $3.8 million last cycle.
  • How Democratic Senate leaders are clearing Michigan for Slotkin: Politico’s Burgess Everett has the details on Senate Democratic leaders’ rallying effort behind Democratic Rep. Elissa Slotkin for Michigan’s open Senate seat. “The retiring Stabenow has personally steered several of those interested in taking her Mitten State seat toward different positions that will soon open up. And as a result, Rep. Elissa Slotkin (D-Mich.) has largely cleared the field in what could have otherwise been a messy Senate primary,” Everett reports. “So while the primary itself is more than a year away, there’s a growing feeling that party leaders have avoided a pile-up in a race that Democrats absolutely need to win to keep their majority next fall.”

Notable and Quotable

 “If I wanted to spend my time in a retirement community, I’d definitely choose The Villages over The Senate.”

—GOP Rep. Matt Gaetz told Politico’s Jonathan Martin of a prospective Senate run against Florida Sen. Rick Scott, March 14, 2023

Presented Without Comment

Let Us Know

What do you make of the GOP presidential field’s growing split over Ukraine?

*Correction, March 15, 2023: Punchbowl’s report on DCCC fundraising published in February, not last week as originally reported.

Andrew Egger is a former associate editor for The Dispatch.

David M. Drucker is a senior writer at The Dispatch and is based in Washington, D.C. Prior to joining the company in 2023, he was a senior correspondent for the Washington Examiner. When Drucker is not covering American politics for The Dispatch, he enjoys hanging out with his two boys and listening to his wife's excellent taste in music.

Audrey is a former reporter for The Dispatch.