| | | | |  | | By Ryan Lizza, Rachael Bade and Eugene Daniels | Presented by Binance | With help from Eli Okun and Garrett Ross
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Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee on Capitol Hill on Dec. 8, 2021. | Alex Wong/Getty Images | | | | |  | DRIVING THE DAY | | BREAKING, 4:05 A.M. — Virginia state Sen. JENNIFER McCLELLAN handily won the Democratic nomination to succeed the late Rep. DONALD McEACHIN in the Richmond-based 4th Congressional District. McClellan won nearly 85 percent of the 27,900 votes cast in a snap "firehouse primary," and she is heavily favored to win a Feb. 21 special election. 'ALIVE AND KICKING' — It was a moment for the history books. For the first time since Russia invaded, Ukrainian President VOLODYMYR ZELENSKYY left his country and flew to D.C. for a high-profile address to Congress and meeting with President JOE BIDEN. "Ukraine is alive and kicking," Zelenskyy declared, standing before assembled legislators dressed in fatigues and asking for more U.S. aid. "We have artillery, yes," he said. "Is it enough? Quite honestly, not really." Despite an overwhelmingly positive bipartisan reception, "several Republican lawmakers, including those set to assume top leadership positions, weren't yet ready to commit to keeping the funding going in the next session," Shayna Greene and Sarah Ferris report. House GOP Leader KEVIN McCARTHY said afterward that he still "never supported a blank check." Sen. CYNTHIA LUMMIS (R-Wyo.) said she still doesn't think U.S. taxpayers should foot the bill. Especially notable was the reaction of a cadre of far-right members. Reps. LAUREN BOEBERT (R-Colo.), MATT GAETZ (R-Fla.) and TIM BURCHETT (R-Tenn.) didn't clap as Zelenskyy walked in. (Boebert and Gaetz were also "spotted blowing straight past a security checkpoint" on their way to the speech, The Independent's John Bowden reports.) Rep. ANDREW CLYDE (R-Ga.) refused to stand during one ovation, even when Rep. JIM JORDAN (R-Ohio) urged him to. Here's how Rep. THOMAS MASSIE (R-Ky.) explained his own absence: "I'm in DC but I will not be attending the speech of the Ukrainian lobbyist." More Ukraine reading: "Zelenskyy comes to Washington and pulls neither punches nor asks," by Jonathan Lemire … "Zelensky's visit yields remarkable moment for two presidents," WaPo … "As Ukraine Prepares for a Second Year at War, the Prospect of a Stalemate Looms," NYT SBF FALLOUT ROCKS DATA FOR PROGRESS — SEAN McELWEE lives in New York — famously — but he kept a place in Washington, D.C., at the Mondrian apartments at 12th and N that he shared with his close friend DAVID SHOR for when they were in town. One Friday in late July, McElwee hosted a party of young progressives and D.C. journalists. He was playing "Super Smash Bros." with a friend when the conversation turned to campaign finance laws. McElwee complained that the current restrictions were "dumb." McElwee went through a libertarian phase as an undergraduate at The King's College and he still held onto some of his Cato-inspired beliefs as he drifted left. There are strict limits on hard money donations, which go directly from individuals to candidate campaigns. "His view was that those campaign finance rules violated his First Amendment rights," one of his friends told Playbook. "Why can't I give more than $2,200 to someone?" McElwee asked as their onscreen characters tried to knock each other out. His "Smash Bros." opponent didn't think much of the comment at the time, but it stuck with him. Yesterday, that throwaway line suddenly seemed like a revelation, perhaps a key to understanding what some Democrats fear could be one of the most enormous political influence scandals in a generation. McElwee is a well-known progressive activist who started the "Abolish ICE" movement and in 2018 founded Data for Progress, a progressive think tank with an emphasis on influencing public policy through polling. DFP quickly embedded itself into the top layers of the Democratic firmament. More recently, McElwee became a close political ally and adviser to FTX founder SAM BANKMAN-FRIED. (They were connected through Shor, according to a friend of both men.) McElwee had easy access to the White House and the press. And he made sure they had access to him. He kept an open Slack channel at DFP that became a rolling conversation between McElwee, Biden administration officials, and some well-known reporters — a kind of JournoList for the early 2020s. On Saturday, November 12, the day after FTX filed for bankruptcy and SBF resigned as CEO, McElwee abruptly shuttered the Slack channel. Six days later, he and Data for Progress began negotiating his exit from the firm he had built.
| | | | A message from Binance: It's been a tough year for crypto. After unprecedented fraud and mismanagement, industry confidence has been shaken. As the world's largest crypto exchange, Binance believes greater transparency is critical. At Binance, user assets are backed 1:1 and our capital structure is debt-free, and we are eager to work with regulators to help bring order to the markets. Learn more about our commitment to moving forward in Politico this week. | | | At the time, the reported reason for the rupture was that McElwee's well-known penchant for betting on the outcomes of elections created a conflict of interest for a polling firm. A slew of 2022 DFP polls had a GOP bias, and activists on Twitter — as well as some prominent Democrats pinging reporters — asked whether McElwee was cooking DFP's polls to affect races and cash in. Sources at DFP insist that this would have been highly unlikely, and that their polls had a GOP bias because of an oversampling of respondents via SMS. In the wake of this, DFP recently adopted a previously unreported "Gambling and Wagering Policy" that prohibits employees from betting on anything related to DFP projects or clients. The McElwee-DFP breakup was ugly, but the two sides were trying to negotiate an amicable separation agreement and a severance. Then on Dec. 13, the U.S. Attorney for the Southern District of New York unsealed an eight-count indictment against SBF. The first seven counts, which were about financial crimes, garnered the most attention. But it was the eighth count that turned heads in Washington, alleging a straw-donor scheme in which SBF funneled corporate money to candidates and committees through third parties. And SDNY alleged that SBF had help: SBF "and others known and unknown," the indictment says, made contributions "in the names of other persons." In the race to figure out who might have helped SBF make straw donations, McElwee's name was at the top of the list. The leadership at DFP suddenly feared they could be in the middle of a much bigger scandal. Nobody at DFP makes more than $200,000 a year, yet several employees who worked for McElwee made thousands of dollars in campaign donations in 2022. One employee, ETHAN WINTER , DFP's lead analyst, made nearly $31,000 in donations, which a source at DFP said was more than a quarter of his salary. On Tuesday morning, David Freedlander reported in N.Y. Mag that McElwee had pressured a DFP employee to be a straw donor. On Wednesday, sources at DFP identified Winter as that employee and told us that he had resigned. (Winter's resignation was first reported by CNBC.) Sources inside and outside of DFP noted that there was an enormous power differential between McElwee and Winter. "Ethan was very much Sean's subordinate," a person close to both men said. "I submitted a letter of resignation to Data for Progress nearly a month ago on November 28, 2022," Winter told Playbook in a statement. "I believed, and continue to believe, in the mission of Data for Progress. I wish it nothing but the best." Winter declined to respond to any other questions on the record. Playbook asked DFP if the organization knew for certain that its employees who made political contributions in 2022 did so legally. DFP responded in a statement: "Sean McElwee was dismissed as a result of allegations of misconduct and we are launching a full independent review of that conduct. We will continue to work alongside our talented team of policy experts and data scientists to provide polling that pushes the progressive movement forward."
| | | | A message from Binance: As the world's largest crypto exchange, Binance believes greater transparency is critical. At Binance, user assets are backed 1:1, and we're eager to work with regulators to help bring order to the markets. Learn more about our commitment to moving forward in Politico this week. | | | When we emailed McElwee on Wednesday, a lawyer with expertise in white collar criminal defense cases responded on his behalf. We asked if McElwee pressured Winter or anyone to make straw donations, and whether any of Winter's donations were at McElwee's behest. "Sean categorically denies that he pressured Ethan Winter or anyone else into making illegal straw donations," McElwee's lawyer, Matt Levine, said in a statement. "Any other talk along these lines is speculation. We have no reason to believe that the eighth count of the indictment issued against Sam Bankman-Fried has anything to do with Sean." We also asked if Levine or McElwee have been contacted by the Justice Department. "We have no further comment at this time," Levine replied. Good Thursday morning. Thanks for reading Playbook. Where does the SBF/crypto story go from here? If you have ideas, let us know: Rachael Bade, Eugene Daniels, Ryan Lizza. TREND WATCH, PART I — "Covid-19 and overdose deaths drive U.S. life expectancy to a 25-year low," by Krista Mahr TREND WATCH, PART II — "U.S. Home Sales Post Record 10th Straight Month of Declines," WSJ
| | BIDEN'S THURSDAY — The president will receive the President's Daily Brief at 9 a.m.
THE HOUSE will meet at 9 a.m. to take up legislation to reform presidential tax returns and audits and, potentially, the omnibus spending bill. Speaker NANCY PELOSI will hold her weekly press conference at 10:45 a.m. | | | | | | A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We're kicking off with a series exploring darknet market places, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY. | | | | | PHOTO OF THE DAY
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Ukraine President Volodymyr Zelenskyy delivers an address during a joint session of Congress on Wednesday, Dec. 21. | Francis Chung/POLITICO | | | PLAYBOOK READS | | CONGRESS THE WHEELS COME OFF THE OMNIBUS — The Senate planned to pass the omnibus spending bill sometime late overnight. That's not what happened: Senators left the Capitol without having come to an agreement, as a Title 42 border policy dispute pushed by Sen. MIKE LEE (R-Utah) snarled negotiations. "Lawmakers are at a standstill over a proposed GOP amendment," Caitlin Emma and Jordain Carney report. We'll have a shutdown by Friday night if Congress can't extend government funding, and there was late-night talk of defaulting to a continuing resolution, extending current funding into the new year. However … In floor remarks made just before midnight, Senate Majority Leader CHUCK SCHUMER insisted a breakthrough was "very close" and called an 8 a.m. vote to keep the parties talking. Lee and the GOP want a 51-vote threshold for a vote on a Title 42 amendment — raising the significant prospect that it could get added to the bill — but Democrats had only offered a 60-vote threshold. Of course, if the omnibus gets tripped up, $47 billion in aid to Ukraine is among the priorities at risk — quite the split screen with Zelenskyy's visit to Washington. WHAT'S IN THE BILL — "Lawmakers Steer Home More Than $15 Billion in Pet Projects," by NYT's Stephanie Lai: "The $1.7 trillion spending bill moving through Congress contains more than 7,200 earmarks for projects in lawmakers' home states and districts." REPUBLICANS IN DISARRAY — The clash between Senate and House Republicans over the omnibus is growing: More House conservatives joined an effort led by Rep. CHIP ROY (R-Texas) to pressure the Senate, with 31 members and members-elect now threatening to "oppose and whip opposition to any legislative priority of those senators who vote for its passage — including the Republican leader." Republican senators have so far brushed aside these warnings, but the House members aren't backing down. The full letter — Gaetz and Rep. MARJORIE TAYLOR GREENE (R-Ga.) have dueling op-eds in the Daily Caller respectively trashing and boosting KEVIN McCARTHY's speakership bid. "Every single Republican in Congress knows that Kevin does not actually believe anything. He has no ideology," Gaetz writes. "Lying to the base is a red line for me, and that's what five of my closest colleagues are doing when they claim a consensus House Speaker candidate will emerge as they oppose Kevin McCarthy," Greene retorts. Speaking of the gavel drama … In a new pod up this morning, BRENDAN BUCK, who advised former speakers PAUL RYAN and JOHN BOEHNER, takes listeners through the possible scenarios of what could happen next if McCarthy fails to get the votes on the House floor Jan. 3. If you're a process nerd, give it a listen. THE TALENTED MR. SANTOS — The latest thing Rep.-elect ROBERT SANTOS (R-N.Y.) appears to have lied about? Having grandparents who fled the Holocaust, the Forward's Andrew Silverstein reports. Santos has claimed that his grandparents fled Europe during World War II, but records show that they were born in Brazil well before the war, and databases of Holocaust survivors and fleeing European Jews contain no mention of them. ALL POLITICS PULL UP A CHAIR — Even though RNC Chair RONNA McDANIEL says she's secured support from well over half of the RNC's members for another term, the backlash against her continues to rumble. Now, McDaniel opponents in Florida say they've gotten enough signatures to potentially force a state party vote on formally calling for her ouster, Matt Dixon reports from Tallahassee. ANTHONY SABATINI is leading the charge of conservatives who argue that McDaniel has presided over disappointing GOP showings for years. DEMOCRACY WATCH — Halfway through a two-day trial on KARI LAKE's claims of election misconduct in the Arizona gubernatorial race, she "did not reveal evidence of the misconduct she alleged," the Arizona Republic's Ray Stern reports. It continues today at 11 a.m. Eastern time. RUNOFF AUTOPSY — Georgia Public Broadcasting's Stephen Fowler dives into the voter files to figure out who stayed home — or showed up for the first time — in this month's Senate runoff election. "Close to 650,000 Georgians who voted in the general election did not vote again in the runoff, including more than 90,000 2022 Republican primary voters. Of the 230,000 that showed up for the runoff but not the general, at least 34% of those, or roughly 79,000 voters, were Black." Also striking: A higher number of registered voters didn't vote at all in the runoff than showed up to the polls. THE WHITE HOUSE LOOK WHO'S BACK — "Ex-Google boss helps fund dozens of jobs in Biden's administration," by Alex Thompson: "ERIC SCHMIDT, the former CEO of Google who has long sought influence over White House science policy, is helping to fund the salaries of more than two dozen officials in the Biden administration under the auspices of an outside group, the Federation of American Scientists. … [A] spokesperson also defended the existence of privately funded fellows, chosen by FAS, in key policy making areas as both legal and beneficial to the public." NIGHT OF THE HUNTER — ABBE LOWELL is joining HUNTER BIDEN's legal team to help lead his response to congressional investigations, NBC's Sarah Fitzpatrick scooped. The prominent lawyer will occupy a crucial role for the president's son as House Republicans gear up to make him an oversight target. WHITE HOUSE DEPARTURE LOUNGE — CHRIS INGLIS, the country's inaugural national cyber director and a top cybersecurity adviser to Biden, is planning to leave the administration and retire in the next couple of months, CNN's Sean Lyngaas scooped. KEMBA ENEAS WALDEN will step up to become acting director. But congressional cyber leaders say they hope Inglis will decide to stay on longer, at least until a big new national cybersecurity strategy is released and starts to be implemented. JUST POSTED — "Kamala Harris, a Very Turbulent Year in America, and the Challenge of Being First," by Vanity Fair's Molly Jong-Fast
| | | | A message from Binance:   | | | JAN. 6 AND ITS AFTERMATH HURRY UP AND WAIT — The House Jan. 6 committee delayed the release of its final report from Wednesday to most likely today. More from Reuters WHAT WE HAVE SO FAR — Ahead of the full report, the committee on Wednesday put out 34 transcripts of interviews it conducted throughout its probe. The notable names include JOHN EASTMAN, JENNA ELLIS, MICHAEL FLYNN and ROGER STONE, and one of the most striking features is how frequently witnesses invoke the Fifth Amendment to avoid answering questions — even for basic biographical information about themselves. Details from the L.A. Times' Sarah Wire and Arit John … NYT's Luke Broadwater, Maggie Haberman and Alan Feuer THE OTHER INVESTIGATION — The committee is now sharing its evidence with special counsel JACK SMITH and federal investigators at the Justice Department, Bloomberg's Billy House and Chris Strohm report. THE OTHER OTHER INVESTIGATION — House Republicans put out a 78-page report Wednesday investigating the Jan. 6 insurrection as a counterpoint to the official House committee's probe. The GOP report places heavy emphasis on security failures, some of which it pins on Democratic leaders, Bloomberg's Billy House reports. "It breaks little new investigative ground, with its main finding that intelligence and law enforcement failures left the US Capitol complex vulnerable. But the report does add emphasis to Democratic Speaker Nancy Pelosi's role in the Capitol security plan before the insurrection." The full report TRUMP CARDS THE TAXES — After nabbing Trump's tax returns, House Democrats will force a vote in the chamber on a bill that would mandate public IRS audits of presidential tax returns, Benjamin Guggenheim reports. "The legislation stands virtually no chance of passing the 50-50 Senate, making it a largely symbolic move. But it affords Democrats one more chance to give Trump a high-profile punch before they surrender their House majority." — "Trump's Taxes: Red Flags, Big Losses and a Windfall From His Father," by NYT's Russ Buettner, Susanne Craig and Mike McIntire THE LAWSUITS — After E. JEAN CARROLL brought a lawsuit alleging Trump raped her under New York's new Adult Survivors Act, the former president's legal team argued in court Wednesday that the law itself is unconstitutional, Erin Durkin reports in New York. But the judge appeared skeptical of the claim: "I wouldn't count on that." JUDICIARY SQUARE THERE ARE RECEIPTS — "He Sued a Woman Who Testified in Congress About Sexual Abuse. Then a Secret Report About His Own Behavior Got Released," by Michael Schaffer: "ZIA CHISHTI, the politically-connected Washington entrepreneur, accused his accuser of lying. A newly public arbitration report tells a different story." AMERICA AND THE WORLD WHAT MACRON IS THINKING — French President EMMANUEL MACRON told reporters that Europe needs to beef up its own security abilities and depend less on the U.S. within NATO, WSJ's Noemie Bisserbe and Stacy Meichtry scooped from aboard the French presidential plane. "Europe needs to gain more autonomy on technology and defense capabilities, including from the U.S.," he said. LATEST SANCTIONS — "U.S. slaps sanctions on Iran officials over protest crackdown," by Reuters' Daphne Psaledakis BEYOND THE BELTWAY IMMIGRATION FILES — Illinois, New York and other blue areas are preparing for a potential deluge of migrants if and when the Title 42 policy is lifted, with concerns rising about available resources, Shia Kapos, Erin Durkin and Matt Dixon report. BORDER SONG — Facing a federal lawsuit, Arizona Gov. DOUG DUCEY agreed Wednesday to take down the shipping-container border barrier he's been constructing along his state's southern edge, which had become a political flashpoint, NYT's Jack Healy reports. MEDIAWATCH FIRST FAMILY FILES — "Jenna Bush Hager, Progeny of Presidents, Is Now a Publishing Kingmaker," by NYT's Matt Flegenheimer. FOX IN THE HENHOUSE — "In Testimony, Hannity and Other Fox Employees Said They Doubted Trump's Fraud Claims," by NYT's Jeremy Peters
| | | | POLITICO AT CES 2023 : We are bringing a special edition of our Digital Future Daily newsletter to Las Vegas to cover CES 2023. The newsletter will take you inside the largest and most influential technology event on the planet, featuring every major and emerging industry in the technology ecosystem gathered in one place. The newsletter runs from Jan. 5-7 and will focus on the public policy related aspects of the event. Sign up today to receive exclusive coverage of CES 2023. | | | | | | | PLAYBOOKERS | | Bob Woodward was named a Washingtonian of the Year. Sheila Jackson Lee, Louie Gohmert, Fred Upton and Steve Womack were among the first members of Congress to arrive for Volodymyr Zelenskyy's speech. Emmett Till and Mamie Till-Mobley will be posthumously awarded the Congressional Gold Medal after the House passed a resolution Wednesday. Maura Reynolds, Josh Gerstein and Alex Ward are the POLITICO stars who wrote two of the six most engaging news stories on the internet this year. TJ Ducklo celebrated nearly 34 months of his cancer in remission. FIRST IN PLAYBOOK — As he takes on a higher profile as incoming NRSC chair, Sen. Steve Daines (R-Mont.) is adding Matt Lloyd as deputy chief of staff and comms director and promoting Daniel Gerig to legislative director and Rachel Dumke to deputy comms director. Lloyd currently is deputy chief of staff and comms director for Sen. Rob Portman (R-Ohio), and is a Trump administration and Mike Pence alum. TRANSITIONS — Austin Chambers is joining SomethingElse Strategies, a Republican media and marketing firm, as a partner. He currently runs MainThing Strategies and was president of the Republican State Leadership Committee in the 2020 cycle. … Matt Verghese will be director of federal relations for Maryland Gov.-elect Wes Moore. He currently is chief of staff for Rep. Anthony Brown (D-Md.). … Zach Kahan is now special assistant in HHS' Office of Intergovernmental and External Affairs. He previously was deputy director of outreach and member services for the House Energy & Commerce Committee. HAPPY BIRTHDAY: Sen. Ted Cruz (R-Texas) … Rep. Barry Loudermilk (R-Ga.) … Charlie Peters (96) … Diane Sawyer … Jamie Kirchick … Mike Needham of Sen. Marco Rubio's (R-Fla.) office … DJ Nordquist … Edison Electric Institute's Rich Ward … Matt Manda … CNN's Daniella Diaz … Heather Holdridge of Real Voices Media (5-0) … Adam Verdugo … Libby Rosenbaum of the American Council of Young Political Leaders … Maria Thorbourne … Marc Raimondi … Zack Carroll … AEI's Rachel Manfredi … Beau Phillips … Jake Perry of Jake Perry + Partners … DCCC's Karen Defilippi … NPR's Michele Kelemen … McGuireWoods Consulting's Mark Bowles … Paul Wolfowitz … former Rep. Bill Lipinski (D-Ill.) … POLITICO's Kristin Longe … Chris Austin … Eugene Steuerle ... Andrew Egger ... WTOP's Matt Small … former Energy Secretary Ernie Moniz … Maeve Coyle … Mary Kirtley Waters … Landon Heid … Hank Sheinkopf … Tyler Barth … Justin Duckham Did someone forward this email to you? Sign up here. Send Playbookers tips to playbook@politico.com or text us at 202-556-3307. Playbook couldn't happen without our editor Mike DeBonis, deputy editor Zack Stanton and producers Setota Hailemariam and Bethany Irvine.
| | | | A message from Binance: It's been a tough year for crypto. Macroeconomic headwinds have ushered in challenging market conditions, followed by unprecedented fraud and mismanagement. The combination rocked consumer confidence and created a level of skepticism about the future of crypto. Binance strongly believes crypto's best days remain ahead, but to get there, transparency is the only path forward. At Binance, we are investing in transparency protocols to demonstrate our strong financial health. Our capital structure is debt-free and all user assets are backed 1:1. Binance does not borrow against customers' funds or invest them without their consent. Most importantly, we look forward to working with policymakers to better protect consumers while promoting innovation. Learn more about our commitment to moving forward in Politico this week. | | | | | | | Follow us on Twitter | | | | Subscribe to the POLITICO Playbook family Playbook | Playbook PM | California Playbook | Florida Playbook | Illinois Playbook | Massachusetts Playbook | New Jersey Playbook | New York Playbook | Ottawa Playbook | Brussels Playbook | London Playbook View all our political and policy newsletters | | Follow us | | | | |
