A $106 Billion Package For Ukraine And Israel Is Tearing GOP Leadership Apart

Republican leaders in the Senate and House are at odds over aid to Ukraine and Israel.

The election of Rep. Mike Johnson (R-La.) as House Speaker sparked a new internal dispute within the GOP.

The choice of the Louisiana lawmaker as Speaker marked the end of five weeks of chaos and paralysis, as House Republicans struggled to find a replacement for Rep. Kevin McCarthy (R-Calif.).

A difference in positions regarding Ukraine aid is risking a bad start for the loose relationship between Johnson and Senate Minority Leader Mitch McConnell (R-Ken.). The two lawmakers have never met in person and have had opposing positions on key topics in recent years.

Johnson voted against McConnell in a November election on GOP leadership. The two also had opposing opinions in January 2021, when Johnson was a main voice against certifying Joe Biden as president, on claims that the election was rigged.

Johnson's election came as a surprise for most of Capitol Hill. According to The Hill, many Republican senators hadn't even heard of Johnson before he became House Speaker.

With the looming date of Nov. 17 as the deadline to pass a new bill to fund the U.S. government,  Congress could be launched into a new drama that once again puts the country on the brink of a shutdown.

Should Israel And Ukraine Go In The Same Bag?

McConnell has made his point clear: he wants to keep financial and military aid for Ukraine and Israel tied together. He views both issues as a threat to national security within the grander context of supporting U.S. allies in standing against the three main geopolitical threats of the moment: Russia, China and Iran.

"This is a moment for swift and decisive action to prevent further loss of life and to impose real consequences on the tyrants who have terrorized the people of Ukraine and of Israel. And right now, the Senate has a chance to produce supplemental assistance that will help us do exactly that," said McConnell at a Monday event alongside Oksana Markarova, the Ukrainian ambassador to the U.S.

Since the war in Ukraine broke out, the U.S. has sent at least $75 billion in military, financial and humanitarian aid to Ukraine, according to the Council on Foreign Relations. Sixty-one percent of the aid falls into defense categories.

When Congress passed a stopgap measure that averted a government shutdown by merely hours on Sept. 30, the issue of sending additional aid for Ukraine became a key bone of contention between Democrats, moderate Republicans and the House Freedom Caucus, representing the most hard-right section of House GOP.

Earlier this month, President Joe Biden unveiled a $106 billion package which included $61 billion in Ukraine aid and $14 billion of aid for Israel, with the rest intended for supporting Taiwan and the Indo-Pacific region against Chinese control, as well as further securing the U.S.-Mexico border.

McConnell is in favor of the package but has said he wants to beef up the national security element of the bill. The Minority Leader has a good working relationship with Senate Majority Leader Chuck Schumer (D-N.Y.), as both senators stand behind continuing support for Ukraine.

On Monday, Israeli Prime Minister Benjamin Netanyahu stated Israel would not entertain the idea of a ceasefire with Palestinian militant group Hamas.

Yet for Johnson, Ukraine and Israel need to be treated separately. On Sunday, he said he expected a stand-alone bill on Israel funding to be treated in the House this week. The Speaker said to Fox News he expected the bill to pass with bipartisan support.

“There are lots of things going on around the world that we have to address and we will,” he said, adding that “right now what's happening in Israel takes the immediate attention, and we've got to separate that and get it through."

Prominent GOP Sen. Ted Cruz (R-Texas) said to The Hill that Israel shouldn't be the victim of a political quarrel over Ukraine.

"What Biden and Schumer are doing, which is holding Israel aid hostage in order to pass all of their other partisan priorities, is profoundly cynical," Cruz said.  

Stocks To Watch

The outcome of upcoming congress action on Ukraine and Israel has the power to affect the stocks of big defense companies supplying the U.S. government and its allies.

This included the largest government provider by the amount of capital spent, Lockheed Martin Corp LMT, as well as Boeing Co BA, Northrop Grumman Corp NOC, General Dynamics Corp GD, RTX Corp RTX and Leidos Holdings Inc LDOS.

ETFs following the defense sector can also become sensitive to bills on military aid, including the three largest by assets under management: iShares U.S. Aerospace & Defense ETF ITA, Invesco Aerospace & Defense ETF PPA and SPDR S&P Aerospace & Defense ETF XAR.

Photo: Sen. Mitch McConnell, Shutterstock