Why Matt Gaetz matters in Morocco

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Oct 06, 2023 View in browser   By Adam Behsudi and Zachary Warmbrodt PROGRAMMING NOTE: We’ll be off this Monday for Indigenous Peoples Day but will be back in your inboxes on Tuesday. 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 Rep. Matt Gaetz probably isn’t thinking about next week’s IMF-World Bank meetings in Marrakech. But his presence will be felt. It comes down to money. The U.S. House is in turmoil, and getting Congress to sign off on President Joe Biden’s budget request to boost funds for the World Bank and similar organizations faces an even steeper uphill battle. Gaetz and many other Republicans, even those who didn’t support the ouster of former Speaker Kevin McCarthy, are balking at providing more aid to Ukraine’s fight against Russia. That’s bad news for the World Bank, given that Ukraine aid is lumped together with U.S. support for international financial institutions in the appropriations process, which is in limbo. It’s an issue that will be lurking next week in North Africa, where global finance leaders will be looking for more money to make the World Bank and IMF more responsive to climate change and other challenges in a world beset by rising geopolitical tensions and economic fragmentation. Biden touted his ambitious financial pledge for new World Bank funding at the G20 summit in September. So far, perhaps fearing that the U.S. can’t put its money where its mouth is, no other big member of the bank has stepped forward to match that — calling into question the credibility of U.S. leadership on the issue. “Are other countries not coming forward because they don’t think the U.S. can actualize on its financial pledge, in particular given the dysfunction in Congress?” said Clemence Landers, a former Treasury official who is now at the Center for Global Development, a think tank. She predicts an “incredibly steep” learning curve for new World Bank President Ajay Banga, a former Mastercard CEO tapped by the Biden administration. Banga will spend next week trying to prove he is up to the challenge of mobilizing more resources. Barring any expansion to the bank’s balance sheet, he will be tasked with trying to do more with the same resources — something that experts say is impossible when it comes to adequately addressing climate change. Banga is pushing for greater private sector investment as well. Banga says the capital available for one of the bank’s primary arms is “a pimple on a dimple on an ant’s left cheek compared to what we need in the world.” Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center, said that, given the political reality, it’s not about swinging for the fences. “It’s about moving the football a few yards at a time and showing that these international institutions are still effective,” he said. But the administration’s push to elevate climate change as a priority of the World Bank is giving conservative lawmakers one more reason to think twice about backing more funding. “With growing GOP opposition to the Democrats’ climate policies, the administration may eventually face a choice between pursuing international climate goals at these institutions and maintaining the bipartisan consensus on development finance,” said Matt Swinehart, a former Treasury official now at Rock Creek Global Advisors. The administration says it’s aware of the challenge. “We have structured a package that should appeal to a wide range of people,” said a senior Treasury official. “We’re going to have to do the work to get it passed.” Happy Friday — What are you watching at the IMF-World Bank meetings? Let us know: Zach Warmbrodt, Sam Sutton.   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 marketplaces, 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.     Driving the day September jobs numbers are out at 8:30 a.m. … Former FDIC Chair Jelena McWilliams is the keynote speaker at the Future of Financial Regulation symposium in Washington … Fed board member Christopher Waller talks payments at Brookings at 12 p.m. What can McHenry do? — Our Huddle colleagues have a look at the confusion around the extent of Speaker Pro Tempore Patrick McHenry’s authority and the concern over how he’s used it so far. “No member of GOP leadership has explicitly laid out where exactly they believe McHenry’s powers begin and end,” they report. SEC sues Musk — The SEC is asking a federal court to compel Elon Musk to testify as part of an investigation into his purchase of Twitter, Declan Harty reports. The agency says it’s looking into potential securities law violations related to the $44 billion deal. Economy Why today’s jobs number matters — A better-than-expected report for September could stoke fears that the Fed will keep rates high next year — “good” economic news that could rattle Wall Street, per Victoria Guida. Victoria sums up the political and financial tensions: “Biden’s need for a healthy economy through the election year is clashing with the Fed’s main goal of winning the battle against high inflation. Wall Street is bracing for rates to stay elevated because that would not only make it more expensive for companies to borrow but also to repay their debt.” Economists expect that September will show a net 170,000 new jobs, according to CNBC. How it’s going in the markets so far, per Reuters: “A selloff in U.S. government bonds is jolting everything from stocks to the real estate market, as investors recalibrate their portfolios amid a surge in Treasury yields to their highest levels in more than a decade and a half.”   Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of new episodes – click here.     Crypto FTX insider testifies against SBF — FTX co-founder Gary Wang said in court that Sam Bankman-Fried committed financial crimes, per CoinDesk. Wang, who has also pleaded guilty to federal charges, was the fourth witness called by the DOJ in Bankman-Fried’s fraud trial.   Follow us on Twitter Mark McQuillan @mcqdc Zachary Warmbrodt @Zachary Victoria Guida @vtg2 Declan Harty @ @declanharty Eleanor Mueller @eleanor_mueller Katy O'Donnell @katyodonnell_ Sam Sutton @samjsutton   Follow us

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