Principals

1. Johnson’s power
2. Dems estimate immigration cost
3. GOP intrigue in Florida
4. Consumer price data
5. US Steel bid
6. Biden relaxes on Cuba

PDB: Hegseth grilled, but expected to advance

Biden to deliver farewell address … Bondi, Rubio, Vought face hearings … AP: Hamas agrees to ceasefire draft, Israel still mulling details

Johnson takes charge of Rules

House Speaker Mike Johnson reasserted power over the influential Rules Committee by tapping Rep. Virginia Foxx, N.C., to lead it, Semafor’s Kadia Goba reports. There are further signs of Johnson consolidating power below the top level: Freshman Rep. Brian Jack, R-Ga. replaced Rep. Guy Reschenthaler, and Rep. Morgan Griffith, R-Va. replaced Rep. Thomas Massie, R-Ky., a Johnson critic and the lone member to oppose his bid for speaker. Griffith’s appointment was seen as a consolation prize for Freedom Caucus members who were hoping to see Texas Rep. Chip Roy lead the committee, but so-called pragmatic members of the conference seemed pleased with the speaker’s choice. “Morgan Griffith is an incredibly principled member who I think has the potential to be an incredible Rules Committee member,” said Rep. Dusty Johnson, R-S.D.

Dems balk at Laken Riley cost

As interminable negotiations over amendments to the Laken Riley Act continue, Democrats are warning about its cost: $83 billion over three years, with $26 billion upfront the first year, Semafor’s Burgess Everett reports. Republicans are scoffing at the numbers, arguing they are inflated and based on old data. Still, passing the bill could also fuel the GOP’s desire to send more border security money to incoming President Donald Trump. “We’re prepared to give ICE the resources it needs to properly enforce federal law and protect American families, both through the appropriations and reconciliation processes,” said lead GOP sponsor Katie Britt, R-Ala, who added that Democrats are the ones “who have long fought giving ICE more funding.” Still, Democrats’ views will be important: They have the leverage to stop the bill if they don’t think it’s workable.

Scott weighs in on Senate vacancy

Jim Justice was sworn in as the GOP’s 52nd Senate vote on Tuesday, but Republicans will need more reinforcements. There’s an Ohio vacancy, and Marco Rubio will resign his seat if confirmed as secretary of state, meaning Florida Gov. Ron DeSantis will need to find someone to fill Rubio’s seat. It’s a complicated calculation: Rep. Cory Mills is angling for the appointment and positioning himself to potentially run for the seat anyway, if DeSantis picks someone else, like Attorney General Ashley Moody or Rep. Kat Cammack. “I know Cory, and I think he’s a great guy. I think he would be a great appointment,” Sen. Rick Scott, R-Fla., told Semafor. Still, Scott wasn’t sure what he would do if there were a contested race: “I try not to be involved in primaries.” DeSantis isn’t eager to further slim down the House GOP majority, a potential problem for Cammack and Mills.

— Burgess Everett and Kadia Goba

Why Wall Street is eyeing today’s CPI

Wall Street is closely watching today’s consumer price report for clues to future rate decisions. The report will follow a surprisingly strong jobs report and surging bond yields, which — along with expected tariffs from the incoming Trump administration — have turned the focus back to inflation. “With signs piling up that the economy is still running hot, investors have abandoned any hope of significant rate cuts this year, and analysts are starting to openly wonder whether the Federal Reserve’s next move on interest rates is up, not down,” Semafor Business noted. One new data point worth taking into account: The producer price index rose 0.2% in December, less than expected, and was flat excluding food and energy costs. That alone is unlikely to put fresh rate cuts back on the table, however.

Cleveland-Cliffs prepares bid for US Steel

The CEO of Cleveland-Cliffs told Semafor’s Rohan Goswami that the company has assembled financing for a US Steel takeover bid in the range of $8 billion. CEO Lourenco Goncalves declined to specify which banks had committed to the bid, but he’s been working with advisers from Moelis, JPMorgan, UBS, Truist, and Wells Fargo on strategy and structure for a bid in the high $30s. CNBC was first to report that Cleveland-Cliffs is in talks with rival Nucor about a joint bid for US Steel after President Biden moved to block a planned takeover by Japan’s Nippon Steel. Goncalves elaborated on the ongoing discussions in an interview following a press conference that was seemingly designed to attract attention from the incoming Trump administration: The CEO, surrounded by American flags, name-dropped several Trump allies and at one point belted out, “America First.”

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Biden’s late moves on Cuba

Donald Trump will have a new decision to make on Cuba, after the outgoing Biden administration decided to remove the Caribbean country from the US’ list of state sponsors of terrorism. Senior administration officials said the decision was part of a deal facilitated by the Catholic Church that will see Havana release scores of prisoners detained in Cuba during July 2021 human rights protests. The timing of the move is striking, coming just before today’s confirmation hearing for Trump’s pick to be secretary of state, Florida Sen. Marco Rubio, the son of Cuban immigrants and a fierce critic of Havana’s government. Trump is sure to reverse Biden’s Cuba move, which attracted swift criticism from Republicans as well as Florida Democrats, who Axios reported worry it gives Trump the chance to “frame their party as beholden to socialists.”

Blindspot: Birth rates and Hegseth

Stories that are being largely ignored by either left-leaning or right-leaning outlets, curated with help from our partners at Ground News.

What the Left isn’t reading: Deaths are on track to outpace births within a decade, according to projections from the Congressional Budget Office.

What the Right isn’t reading: Only two in 10 Americans support Pete Hegseth’s nomination to lead the Pentagon, while one-third disapprove of the pick and one-third say they don’t know enough to form an opinion, according to an AP-NORC poll.

Beltway Newsletters

Punchbowl News: Speaker Mike Johnson told his conference on Tuesday that he wants the House to pass the budget resolution for reconciliation by Feb. 27, laying out a very quick timeline.

Playbook: The Florida lobbying shop Rubin, Turnbull & Associates is opening an office in DC that will be led by Caroline Wiles, the daughter of Donald Trump’s incoming chief of staff Susie Wiles.

Axios: Trump’s team expects to raise $500 million from wealthy donors by this summer.

WaPo: Some big questions loom over President Biden’s final days in office, including how much Inflation Reduction Act money his administration will get out the door and who he’ll pardon.

White House

• President Biden signed an executive order designed to accelerate the construction of AI data centers.

Congress

• Donald Trump’s defense secretary pick, Pete Hegseth, faced a grilling from Democrats during his confirmation hearing on Tuesday, but Republican members signaled support for the nominee and he’s likely to advance out of the Senate Armed Services Committee with GOP votes. Sen. Joni Ernst, R-Iowa, once seen as a possible Republican no vote, said she would support Hegseth after the hearing.
• Two Texas Democrats voted with Republicans to pass a House bill that would prevent transgender girls and women from competing on women’s school sports teams.

Transition

• Donald Trump floated creating an “External Revenue Service” to collect tariffs on foreign goods.
• Elon Musk, Jeff Bezos and Mark Zuckerberg will all attend Trump’s inauguration next week, while Michelle Obama is skipping it. (Zuckerberg is also hosting an afterparty.)

Outside the Beltway

• Republican Aric Nesbitt is running for governor in Michigan. — Detroit News

Business

• Meta is cutting 5% of its staff. — Bloomberg
• The SEC is suing Elon Musk for buying Twitter stock at “artificially low prices,” underpaying by some $150 million.

National Security

• Donald Trump is considering lawyer Jeffrey Kessler to lead the Commerce Department Bureau of Industry and Security, which oversees the US export control regime.

Foreign Policy

• The Biden administration added three dozen Chinese companies to a list that restricts imports tied to forced labor in Xinjiang.
• Korean law enforcement has detained embattled President Yoon Suk Yeol.

Technology

• TikTok is planning to shut down its app for all US users on Sunday, going beyond what the ban Congress approved would immediately require. — The Information
• The Biden administration will announce new rules encouraging chipmakers like TSMC to increase scrutiny of customers in order to keep advanced chips out of China. — Bloomberg

Media

• MSNBC president Rashida Jones is stepping down. — Status
• The Guardian says it’s getting a “Trump bump.” — CNN

Correction

In yesterday’s Principals, we wrote that Donald Trump’s nominee for interior secretary, Doug Burgum, was poised to sit for his confirmation hearing, when in fact it had been delayed.

Principals Team

Edited by Morgan Chalfant, deputy Washington editor

With help from Elana Schor, senior Washington editor

Contact our reporters:

Burgess Everett, Kadia Goba, Shelby Talcott, David Weigel

Janet Yellen is the outgoing Treasury Secretary under the Biden administration. She’ll give a speech at the New York Association for Business Economics later today.

The wildfires that are sweeping Los Angeles may accelerate the flight of home insurance companies, in spite of recent regulatory changes aimed at retaining them, the state’s previous top insurance official told Semafor’s Tim McDonnell.

For California to experience fires like these “was never a question of if, it was a question of when,” the official said.