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Politico
21 hours ago
- Politics
- Politico
The ‘dual-edged sword' of AI chatbots
With help from Maggie Miller Driving the day — As large language models become increasingly popular, the security community and foreign adversaries are constantly looking for ways to skirt safety guardrails — but for very different reasons. HAPPY MONDAY, and welcome to MORNING CYBERSECURITY! In between the DMV's sporadic rain this weekend, I managed to get a pretty gnarly sunburn at a winery. I'll be spending the rest of the summer working to fix the unflattering tan lines. Follow POLITICO's cybersecurity team on X at @RosiePerper, @johnnysaks130, @delizanickel and @magmill95, or reach out via email or text for tips. You can also follow @POLITICOPro on X. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Today's Agenda The House meets for morning hour debate and 2 p.m. to consider legislation under suspension of the rules: H.R. 1770 (119), the 'Consumer Safety Technology Act"; H.R. 1766 (119), the 'NTIA Policy and Cybersecurity Coordination Act"; and more. 12 p.m. Artificial Intelligence SKIRTING GUARDRAILS — As the popularity of generative artificial intelligence systems like large language models rises, the security community is working to discover weaknesses in order to boost their safety and accuracy. But as research continues identifying ways bad actors can override a model's built-in guardrails — also known as 'jailbreaking' — to improve safeguards, foreign adversaries are taking advantage of vulnerabilities in LLMs to pump out misinformation. 'It's extremely easy to jailbreak a model,' Chris Thompson, global head of IBM's X-Force Red Adversary Simulation team, told your host. 'There's lots of techniques for jailbreaking models that work, regardless of system prompts and the guardrails in place.' — Jailbreaking: Popular LLMs like Google's Gemini, OpenAI's ChatGPT and Meta's Llama have guardrails in place to stop them from answering certain questions, like how to build a bomb. But hackers can jailbreak LLMs by asking questions in a way that bypasses those protections. Last month, a team from Intel, the University of Illinois at Urbana-Champaign and Boise State University published research that found AI chatbots like Gemini and ChatGPT can be tricked into teaching users how to conduct a ransomware attack on an ATM. The research team used an attack method called 'InfoFlood,' which pumps the LLM with dense language, including academic jargon and fake citations, to disguise the malicious queries while still getting the questions answered. According to Advait Yadav, one of the researchers, it was a simple yet successful idea. 'It was a very simple test,' Yadav told your host. 'We asked, what if we buried … a really harmful statement with very dense, linguistic language, and the success rate was really high.' Spokespeople for Google and OpenAI noted to your host that the report focuses on older LLM models. A spokesperson for OpenAI told MC in a statement that the firm takes steps 'to reduce the risk of malicious use, and we're continually improving safeguards to make our models more robust against exploits like jailbreaks.' — Disinfo mission: And as university researchers find ways to sneak past these guardrails, foreign adversaries are, too. Rival powers like Russia have long exploited AI bots to push their agenda by spreading false information. In May 2024, OpenAI detailed how operations from Russia are using its software to push out false and misleading information about a variety of topics — including the war in Ukraine. 'These models are built to be conversational and responsive, and these qualities are what make them easy for adversaries to exploit with little effort,' said McKenzie Sadeghi, AI and foreign influence editor at the misinformation tracker NewsGuard. NewsGuard's monthly audits of leading AI models have repeatedly found that chatbots will generate false claims around state narratives from Russia, China and Iran with little resistance. 'When foreign adversaries succeed in manipulating these systems, they're reshaping the informational landscape that citizens, policymakers and journalists rely on to make decisions,' she added. — Boosting safeguards: As actors linked to foreign adversaries utilize the chatbots, the security community says they are working to keep up. 'The goal of jailbreaks is to inform modelmakers on vulnerabilities and how they can be improved,' Yadav told your host, adding that the research team plans to send a courtesy disclosure package to the model-making companies in the study. For Google's Gemini App, the firm runs red-teaming exercises to train models to defend against attacks, according to Elijah Lawal, the global communications manager for the Gemini App. 'This isn't just malicious threat actors using it,' Thompson told your host. 'There's also the security research community that is leveraging this work to do their jobs better and faster as well. So it's kind of a dual-edged sword.' On The Hill FIRST IN MC: QUESTIONS, CONCERNS — Rep. Raja Kristhnamoorthi (D-Ill.), ranking member of the House Select Committee on China, wants answers on how the State Department is working to prevent the use of AI-enabled impersonations of officials, following reports that Secretary of State Marco Rubio was the recent subject of an AI hoax. Krishnamoorthi will send a letter to Rubio today, first obtained by Maggie, asking questions around the agency's approach to countering AI-enabled impersonations, such as deepfake videos and voice recordings. This comes after The Washington Post reported last week that an imposter used these types of scams to pose as Rubio and contact foreign diplomats and U.S. lawmakers. Given his role on the China Committee, Krishnamoorthi is particularly interested in understanding how the State Department is studying and addressing the potential negative impact of deepfakes on the U.S.-China relationship, and whether the agency has a process for evaluating the authenticity of communications from Chinese and other foreign officials. 'While I currently have no information indicating this incident involved a foreign state, and hoaxers are equally capable of creating deceptive deepfakes like this given the proliferation of AI technologies, this incident presents an opportunity to highlight such risks and seek information about the department's efforts to counter them,' Rajnamoorthi wrote in the letter being sent today. When asked about the impersonations, Rubio reportedly told reporters in Malaysia last week that he uses official channels to communicate with foreign officials, in part due to the risk of imposters claiming to be him. The State Department put out a statement last week following the Post's report, noting that the agency is investigating the incident. China corner SUSPECTED BREACH — Suspected Chinese hackers have gained access to email accounts of advisers and attorneys at Wiley Rein, a top law firm in Washington, in an intelligence-gathering operation. CNN reported on Friday that the hackers linked to the breach 'have been known to target information related to trade, Taiwan and US government agencies involved in setting tariffs and reviewing foreign investment,' according to the firm. — Zoom out: This breach comes amid the Trump administration's trade war against China, which Wiley Rein helps its powerful clients navigate. The International Scene COME TOGETHER — Norway is joining the international initiative to boost Ukraine's cybersecurity defenses. Ukraine's Digital Transformation Ministry announced on Friday that Norway is also joining the Tallinn Mechanism and will provide Ukraine with 25 million Norwegian krone, or $2.5 million, to support the country's cyber defenses by the end of 2025. 'The Tallinn Mechanism is a key instrument of international support that helps Ukraine resist these attacks while building long-term digital resilience,' Norway's Foreign Minister Espen Barth Eide said in a statement. — Zoom out: Norway is the 12th country to join the Tallinn Mechanism — which includes Estonia, the United Kingdom, Germany, Canada and the U.S. The group was established in 2023 to coordinate private sector and government aid to Ukraine. Quick Bytes LOCATION, LOCATION, LOCATION — Bodyguards using fitness app Strava inadvertently made locations of Swedish leaders, writes Lynsey Chutel for The New York Times. 'HORRIFIC BEHAVIOR' — In a series of posts on X, the AI chatbot Grok apologized for 'horrific behavior' following a series of posts that included expressing support for Adolf Hitler, Anthony Ha reports for TechCrunch. Also Happening Today The Armed Forces Communications and Electronics Association holds the TechNet Emergency 2025 conference. 9 a.m. Chat soon. Stay in touch with the whole team: Rosie Perper (rperper@ John Sakellariadis (jsakellariadis@ Maggie Miller (mmiller@ and Dana Nickel (dnickel@
Politico
21 hours ago
- Business
- Politico
Welcome to appropriations season
With help from Pavan Acharya QUICK FIX — House appropriators released their fiscal 2026 spending bill for DOT, which includes a funding boost for the FAA. — It's a busy few days on Capitol Hill when it comes to transportation issues. DOT chief Sean Duffy will be testifying before lawmakers, and three DOT administrator nominees have their confirmation hearing. — The FAA is expected to update its request for companies' ideas on how to revamp the nation's air traffic control system. We break down the schedule. IT'S MONDAY: You're reading Morning Transportation, your Washington policy guide to everything that moves. We're glad you're here. Send tips, feedback and song lyrics to Sam at sogozalek@ Chris at cmarquette@ Oriana at opawlyk@ and Pavan at pacharya@ and follow us at @SamOgozalek, @ChrisMarquette_, @Oriana0214 and @pavanmacharya. 'Mountains rough this time of year/ Close the highway down/ They don't warn the town/ I've been fightin' second gear/ For 15 miles or so/ Tryna beat the angry snow.' Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the Week DIG IN: The House Appropriations Committee is out with its fiscal 2026 spending bill for DOT, Sam reports. You can read it here, and a summary is available here. The Transportation, Housing and Urban Development, and Related Agencies subcommittee will mark up the legislation at 5 p.m. today. Your MT team is digging through the text, and will have full coverage throughout the week. HIGHLIGHTS: The legislation includes around $22 billion in discretionary money for DOT, which is roughly $3.1 billion below fiscal 2025 levels and $4.7 billion less than the Office of Management and Budget's request, according to the committee's summary. With $83.3 billion in obligation limitation for highway and airport trust fund programs, there's approximately $105 billion in 'total budgetary resources' to 'improve the safety and efficiency of our nation's transportation system,' the summary says. — The FAA would see a notable boost in funding, snagging about $23.3 billion — an increase of roughly $2.3 billion compared to fiscal 2025. This includes approximately $10.4 billion to 'fully fund air traffic control operations' and to allow the FAA to hire 2,500 controllers, the summary says. THE STAKES: Lawmakers are racing to avoid a government shutdown before the Sept. 30 funding deadline — a tall order, with Congress on recess in August and limited days in session over the coming weeks. And Democrats may have little incentive to help Republicans in the Senate pass appropriations bills as the Trump administration continues its government-slashing effort, which includes a rescissions package that targets foreign aid and public broadcasting. On The Hill BUSY, BUSY, BUSY: Aside from the House appropriations markup, Wednesday is jam-packed with transportation-related events on Capitol Hill — all at 10 a.m. They are: — House Transportation Committee: DOT Secretary Sean Duffy, who is also now interim administrator of NASA, will answer questions from lawmakers during an open forum about Navy Yard, including the department's fiscal 2026 budget request. Expect questions on everything from Duffy's plan to build a 'brand new' air traffic control system to how his temporary role at the space agency will impact his work at DOT. — Senate Commerce Committee: Three DOT administrator nominees — Jonathan Morrison for NHTSA, Derek Barrs for the FMCSA and Paul Roberti for PHMSA — will testify at their confirmation hearing. Expect questions about NHTSA's oversight of Elon Musk's Tesla and autonomous driving technology, as well as traffic fatalities; trucking safety and the FMCSA's regulation of the industry; and PHMSA's pipeline safety enforcement. — Senate Environment and Public Works Committee: The panel will hold a hearing about the upcoming surface transportation bill, which will succeed the 2021 infrastructure law. (The Biden-era package expires next fall.) EPW Chair Shelley Moore Capito ( previously told your MT host that she wants to have text in hand by year's end. The witnesses will be: North Dakota Gov. Kelly Armstrong (R), on behalf of the National Governors Association; Austin Ramirez, CEO of Husco International Inc., on behalf of the National Association of Manufacturers; and Kate Gallego, mayor of Phoenix, Arizona. BONUS: The House Homeland Security Committee's transportation and maritime security panel is hosting a hearing at 10 a.m. Tuesday titled: 'Surveillance, Sabotage, and Strikes: Industry Perspectives on How Drone Warfare Abroad Is Transforming Threats at Home.' Aviation THE RACE IS ON: The FAA is expected to release early this week a finalized version of its request for companies' ideas on how to overhaul the U.S. air traffic control system, a key priority of Duffy's. (The GOP included roughly $12.5 billion in Republicans' recent megabill as a 'down payment' for this effort.) Proposals for the project will be due Aug. 4. SPEED IT UP: DOT said Friday that since Duffy rolled out a plan in late February to boost the nation's ranks of air traffic controllers, the FAA has expanded onsite training at its Oklahoma City academy by nearly 30 percent, with July set to see the highest number of students in the agency's history (550 by the end of the month). MORE QUESTIONS: Indian investigators are out with their preliminary report into June's Air India Boeing 787 crash, which killed at least 260 people in the city of Ahmedabad. The initial analysis shows confusion in the cockpit just before the jet hit a building, with fuel supply to the engines being cut off soon after takeoff. In a recording, one pilot can be heard asking the other why he did this — but the latter responded that he hadn't flipped the switches. — Investigators stressed that, at this point, they have no recommendations for either Boeing or GE Aerospace, which manufactured the engines. The probe into the incident remains ongoing, and no cause has been determined. Rail ICYMI: A dozen Senate Democrats are calling on the FRA to deny a petition from the rail industry that would allow most North American freight railroads to replace some track inspections conducted by humans with ones done via autonomous technology. (Unions are upset, too.) The group of lawmakers was led by Sen. Maria Cantwell (D-Wash.), ranking member of the Senate Commerce Committee. The Association of American Railroads, which filed the petition, has argued that the changes will allow companies to be able to detect track defects earlier. The Autobahn — 'At least 4 presumed dead, 11 missing after Houthi rebels sink ship in Red Sea, EU naval mission says.' AP. — 'Ford Breaks Annual Record for Safety Recalls Within First Six Months of Year.' Wall Street Journal. — 'How China's BYD Is Squeezing Suppliers in the EV Price War.' Wall Street Journal. — 'Amid Air India probe, US FAA, Boeing notify fuel switch locks are safe, document, sources say.' Reuters. — 'Boeing settles with Canadian man whose family died in 737 MAX crash.' Reuters. — 'US senator says United, JetBlue partnership could harm competition.' Reuters. — 'Jaguar Land Rover North America recalls about 21,000 US vehicles over torn passenger airbags.' Reuters. — 'US safety regulator opens recall query into over 27,000 Polestar 2 vehicles.' Reuters. — 'Stellantis Says Armed Man at Its Michigan Plant Now In Custody.' Bloomberg. — 'Delta Strips Engines Off New Airbus Jets to Overcome US Shortage.' Bloomberg.
Politico
4 days ago
- Business
- Politico
A new challenge for flood insurance
Presented by Editor's note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. QUICK FIX Devastating floods in Texas are exposing a growing problem that Congress may have to weigh when considering overhauling the National Flood Insurance Program. As extreme weather and flooding become more frequent in areas where homeowners don't typically hold federal flood insurance policies, policymakers could be forced to look at how to make the NFIP more attractive to non-coastal homeowners. However, this could tax the program even more as it nears its $30.4 billion debt ceiling. The floods in Texas and continued cleanup from the deluge in North Carolina have brought the issue front and center as Congress begins to figure out how to sustain a program that acts as the country's de facto risk management tool for flood events. Only about 2 percent of Kerr County, Texas, and 1.5 to 7 percent of surrounding counties, the main area impacted by the Texas flooding, are insured, leaving a large majority of the estimated 65,000 residential structures uncovered, according to data from the NFIP. 'It just exposes the flood insurance gap, and that we all need to continue to do a better job of making sure that people realize that floods can happen anywhere, and they do happen, they're devastating, and so insurance is one way you can help protect the financial future of your family or small business,' said David Maurstad, former senior executive of the NFIP under the Biden administration. NFIP provides 95 percent of all flood insurance policies in the country, but the program has been subject to a cycle of short-term reauthorizations by Congress. The next deadline is Sept. 30, marking the 34th reauthorization in eight years. Lawmakers have avoided tackling a long-term strategy to improve the NFIP, which is chronically in billions of dollars of debt to the Treasury and is being pushed closer to a breaking point with every new natural disaster. The aftermath of flooding in places outside of coastal areas prone to hurricanes may force policymakers to confront the new reality that could add even more pressure to the embattled program: If property owners in communities surrounding the areas impacted by the flood in Texas follow the typical trend, some may start looking to buy NFIP policies. But expanding access to the program won't be easy. One of the main barriers to flood insurance policies is people's willingness to pay the price. NFIP's new pricing model, Risk Rating 2.0, implements additional flood risk variables and 'is mandated by Congress to set rates that are actuarially sound to reflect each covered property's true flood risk and are fairly distributed based upon individual risk levels,' according to the program's website. The average NFIP premium is $786 per year, according to FEMA data from 2023. Risk Rating 2.0 has gotten some flak from lawmakers. In June, Sen. Bill Cassidy (R-La.) and nine other colleagues demanded an end to the policy. They said that NFIP premiums have increased in every state and 'by FEMA's own estimates, 77 percent of all NFIP policies now pay more than under the old system.' Congress has 'got to look at [NFIP], and they've got to incentivize it, or something else a little more so you can start to get more coverage across the country' not just in the traditional coastal areas, said Chris Steubing, executive director of the Texas Floodplain Management Association. NFIP talks are ongoing, both insurance subcommittee chairs, Rep. Mike Flood (R-Neb.) and Sen. Mike Rounds (R-S.D.), have previously told POLITICO, and both members want to make progress this year. But no concrete plan has materialized yet. 'I'm concerned that there's a lot of people out there who might consider buying flood insurance if it was less expensive,' Rounds said. IT'S FRIDAY — Feel free to send any tips about insurance, financial services or small business to Katherine at khapgood@ And as always, send MM tips and pitches to Sam at ssutton@ Driving the day The Washington International Trade Association holds a virtual discussion, 'Former Trade Negotiators Unpack the July 9 Tariff Deadline,' beginning at 9 a.m. … Treasury's monthly budget statement will be released at 2 p.m. … Vietnam: deal or no deal? — 'Vietnam thought it had a preliminary deal with the U.S. to lower its tariff level substantially. Then, at the last minute, President Donald Trump raised the rate,' report Daniel Desrochers, Phelim Kine and Ari Hawkins. 'As a result, the Vietnamese government still has not formally accepted a key part of the agreement the president touted on social media last week, despite Trump's claim in the post that the terms had been agreed to by Vietnam's leader, Tô Lâm, according to four people familiar with the discussions…' Vought Pressures Powell Over Fed HQ Renovation — A key Trump official said Federal Reserve Chair Jerome Powell has 'grossly mismanaged' the institution and demanded more information about the central bank's renovation of its headquarters in Washington, Bloomberg reports. 'The President is extremely troubled by your management of the Federal Reserve System,' Russ Vought, director of the White House Office of Management and Budget, wrote in a letter addressed to Powell on Thursday. 'Instead of attempting to right the Fed's fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C., headquarters.' The Economy ICYMI — From Sam: 'Tariff inflation hasn't shown up. Here's why it matters for Trump and the Fed.' Counterpoint — Unlimited Funds Co-Founder, CEO and CIO Bob Elliott — a frequent flyer around MM — published his own (paywalled) analysis Thursday contending that consumers are already seeing tangible effects from tariff-related price increases. Based on Elliott's calculations, 'the rise in tariffs should have created a 1.5 percent price increase on core goods and a 1.9 percent increase on durable goods prices.' Dimon tells Europe: 'You're losing' — JPMorgan Chase CEO Jamie Dimon warned European leaders they have a competitiveness problem and that they are currently 'losing' the battle to rival the US and China, per the Financial Times. 'Europe has gone from 90 percent US GDP to 65 percent over 10 or 15 years. That's not good,' Dimon said at an event in Dublin organized by the Irish foreign ministry. 'You're losing.' On The Hill Possible quick crypto win for Trump — President Donald Trump is set to notch his first big legislative win on cryptocurrency policy next week, as House Republicans prepare to accept a Senate bill to create new rules for stablecoins, Jasper Goodman reports. The chamber is set to vote early next week on the Senate's GENIUS Act, which would create the first-ever U.S. regulatory framework for so-called stablecoins that are pegged to the value of the dollar. The bill, which passed the Senate last month with bipartisan support, is poised to become the first major crypto regulatory measure ever adopted by Congress. Gould confirmed as OCC head — The Senate on Thursday approved Jonathan Gould's nomination to serve as Comptroller of the Currency, making him the first confirmed head of the agency since 2020, per Jasper. At the regulators Happy big banks — The Federal Reserve is seeking comment on a new supervisory framework for the largest U.S. banks. 'Nearly two-thirds of the large financial holding companies are not 'well managed' despite having capital and liquidity levels substantially above regulatory requirements,' Vice Chair for Supervision Michelle Bowman said in a statement. 'The proposal would generally require a deficiency in either a large bank holding company's capital or liquidity ratings, in addition to a deficiency in its governance and controls, in order to be classified as not well-managed.' Outgoing Financial Services Forum President and CEO Kevin Fromer — whose organization represents the largest U.S. banks — praised the proposal as a 'welcome development to help focus supervision on material, financial risks.' Jobs report Eileen Braden has been named the new head of U.S. government relations at JPMorgan Chase, where she'll be tasked with leading the integration of the bank's federal and state government relations. Braden joined JPMorgan in 2017 and previously led the bank's state and local government relations team. M&T Bank Corp. has named Sam Mayper as a senior vice president of federal government relations. Mayper was previously a vice president at the Independent Community Bankers of America.
Politico
4 days ago
- Politics
- Politico
The Real World: NASA Edition
With help from Joe Gould and Oriana Pawlyk WELCOME TO POLITICO PRO SPACE. It's been another wild week: Department of Transportation Secretary and former reality TV star Sean Duffy is now NASA's interim administrator, while the Senate appears to be on track to give the agency its biggest budget in decades, in direct opposition to the White House. What are your thoughts on the new administrator? Email me at sskove@ with tips, pitches and feedback, and find me on X at @samuelskove. And remember, we're offering this newsletter for free over the next few weeks. After that, it will be available only to POLITICO Pro subscribers. Read all about it here. The Spotlight President Donald Trump's decision late Wednesday to tap Transportation Secretary Sean Duffy to be the interim head of NASA has prompted questions in Congress about whether Duffy is up to the job. But there is also some cautious industry optimism. Status check: In addition to a series of major projects at the Department of Transportation, including air traffic control modernization, the former reality television star, congressmember and Fox Business host will have a range of big decisions to make at NASA. The agency must make progress on numerous technical challenges to land humans on the moon by mid-2027, and it is also tasked with accelerating plans to land on Mars. Meanwhile, Duffy must navigate tensions between the White House budget, which would cut nearly a quarter of the agency's funding, and the Senate's version, which appears set to back an increase of NASA's budget to levels not seen in decades. Safety rating: Sen. Mark Kelly (D-Ariz), a former astronaut, said it would be reasonable to consider Duffy for NASA administrator — but not to have him be both Transportation secretary and NASA administrator. 'How does he figure out what the priority is? Is it the FAA, which has all kinds of problems, or NASA, which has all kinds of problems?' Sen. Ted Cruz (R-Texas), a leader on space issues as head of the Senate committee that covers NASA, said he liked Duffy, but that he wanted a full-time NASA administrator soon: 'I hope that happens promptly,' he told reporters Thursday. Duffy is taking on the position after Trump last month abruptly withdrew the nomination of Jared Isaacman for NASA administrator — a move that came amid a falling out between Trump and Elon Musk, who had done business with Isaacman. NASA has been run since January by acting Administrator Janet Petro, who will return to her role as director of Kennedy Space Center, she said in a statement provided by NASA. Bill Nelson, the former NASA administrator under the Biden administration, said he saw value in Duffy's appointment: 'Maybe he can help NASA restore some stability amidst all the uncertainty.' On the bright side: Three industry officials, granted anonymity to discuss the move, likewise said there were reasons for optimism. Duffy's position as a Senate-confirmed leader is better than having a less empowered acting administrator, said the first official. 'The good news is, it's somebody that [Trump] most likely trusts,' said the second official. 'He has the President's confidence and Congress'' said the third official, noting Duffy received bipartisan support for his confirmation. This could make it theoretically easier for him to navigate the disagreement between Congress and the White House over the budget. Still, the industry officials noted potential problems. For one, the Department of Transportation licenses space launches, while NASA often buys services from space launch companies, setting up a potential conflict of interest, said the first official. For another, there's little overlap between NASA and Transportation, and with many senior NASA officials departing, Duffy will have less and less of a deep bench to call on to solve the agency's issues, said the second official. Meanwhile, the administration itself appears to lack focus on space issues — meaning that for now, Duffy is very likely the senior-most White House official on anything related to civil space. Galactic Government IT'S SCIENTIFIC: As Congress pushes to save NASA's budget from a White House-proposed cut, it's worth remembering the impact of NASA on fostering scientific talent, said Rep. Grace Meng (D-N.Y.), ranking member of the House appropriations subcommittee that covers NASA. The White House budget would cut NASA's budget by almost 25 percent, and nearly halve the agency's science budget. The Senate has pushed back by voting to boost NASA's funding, with their public rhetoric focused most prominently on backing human spaceflight. But NASA funding is just as important for sustaining America's science talent, Meng told me in an interview last week. 'Not every American might think about going into space, but every community in this country is impacted by cuts to [science, technology, engineering, and mathematics] and education grants.' The White House budget guts NASA's Office of Science, Technology, Engineering, and Mathematics Engagement, with the document arguing that 'NASA will inspire the next generation of explorers through exciting, ambitious space missions, not through subsidizing woke STEM programming.' Former NASA officials have also argued that reduced science spending overall discourages the development of the scientific workforce. NASA provides 'unique training and career opportunities in aerospace, software design and other high-demand skills,' they wrote. Why it matters: Meng's push reflects broader trends within Democratic messaging on Trump administration cuts to science. Earlier this week, Democratic members of the House Committee on Science, Space and Technology hosted a 'Science Fair of Canceled Grants.' FAA ABOUT THAT GROUND TEST: When SpaceX experienced an explosion during a static fire test last month of its Starship prototype rocket, the FAA at the time said the activity wasn't in its purview to oversee. Oriana caught up with a former FAA official with knowledge of its space program on that reasoning (the official was granted anonymity to discuss FAA procedures): The basics: When the FAA established its Part 450 rule, which licenses the safety of rocket launches and reentry, it gave companies the ability to work out their terms with the FAA. 'That's totally within the rules of [Part] 450 and every operator has that option to negotiate that with the FAA — so there's no special treatment here,' the official said in a recent interview. Companies like SpaceX, the official said, have negotiated that a launch begins once the engine is ignited. Because SpaceX's June 19 explosion happened during a static test — with nothing 'on' in that respect — it wouldn't be under FAA's purview to oversee what happened. — Part 450 was put into place in 2020 and was intended to reduce the number of times a company needs to solicit approvals from the FAA and decrease the need for waivers of existing regulations, among other changes intended to make the licensing process more efficient. The Reading Room Over 2,000 senior staff set to leave NASA under agency push: POLITICO SpaceX Valuation to Hit Around $400 Billion in Share Sale: Bloomberg Space industry urges US Congress not to axe system that prevents satellite collisions: Reuters Air Force review spotlights risks in space agency's go-fast approach: Defense News Space Force unveils first international strategy, while GAO flags barriers to space cooperation: Space News Event Horizon TUESDAY: The Space Policy Institute and the Moorman Center for Space Studies hold a book launch on national security space. The Washington Space Business Roundtable hosts a panel on nuclear space. WEDNESDAY: The House Science, Space and Technology Environment Subcommittee holds a hearing on weather forecasting. The Maryland Space Business Roundtable holds a luncheon with Gen. Les Lyles. Making Moves Paula Trimble is now vice president of government affairs and strategy at satellite builder Muon Space. She was previously the Space Development Agency's policy chief and director of legislative affairs, Mike Hess, former NASA deputy associate administrator for Mission Support, is now a vice president at Leidos. Photo of the Week
Politico
5 days ago
- Business
- Politico
No-show tariff inflation
Presented by Editor's note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. Quick Fix The price spikes that were expected to accompany President Donald Trump's head-spinning tariff regime have not arrived. That has created unique challenges to the Federal Reserve in its path to lowering interest rates — and raises questions about how the central bank will be led in the future. Trump and top administration officials have accused Federal Reserve Chair Jerome Powell of slow-walking rate cuts due to misplaced fears that a massive trade war would cause consumer prices to surge. Now, an unexpected cascade of favorable economic data — including a still robust job market — has emboldened those attacks. Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett have stepped up criticism of the Fed's decision-making as speculation mounts over who will get the nod to replace Powell when his term as chair expires next year. The president says his next Fed chair will be 'somebody who wants to cut rates,' and he has seized on a new report from Council of Economic Advisers Chair Stephen Miran as an example of how his economic vision can succeed in defiance of the cognoscenti. 'The Fake News and the so-called 'Experts' were wrong again,' the president posted on his social network. 'Someone should show [Miran's] new Study to 'Too Late' Jerome Powell, who has been whining like a baby about non-existent Inflation for months, and refusing to do the right thing.' Fed policymakers are divided on the trajectory for interest rates and unsure of how and when tariffs could affect prices and employment, according to the minutes of the central bank's June meeting released Wednesday. Powell says the economy's resilience could provide room to leave rates unchanged until there's greater clarity on inflation. But if Fed policymakers decide to leave interest rates where they are at their next meeting on July 29-20, it's likely to trigger an even more intense reaction from the White House. 'Trump wants to put maximum pressure on Powell to cut rates quickly,' said Stephen Moore, a former Trump economic adviser who was floated for a role at the Fed during the president's first term. Powell himself has said he'd be open to lowering rates if this summer's inflation data comes in softer than expected. And there's a growing belief among some Wall Street economists — as well as households surveyed by the New York Fed – that near-term inflation could be more limited than the post-'Liberation Day' panic suggested. Goldman Sachs economists estimate that tariffs have been responsible for less than one-tenth of a percentage point in price growth this year, though the effects could still intensify. In a note to clients, Samuel Tombs of Pantheon Economics said the sky-high 'reciprocal' levies now pending against Japan and South Korea are unlikely to have a material effect on the overall tariff rate or inflation, given that their exports are largely covered by exemptions and sector-specific levies. Perhaps more importantly, while businesses from Best Buy to Costco have raised prices due to import duties, many others are holding fire. 'Most businesses have not fully passed along the cost of the tariffs,' Neil Bradley, the chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce, said during a panel on Wednesday. 'Part of that's a hope that the tariffs go down. Part of it's a concern about market share that they might have. Part of it might be uncertainty about the macroeconomy.' So long as that remains the case, high-level economic data will continue to provide Trump with arguments to go after Powell over borrowing costs — or make lowering interest rates a litmus test for anyone who might want to take his place. But there is still plenty of evidence that tariffs could percolate into consumer prices in the coming months. More than half the companies surveyed by the consulting firm KPMG reported declining gross margins because of tariffs, according to a survey released on Wednesday. More than 80 percent said they expect to raise prices in the next six months. 'The volume is being turned up, if you care to listen,' said Brian Higgins, a managing director at the consulting firm who works with industrial and manufacturing clients. 'Price increases are coming. The tariff-related inflationary impacts have not fully hit.' If that's the case, the danger for Trump would be in getting the lower rates he craves. 'The one thing that could really upend his presidency and his standing with voters would be another bout of inflation,' said Moore. 'Inflation is just a killer for politicians. I think he has to be very careful that [Fed rate] cuts don't spark another round of higher prices at the grocery store and the gas pump.' IT'S THURSDAY — And as always, send MM tips and pitches to Sam at ssutton@ Driving the Day The Brookings Institution holds a discussion on 'Can Trump Bring Manufacturing Back to the U.S.?' at 10 a.m. … Fed Gov. Christopher Waller will speak at a Federal Reserve Bank of Dallas and World Affairs Council of Dallas/Ft. Worth event at 12:30 p.m. … The Bipartisan Policy Center holds a virtual discussion on the economic effects of rent regulation at 2 p.m. … Another whirlwind day — Trump threatened to impose 50 percent tariffs on Brazil over its prosecution of former President Jair Bolsonaro, a far-right politician who has claimed that his defeat to Luiz Inacio Lula da Silva was the result of a rigged election. The 'overtly political tone of the letter is a break with more than a dozen other letters Trump has sent to foreign governments this week,' report Ari Hawkins, Eric Bazail-Eimil, Daniel Desrochers and Megan Messerly. Other missives sent Wednesday went to trading partners in Asia, Africa and Europe. — Lula has already said his government will reciprocate, per CNBC's Kevin Breuninger. Business opposition intensifies — The Chamber and the Consumer Technology Association asked a federal appeals court to strike down Trump's use of a 1977 emergency powers law to impose tariffs on countries around the world, Doug Palmer reports. Most major business groups have 'sat on the sideline' in the legal brawl over Trump's tariff regime. Non-American Apparel — New trade data shows that apparel imports from China dropped to a 22-year low, according to Helen Reid and Siddharth Cavale of Reuters. The Economy Maybe everyone had work deadlines and couldn't shop online — Early sales data from Amazon's annual Prime Day sales event were bleak, per Bloomberg's Spencer Soper: 'Momentum Commerce, which manages online sales for 50 brands in a variety of product categories and price points, said its Amazon sales plunged 41 percent on Tuesday when compared with the start of Prime Day last year.' Bernstein's red flag on deficits — Jared Bernstein, a top economic adviser to former President Joe Biden, writes in the NYT that higher interest rates have prompted him to rethink his dovish views on deficits: 'If we continue to ignore the unforgiving trajectory we are on, we are inviting a debt shock, a kind of crisis that periodically hobbles lower-income and developing countries.' On the Hill It is, in fact, Elmo's World — Senate Republicans are divided over how the $9.4 billion rescission legislation sought by the White House will make cuts to public media and global health funds, according to Jordain Carney. Sanctions — Trump is prepared to support Republican legislation that would impose new sanctions on Russia. But 'only if it changes to give him more control,' report Jordain, Rachael Bade and Eli Stokols. Never easy — From Jasper Goodman: 'Senate Democrats whose support is critical to passing a sweeping overhaul of cryptocurrency rules that Republicans plan to pursue this fall signaled Wednesday that they intend to push for consumer protections focused on so-called memecoins and illicit finance safeguards to be included in a final bill.' Paul Grewal on tokenization — Declan Harty, filing from vacation 'tsk-tsk,' has a Q&A with Coinbase's Paul Grewal. Here's what the crypto exchange's chief legal officer had to say about the tokenization of equities. 'We think there should be a digitally native way for individuals and institutions to own equity in publicly listed companies. We think there's a way to get there on privately listed companies, although there are some more difficult issues that we'd have to resolve in terms of the issuer involvement in that process. But the fundamental vision is a digitally native claim on equity in an institution that can be created as freely and as easily as you can send an email.' At the regulators Warren's warning — In a letter to Financial Stability Board Chair Andrew Bailey, Sen. Elizabeth Warren said Randal Quarles should be dismissed from his new role at the global financial watchdog, dinging the former Fed vice chair for 'weakening safeguards for megabanks at the expense of financial stability and the American public.' — The FSB also released new recommendations aimed at capping the amount of debt that hedge funds, pension funds and insurers take on to boost returns, report Carlo Boffa and Fiona Maxwell. Briggs confirmed — The Senate has confirmed Bill Briggs as deputy administrator of the Small Business Administration, Katherine Hapgood reports. Cancel culture — WaPo's Leo Sands and Shira Ovide: 'A federal appeals court has voided Biden-era plans to crack down on tough-to-cancel subscriptions, which would have required businesses to make it as easy to cancel subscriptions as it is to sign up to them.' Jobs report New era at Financial Services Forum — The Financial Services Forum has named Amanda Eversole as its next president and CEO. Eversole joins the banking group from the American Petroleum Institute and was previously the head of public affairs at JPMorgan Chase. She succeeds Kevin Fromer, who announced late last month that he would step down as president and CEO. Eversole's 'experience and skills will help take the Forum to a new level – ensuring the organization is not only leading in financial policy debates, but also elevating our members' unique and important role in America's economy,' said Citi CEO and Forum Board Chair Jane Fraser.
