Principals

1. Shutdown looms
2. Debt deal doubt
3. Cautious Fed
4. SCOTUS weighs TikTok ban
5. LNG battle lines

PDB: White House reacts to Trump’s move to kill spending deal

Putin holds news conference … France rape trial ends with dozens of convictions … Politico: Senators want to see Hegseth’s FBI report

Government funding in limbo

The biggest question in Washington today: How will Republicans dig out of the internal meltdown that gripped them on Wednesday over government funding? A three-month spending patch imploded within hours as Donald Trump’s allies urged GOP lawmakers to reject it — a bad sign for party unity come 2025 — and then the president-elect and Vice President-elect JD Vance did as well. House Republican leaders appeared to be still looking for a Plan B as they left the Capitol; they have about 48 hours left to avoid a shutdown. One problem with talk of a totally “clean” funding patch: lawmakers in both parties support adding farm and disaster aid to the end-of-year spending bill. And the House GOP can no longer count on Democrats who would have voted for the now-dead three-month deal. It all adds up to holiday chaos.

Debt limit a long shot in funding bill

Trump and Vance also called for the debt ceiling to be addressed immediately, admitting it’s “not great but we’d rather do it on Biden’s watch” — something both parties seem pretty skeptical about. Democrats typically are more likely to support debt ceiling increases under presidents from their party than Republicans are, but without an imminent deadline, Democrats say they’d just be boosting GOP tax cut plans. “Why would we help them pass the tax cut for billionaires and corporations?” Sen. Chris Murphy, D-Conn., told Semafor. “The people I represent hate that idea.” Republicans don’t think it’s likely, either. “If I’m [Senate Democratic leader] Schumer, just because somebody asked for something, if there wasn’t leverage or benefit to it, I don’t know why I would accept them,” said Sen. Thom Tillis, R-N.C.

— Burgess Everett

Fed careful on future cuts

The Federal Reserve signaled a more cautious approach to mortgage rates next year as it announced another quarter-point rate cut on Wednesday. “Today was a closer call, but we decided it was the right call,” Federal Reserve Chair Jerome Powell said, emphasizing that more progress on inflation would need to be made to trigger more cuts. Meanwhile, Fed officials signaled expectations for fewer cuts next year due to inflation, ahead of Trump’s presidency and potential tariffs that could drive prices upward. Powell noted, however, that little is known about Trump’s actual policy proposals and so “it’s very premature to try to make any kind of conclusion.” The news sent markets plunging — something Trump is likely to take notice of — while the dollar index rose, and so did the cost of borrowing money.

Join us for our largest convening at Davos yet, featuring a world-class lineup of live journalism at the World Economic Forum 2025. Semafor editors will engage with industry leaders to discuss key themes, including global finance, blockchain, AI in the Gulf, Africa’s growth trajectory, and much more.

TikTok takes case to Supreme Court

TikTok will get another shot at preserving its US operations after the Supreme Court agreed to take up the company’s challenge to a law that would ban the social media app in the US next month if its Chinese owners don’t sell it. The Supreme Court will hear arguments on Jan. 10, nine days before a ban is supposed to go into effect. It’s unclear when the court will rule, but the justices could put the law on hold while they decide. TikTok argues the law — which passed Congress with overwhelming support — is unconstitutional because it violates the First Amendment. But a federal appeals court panel in Washington already rejected TikTok’s argument, which may not bode well for the company at the Supreme Court and has proponents of the law on Capitol Hill feeling confident.

Experts question Biden’s parting energy shot at Trump

A top US energy expert thinks the Biden administration missed the mark in its long-awaited study of US natural gas exports, arguing that pushback on a key element of President-elect Donald Trump’s fossil fuel ambitions will end up hurting the economy. The new Department of Energy study casts expansion of the liquefied natural gas industry as a dire economic and environmental risk. But Daniel Yergin, vice chairman of the research firm S&P Global and a preeminent energy historian, disagrees. In a lengthy analysis of the US LNG market, Yergin and his colleagues argue that expanding LNG exports is an unalloyed boon to both the US economy and national security. He told Semafor that holding back the sector will cost the US tens of thousands of jobs, empower Russian President Vladimir Putin, and slow the pace of decarbonization in coal-reliant countries in Asia.

— Tim McDonnell

Beltway Newsletters

Punchbowl News: The conservative backlash over the funding deal negotiated by House Speaker Mike Johnson is raising fresh questions about his future in leadership. More than a dozen members predict Johnson won’t have the gavel in the next Congress.

WaPo: Former Trump adviser Steve Bannon called for Johnson to lose the speakership. “He’s got to go,” Bannon said during his podcast. “And people are sitting there [saying], ‘President Trump supports him.’ Well, hey, President Trump supports him until he doesn’t support him.”

Playbook: Trump’s push for a debt ceiling hike surprised many lawmakers on Capitol Hill, but he’s been privately encouraging Johnson to raise the debt ceiling since the election — an idea the speaker has refused to entertain.

Blindspot

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: President Biden’s approval rating dropped to a new low in a Marquette Law School survey.

What the Right isn’t reading: A lawyer on Fulton County District Attorney Fani Willis’ team suggested that the state’s prosecution of Donald Trump on election interference charges could continue.

White House

• Press secretary Karine Jean-Pierre excoriated Donald Trump and JD Vance after they panned the bipartisan spending deal. She warned Republicans that shutting down the government would “hurt families who are gathering to meet with their loved ones and endanger the basic services Americans from veterans to Social Security recipients rely on.”

Congress

• The Senate passed the fiscal year 2025 defense policy bill in a bipartisan vote of 85-14; a handful of Democrats voted against it because they opposed a measure restricting transgender health care for the children of US service members. Meanwhile, the House passed legislation championed by Paris Hilton that would protect minors at rehab facilities.

• The House Ethics Committee secretly voted to release the report on former Rep. Matt Gaetz by the end of the current Congress. — CNN

Transition

• Elon Musk is relying on the president of his Boring tunneling business, Steve Davis, and former US Technology Officer Michael Kratsios to help hire staff for the non-agency Department of Government Efficiency. — Bloomberg

Outside the Beltway

• The FBI searched the home of Los Angeles deputy mayor Brian Williams in connection with a bomb threat against City Hall.

Economy

• Japan’s central bank held its benchmark interest rate steady, in an unexpected move.

Business

• Nippon Steel’s proposed $14.9 billion takeover of US Steel is on track to be rejected by President Biden after it failed to win the approval of the Committee on Foreign Investment in the United States. — Reuters
• Thousands of unionized Amazon warehouse workers went on strike this morning to force the e-commerce giant to the bargaining table.

Polls

• Fifty-six percent of US adults are more optimistic about the coming year, a four-year high, according to a new Marist poll.
• A majority of Americans disagree with Donald Trump’s plans to use the US military to deport undocumented immigrants and pardon Jan. 6 rioters, according to a Washington Post-University of Maryland poll.

National Security

• The Pentagon says that China is growing its nuclear arsenal.
• Pete Hegseth will get his confirmation hearing to become defense secretary on Jan. 14. — CNN

Foreign Policy

• Russia pulled out its advanced air-defense systems from Syria and moved them to Libya. — WSJ

Technology

• Apple is in negotiations with Tencent and TikTok parent ByteDance to integrate their AI models into its iPhones in China. – Reuters
• The App Association, a lobbying group for tech companies, wrote to Donald Trump’s transition team with recommendations on policy on AI, privacy, and cybersecurity.

Media

• Disney is facing backlash at ABC News over its decision to settle the defamation lawsuit brought by Donald Trump. — WSJ
• The mother of missing American journalist Austin Tice asked Russia President Vladimir Putin for help in finding her son, who was abducted in Syria in 2012. Meanwhile, Israeli Prime Minister Benjamin Netanyahu assured Debra Tice that Israel would avoid airstrikes near a secret prison in Syria where she believes her son may be held. — NBC

Principals Team

• Editors: Benjy Sarlin, Elana Schor, Morgan Chalfant
• Reporters: Burgess Everett, Kadia Goba, Shelby Talcott, David Weigel

Chris DeLuzio is a Democratic representative from Pennsylvania. 

Like many in the movie business, filmmaker Nenad Cicin-Sain has been thinking a lot about how AI might disrupt his industry, Semafor’s Reed Albergotti reported.

Cicin-Sain set out to use AI to write his next screenplay. “I expected it to instantaneously pump out a screenplay once I created all the prompts,” he said. Instead, what ensued was a bizarre episode lasting weeks in which ChatGPT kept asking for more time, continuously changing deadlines and then coming up with reasons why it couldn’t meet them.