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Axios Sneak Peek

Two of the highest-profile Republicans in the Senate are publicly defying Minority Leader Mitch McConnell (R-Ky.) on high-stakes issues vital to the GOP's chances of retaking the majority next year.

The big picture: In interviews with Axios, GOP senators and party strategists declined to blame McConnell for the antics of Sens. Rick Scott (R-Fla.) and Lindsey Graham (R-S.C.). They see the "freelancing" — as one source close to the leader described it — as a sign of the Senate as an institution breaking down under modern incentive structures.

What's happening: Scott, the influential chair of Senate Republicans' campaign arm, irked McConnell this spring by independently releasing a 12-point plan for how the GOP would govern in the majority — undercutting the leader's midterm strategy of keeping the focus on Democratic failures.

Scott's "Rescue America" proposal contained several controversial provisions on Social Security and taxes that Democrats instantly seized on for attack ads — including President Biden, who continued to troll Scott over the plan as recently as Tuesday.

Over the past month, Scott and McConnell have also feuded over the politics, policy and fundraising strategy for reclaiming the Senate.

McConnell recently acknowledged that "candidate quality" could cost Republicans the majority — a subtle dig at Scott, who is responsible for recruiting as chair of the National Senatorial Campaign Committee.

Graham, meanwhile, took GOP leadership by surprise Tuesday by releasing a bill that would ban abortion nationwide after 15 weeks — drawing new attention to a debate that has energized Democrats and closed the polling gap in key races.

The headline-grabbing release came the same day inflation data showed consumer prices remained stubbornly high in August, causing the stock market to plummet.

Graham admitted to Axios that he did not get permission from McConnell to release the proposal. McConnell, like many GOP senators, has said the abortion question should be left to the states.

Between the lines: New awareness of the importance of personal branding, the 24/7 cable news cycle, and internet fundraising has incentivized rogue operators — many of whom have ambitions beyond the Senate.

The insubordination is a product of a new era in politics and underscores how much harder it is to ensure party unity in today's Congress.

"Rick Scott’s plan and Graham’s announcement yesterday have sent candidates running for cover and distancing themselves from these proposals," a Senate GOP leadership aide told Axios. "Exactly the opposite of what we want right now."

What they're saying: "This is an institutional problem. A senator is getting elected in their own states and they are not beholden to anybody," Sen. John Cornyn (R-Texas) told Axios.

"The Senate's made up of 99 people who want to be president — and me," Sen. Kevin Cramer (R-N.D.) said. "People look for moments and opportunities to differentiate themselves. ... Republicans, we don't do the groupthink thing."

"We have 50 Republican senators ... they do this for their own motives," Sen. Chuck Grassley (R-Iowa), who's served in the Senate since 1981, told Axios. Grassley reflected on how, in the past, "the personality of the entire Senate was to be less partisan, more respectful of each other."

Retiring Sen. Richard Shelby (R-Ala.), who has served since 1987, called former Senate Majority Leader Bob Dole (R-Kansas) — famous for holding his conference in line — a "great leader."

But "you can't blame" McConnell, Shelby cautioned. "We've always had individuals and individual outcomes."

"I just think in today's multimedia/24-hour cycle world, it's just different," Cramer added. "It's hard to know whether a guy like Bob Dole could have been able to keep everyone in line today."

What to watch: If Trump-backed "MAGA" nominees are successful in November, McConnell will have even more free agents in his conference who are likely to buck his leadership.

"You got a lot of people who are running this year who are very independent-minded," Sen. Josh Hawley (R-Mo.) told Axios. "If we have more members, and hopefully we do, we'll have more people who do their own thing."

The other side: "Senator Scott fights every day to do what he thinks is right and is in the best interest of Florida families. He answers to them, his family and God — no one else. We couldn’t care less about anonymous sources," Scott spokesperson McKinley Lewis said in a statement to Axios.

Graham's office did not respond to a request for comment.

McConnell's renegades

Two of the highest-profile Republicans in the Senate are publicly defying McConnell on high-stakes issues.

Illustration of several versions of the elephant from the Republican Party logo stampeding and kicking up dust.

Mitch McConnell

Politics & Policy

Federal officials said Wednesday they are investigating whether the employee who reported a package explosion at Northeastern University lied to investigators or played a part in the incident, AP reports.

The latest: Investigators said the employee's story lacked consistency and "his injuries did not match wounds typically consistent with an explosion," per AP.

A screenshot of a Boston EMS tweet about responding to reports of an explosion that injured one person at Northeastern University in Boston.

The FBI was assisting after a package sent to the university's Holmes Hall campus in Boston exploded as a staff member opened it on Tuesday evening, police said.

Details: Police said at a news conference late Tuesday that the 45-year-old man was taken to a local hospital and treated for "minor hand injuries." A search revealed a "second similar package that was ultimately rendered safe by our bomb squad," Boston Police Superintendent Felipe Colon said.

Police said they responded to reports of a suspicious package at the campus at 7:18 pm. Northeastern University Police Department tweeted just before 10 pm that the scene was contained and the NUPD was working with city police to secure the area. 

The university said in a statement to news outlets the building "has been evacuated and a notification was sent to the Boston campus at 7:55 p.m. urging people to avoid the area." 

The FBI said in an emailed statement it's "aware of the incident and coordinating with our law enforcement partners."  

Meanwhile, universities including Harvard, the Massachusetts Institute of Technology and  Boston University said they were increasing patrols as they urged students to report any suspicious activity to police.

What they're saying: Boston Mayor Michelle Wu at the news conference praised law enforcement for their response and said she wanted to "make sure to emphasize that this is of the utmost priority, the safety and wellbeing of all of our young people here."

What we're watching: Colon said police were still investigating both the motive and how the package was delivered to the university.

Editor's note: This article has been updated with new details throughout.

Boston

Boston Members

Axios Boston Thought Bubble

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Axios Boston

Officials investigate staff member who reported Northeastern explosion

Investigators said the employee's injuries "did not match wounds typically consistent with an explosion."

Signage is displayed at Northeastern University in Boston, Massachusetts, U.S., on Monday, April 20, 2020.

Photo: Adam Glanzman/Bloomberg via Getty Images

Amtrak canceled all of its long-distance routes starting Thursday in response to a potential railroad workers strike.

Why it matters: It's the latest disruption stemming from the looming labor strike that could start as soon as Friday, which would lead to a shutdown of most of the country's railway system. It would be the first U.S. railway strike in nearly three decades. 

It is not expected to affect Northeast Corridor, as it is primarily owned by Amtrak.

Amtrak workers are not involved in the labor dispute between the country's largest freight railroad companies and their workers, but most of the passenger railroad's long routes use track owned and maintained by the freight railroads.

The big picture: The labor dispute is between BNSF, Union Pacific and CSX and the majority of the unions representing around 115,000 workers. 

Ongoing talks between the freight companies and the workers have been led by the White House.

The unions have threatened a strike if their requests regarding labor conditions and pay are not heard, and sick time policies have been the primary impasse throughout the talks so far. 

What they're saying: "While we are hopeful that parties will reach a resolution, Amtrak has now begun phased adjustments to our service in preparation for a possible freight rail service interruption later this week," Amtrak said in a statement Wednesday.

"Such an interruption could significantly impact intercity passenger rail service, as Amtrak operates almost all of our 21,000 route miles outside the Northeast Corridor (NEC) on track owned, maintained, and dispatched by freight railroads. These initial adjustments include canceling all Long Distance trains and could be followed by impacts to most State-Supported routes."

Go deeper: With rail strike looming, two unions are holding out

Editor's note: This story has been updated with new details throughout.

Amtrak cancels all long-distance trains ahead of potential railway strike

It uses railway track owned and maintained by freight railroads involved in a labor dispute.

Amtrak trains at a rail in Chicago on Sept. 13.

Amtrak trains at a rail in Chicago on Sept. 13. Photo: Scott Olson/Getty Images

trains

Transportation

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Markets

Axios Markets

Surging housing costs are the engine driving Tuesday's worrisome Consumer Price Index report — and it's going to be tough to bring them down.

Why it matters: The inflation numbers provoked a fresh round of worry that the Fed still hasn't gotten inflation under control, and that it'll have to raise interest rates quite a bit more. 

Driving the news: Core U.S. inflation — that is, price increases stripping out volatile food and energy costs — jumped more than expected in August.

That measure is up 6.3% compared to a year earlier (analysts had expected 6.1%).

The big picture: Shelter costs were the single most important category driving core inflation up, as they are weighted heavily in CPI calculations.  

Owners' equivalent rent, a measure that tries to capture the monthly costs homeowners would pay to rent their home, was up 6.3%. 

Both rates are the highest since the mid-1980s. 

What we're watching: Purchase prices for homes. The COVID-related housing boom pushed the median purchase price of an existing home up roughly 50%. 

That surge in home prices continues to filter through to rents, which in turn, is driving inflation. 

While the surge in mortgage rates this year has slowed buying activity, there've been few indications lately that house prices are falling much. 

So there's little reason to think inflation is going to suddenly abate much either. 

What they're saying: "Typically, once those major shelter components begin to gather momentum, there’s an element of inertia that tends to keep them hot for some time," says Jason Pride, chief investment officer of private wealth at Philadelphia-based money management firm Glenmede. 

The housing problem is also the inflation problem

Shelter costs were the single most important category driving up so-called "core" inflation.

Inflation

WHO Director-General Tedros Adhanom Ghebreyesus said Wednesday that the end of the pandemic "is in sight," but cautioned that "we are not there yet."

Driving the news: "We have never been in a better position to end the pandemic," Tedros said, noting that the number of deaths from COVID-19 last week was the lowest it's been since March of 2020.

"If we don't take this opportunity now, we run the risk of more variants, more deaths, more disruption and more uncertainty, so let's seize this opportunity," Tedros added.

The big picture: The WHO director-general's remarks are the most optimistic since the United Nations agency declared the coronavirus outbreak a pandemic in March 2020, Reuters notes.

Tedros urged governments to "take a hard look" at their policies and "strengthen them for COVID-19 and future pathogens with pandemic potential."

"We urge all countries to invest in vaccinating 100% of the most at-risk groups, including health workers and older people," he said and asked countries to "keep testing and sequencing" for COVID-19 virus.

State of play: COVID has killed approximately 6.5 million people and infected more than 609 million, per Johns Hopkins University's online tracker.

Go deeper... Axios-Ipsos poll: Roll credits on the pandemic

WHO chief says end of COVID pandemic "is in sight"

"We have never been in a better position to end the pandemic," he said.

Director-General of the World Health Organisation (WHO) Tedros Adhanom Ghebreyesus delivers a speech during the 72nd session of the WHO Regional Committee for Europe on September 12, 2022

WHO Director-General Tedros Adhanom Ghebreyesus. Photo: Jack Guez/AFP via Getty Images

COVID-19

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

Codebook

Axios Codebook

The Department of Justice unsealed an indictment on Wednesday against three Iranian nationals charged with malicious computer activity between October 2020 and August 2022.

Why it matters: U.S. indictments of international cybercriminals send a clear message that law enforcement knows who is a part of a flourishing overseas hacking groups and make it difficult for defendants to leave their home countries without risking arrest.

Driving the news: The defendants are accused of "exploiting known or publicly disclosed vulnerabilities in commonly used network devices and software programs to get access to victims' computer networks," per a senior DOJ official.

An indictment unsealed Wednesday alleges the defendants targeted hundreds of victims — including small businesses, nonprofits, local governments and "critical infrastructure," like healthcare organizations — in the United States, United Kingdom, Israel, Russia and Iran.

"The indictment does not allege that these actors undertook these actions on behalf of the Government of Iran. Instead, the indictment alleges the actors were demanding to be paid themselves," the official said.

The individuals face four charges, including conspiracy to commit fraud and related activity in connection with computers and intentional damage to a protected computer.

The DOJ also said Wednesday that it will release a joint cybersecurity advisory later today with the FBI, Cybersecurity and Infrastructure Security Agency and Australian, Canadian and U.K. governments.

The Treasury Department also unveiled new sanctions on Wednesday against the three defendants and the technology companies they're affiliated with.

Between the lines: While the three defendants are being charged for engaging in criminal cyber activities, the senior DOJ official told reporters that cybercrime flourishes in nations that “do not adhere to widely accepted norms.”

In the absence of updated, agreed upon cyber diplomacy norms at the United Nations, the White House has been handing down sanctions and indictments to send a clear message of what they think the norms should be.

What they're saying: "These three individuals are among a group of cybercriminals whose attacks represent a direct assault on the critical infrastructure and public services we all depend on," FBI Director Christopher Wray said Wednesday.

The big picture: The new indictments and cybersecurity advisory is a part of the Biden administration’s continuing efforts to crack down on both Iranian cybercriminal and nation-state hacking groups.

Last week, the U.S. government attributed a series of destructive data exfiltration attacks against Albanian government networks to Iran.

The Treasury Department sanctioned the Iranian Ministry of Intelligence and its minister on Friday.

Go deeper... Why Albania's cyberattacks matter to the U.S.

Editor's note: This story has been updated with a statement from FBI Director Christopher Wray.

22-541 indictment

DOJ charges Iranian hackers in data-stealing scheme

The individuals face four charges, including conspiracy to commit fraud and related activity in connection with computers.

The Department of Justice (DOJ) building on Thursday, Aug. 18, 2022 in Washington, DC.

The Department of Justice building on Aug. 18. Photo: Kent Nishimura / Los Angeles Times via Getty Images

Cybersecurity

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

MAGA-aligned candidates swept the Republican congressional primaries in New Hampshire last night, defeating better-financed candidates backed by Gov. Chris Sununu and House Minority Leader Kevin McCarthy.

Why it matters: The GOP's path to win back a Senate majority has narrowed, with Sen. Maggie Hassan (D-N.H.) better positioned to win re-election. 

The big picture: All three of the GOP congressional candidates seen as more electable went down to defeat. 

Details: The biggest defeat for the GOP establishment came in the Senate primary, where state Senate President Chuck Morse conceded to right-wing retired Gen. Don Bolduc — who faced over $4.6 million in super PAC spending on Morse's behalf from a Mitch McConnell-aligned group. 

Bolduc didn't spend any money on TV ads, instead relying on a grassroots army of fed-up conservatives.

In the state's 1st District, 25-year-old Karoline Leavitt, a former Trump and Elise Stefanik staffer, defeated McCarthy-endorsed Matt Mowers. She'll be facing Rep. Chris Pappas (D-N.H.) in a major House battleground. 

“The media, the Washington establishment and the Democrats counted us out. They said I was too young, we couldn’t raise the money to compete and we could never beat a former Republican nominee," Leavitt said in declaring victory.

In the state's 2nd District, Keene Mayor George Hansel, an abortion-rights supporter, conceded to conservative activist Bob Burns. Republican strategists viewed Hansel's moderate mayoral record as critical to prospects to defeat Rep. Annie Kuster (D-N.H.). 

What we’re watching:  The Cook Political Report with Amy Walter said it would be moving Kuster's race from a toss-up to "lean Democrat" and kept the "lean Democrat" rating for the Senate race.

The McConnell-aligned Senate Leadership Fund committed to spend $23 million against Hassan in the general election, but with Bolduc as the nominee, that's an open question.

Between the lines: Democratic super PACs also intervened in two of these three Republican primaries, attacking Morse in the Senate race and boosting Burns.

 Their money likely made a difference in hurting the GOP's prospects, given the narrow margins in both contests.

The bottom line: Former President Donald Trump didn't endorse in any of these races.  That shows that even without Trump's involvement, the energy within the Republican Party is squarely against the establishment.

 Outside Republican money for more-mainstream candidates didn't make a difference.

Editor's note: This story has been updated after AP officially called the races.

MAGA’s New Hampshire sweep

All three of the GOP congressional candidates seen as more electable went down in defeat.

Republican Senate candidate Don Bolduc greets supporters at a town hall event on Sept. 10 in Laconia, New Hampshire. Photo: Scott Eisen/Getty Images

New Hampshire

Number of children in poverty

Data: Census Bureau; Chart: Axios Visuals

America's child poverty rate plunged in 2021, hitting a record low and accelerating a decadelong decline. That's the main message from Census Bureau data released Tuesday. 

Why it matters: Millions of children aren't growing up in poverty today, thanks in very large part to government poverty-reduction programs.  

The most recent decline can be linked directly to the increase in the child tax credit that was implemented in July 2021 but then expired at the end of that year — which means that next year's number is likely to see a rare increase. 

Between the lines: A reduction in child poverty goes hand in hand with a reduction in the number of poor parents — specifically mothers. 

By the numbers: The number of women heads of households in poverty declined to 4.95 million in 2021 from 7.8 million in 2020, per the census supplemental poverty measure, on top of the 3.4 million children who were taken out of poverty. 

What they're saying: The report is a "kids story but it's also a women's story," said Kate Gallagher Robbins, a senior fellow at the National Partnership for Women & Families.

The big picture: Government spending on low-income children has been steadily increasing over the past 30 years, through programs like Medicaid, refundable tax credits, and the Supplemental Nutrition Assistance Program, or food stamps.

Go deeper: The NYT's Jason DeParle has a deep dive into the various forces bringing poverty down in America even before the trend was accelerated by pandemic-related aid. 

America's successful war on poverty

Government poverty-reduction programs were decisive.

Poverty

Ukrainian President Volodymyr Zelensky paid a visit on Wednesday to the northeastern city of Izyum in Ukraine's Kharkiv region, which was recently recaptured from Russian control as part of Ukraine's counter-offensive.

Why it matters: Izyum was a major logistical hub for Russian forces in the north of Ukraine. 

The big picture: Over the weekend, Russia's Defense Ministry announced that troops were being removed from Izyum and the city of Balakleya in an effort to "regroup" in light of the Ukrainian advance.

During the previously unannounced visit on Wednesday, Zelensky oversaw the raising of Ukraine's flag over the city's main square, the New York Times reported.

“Our blue and yellow flag is already flying in de-occupied Izyum,” he said, per the Times. “And it will be so in every Ukrainian city and village.”

Much of the city has been destroyed and the abandoned remains of Russian tanks and vehicles dotted the streets, NBC News reported.

“The view is very shocking, but it is not shocking for me,” Zelensky told reporters, “because we began to see the same pictures from Bucha, from the first de-occupied territories … so the same destroyed buildings, killed people.”

Zelensky visits recaptured Ukrainian city of Izyum

“Our blue and yellow flag is already flying in de-occupied Izyum,” Zelensky said.

Ukrainian President Volodymyr Zelenskyy attends flag hoisting ceremony in Izium after the Ukrainian forces took control of the city from the Russian forces in Kharkiv, Ukraine on September 14,

Ukrainian President Volodymyr Zelensky attends flag hoisting ceremony in Izyum on Sept. 14. Photo: Metin Aktas/Anadolu Agency via Getty Images

Russian invasion of Ukraine

Ukraine

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

Stocks suffered their steepest daily drop yesterday since some of the scariest months of the COVID crisis. 

The big picture: Another searing inflation report is spooking investors. 

Details: The S&P 500 fell 4.3%. It was the market's worst day in an awful year — and its deepest single-day decline since it suffered a 5.9% collapse on June 11, 2020.  

The broad market index is down 17.5% this year, putting it on track for its worst annual showing since 2009, when it fell a horrific 38.5%.

Tech stocks got beaten up especially badly, with the tech-heavy Nasdaq composite falling 5.2%. It's now down 26% this year. 

What we're watching: Yields on U.S. government bonds — sometimes referred to as "interest rates" — which are the real source of the stock market's pain. 

Treasury yields moved sharply higher after the inflation report hit, as investors bet that the Federal Reserve would have to keep raising the short-term rates it's been jacking up for most of the year to try to contain inflation. 

As we've written, interest rates are an almost invisible — but incredibly important — factor in determining stock prices.

The bottom line: The stock market's woes won't abate until people think interest rates can stop rising.  

Worst day for stocks since June 2020

High inflation is driving stocks way down.

Stock market

Change in Consumer Price Index for select metro areas

Data: Bureau of Labor Statistics; Chart: Simran Parwani/Axios

High prices are hitting hardest in some of the biggest Senate battlegrounds.

Why it matters: Democratic strategists have worried since the spring that pockets of high inflation, particularly in the West and the South, could complicate their efforts to hold the Senate — and new federal data will help validate those fears.

Driving the news: The Consumer Price Index climbed 8.3% over the past year, according to data released yesterday by the Bureau of Labor Statistics. That's already awfully high, and it's even worse for scores of pivotal voters.

The Phoenix metro area — home to roughly two-thirds of voters in Arizona, where Sen. Mark Kelly (D) is up against Republican Blake Masters — saw inflation rise 13% year-over-year. That's the highest local metropolitan reading in the country. 

The second highest metro rate is 11.7%, in the Atlanta area — home to 6 in 10 voters represented by Sen. Raphael Warnock.

The Miami/Fort Lauderdale area, where Sen. Marco Rubio is facing a challenge from Rep. Val Demings, clocked in with the third-biggest local report.

White House Chief of Staff Ron Klain and other top aides are also closely watching AAA’s updates on gas prices. 

And while the national average is now at $3.71 a gallon, down from $5.02 in June, those numbers are still notably higher out west — sitting at $4.92 in Nevada and $4.02 in Arizona.

Between the lines: Americans — and voters — are living in a variety of economic micro-climates, with disparities driven by differences in energy, food and housing costs.

Two U.S. inflation rates: Bad and worse

It’s worse than 8.3% in parts of key Senate battleground states.

Wednesday's top stories

McConnell's renegades

Officials investigate staff member who reported Northeastern explosion

Amtrak cancels all long-distance trains ahead of potential railway strike

The housing problem is also the inflation problem

WHO chief says end of COVID pandemic "is in sight"

DOJ charges Iranian hackers in data-stealing scheme

MAGA’s New Hampshire sweep

America's successful war on poverty

Zelensky visits recaptured Ukrainian city of Izyum

Worst day for stocks since June 2020

Two U.S. inflation rates: Bad and worse

Republicans' rocky attempt to change the abortion narrative

Starbucks of the future means faster drinks, updated mobile app

MyPillow CEO says FBI seized his cellphone

3 men convicted for Jan. 6 attacks on Capitol Police

Stunning stat: Child poverty hit record low in 2021

Democrats' surprise surrogates

GOP abortion bill sends Republicans into containment mode