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January 25, 2023
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THE TOP
Happy Wednesday morning.
We’re going to focus today on the debt limit and what we see as the strengths, weaknesses, opportunities and threats for the top party leaders – President Joe Biden and Speaker Kevin McCarthy.
But let’s start with some news: The White House plans to invite McCarthy to meet with Biden before the Feb. 7 State of the Union. The meeting isn’t scheduled yet, and the details are still in flux. Still, both sides believe it will happen before Biden’s annual speech to Congress.
Now let’s move onto one of our favorite exercises: a SWOT analysis on the legislative issue of the year, the debt ceiling. We’re going to focus mostly on McCarthy, who’s entering his first big legislative battle as speaker.
Let’s pause a beat to review both sides’ position.
McCarthy wants a debt-limit deal. He hasn’t provided much detail as to what that should look like. But we’ve done a good deal of reporting on this topic from inside the GOP leadership. McCarthy seems to be aiming for a budget caps deal to ensure the federal government spends no more money next year than it did in 2022. This would involve tens of billions of dollars in spending cuts, which will be tough to sell politically.
Biden and Democrats’ view is that the debt limit shouldn’t be subject to negotiations and it needs to be lifted without any drama. A prolonged political stalemate over this issue could hurt an already shaky U.S. economy. Democrats want Republicans to agree to a clean debt-limit increase first, then there can be negotiations over spending cuts.
| → | Strengths: In McCarthy’s view, he’s already won the first round of this fight. For the last month, Biden has said he won’t negotiate over the debt limit. Simultaneously, McCarthy has called for a meeting with the president to discuss the issue. The White House has now agreed to schedule a meeting between Biden and McCarthy – and perhaps others key players. |
Administration officials say the meeting would be wide-ranging and the debt ceiling won’t be subject to negotiations. They also note Biden would meet with any congressional leader, so sitting down with McCarthy is standard operating procedure for the president.
Yet McCarthy is getting what he wants – sitting at the same table as Biden talking about government spending, debt and deficits.
That said, the House Republican leadership is intent on trying to craft some sort of deal to lift the nation’s borrowing cap. And the House GOP leadership has assurances from moderate Republicans that they won’t join with Democrats on a discharge petition to bring up a clean debt limit anytime soon. Instead, moderates will allow McCarthy time to negotiate with the White House.
McCarthy plans to take what he considers to be a reasonable position: that the White House should agree to a budget deal to lift the debt ceiling. Remember, this has happened before. Then Speaker Nancy Pelosi extracted an agreement to raise federal spending alongside a debt-limit boost during the Trump presidency.
Our sources tell us that McCarthy won’t demand entitlement reforms, despite calls from some House Republicans for cuts to these programs. Rather, McCarthy wants to put spending on what his team calls a more “sustainable trajectory.”
McCarthy will also seek to negotiate directly with Biden rather than involving Senate Majority Leader Chuck Schumer or House Minority Leader Hakeem Jeffries.
One of McCarthy’s strengths here is that he has some time. It’s only January and a potential default isn’t likely until June or July. So you shouldn’t expect a quick resolution to this fight.
| → | Weaknesses: McCarthy, like many speakers before him, has taken a high-value hostage that he simply can’t afford to hurt. The debt limit needs to be lifted – McCarthy has conceded that on the record. So the question is whether McCarthy can find something Biden’s wants or needs that would ride alongside the debt limit. What that would be is unclear. |
McCarthy’s hand is also further weakened because the House Republican Conference won’t necessarily be behind him in whatever he does. The California Republican also has to worry about Senate Minority Leader Mitch McConnell. McConnell essentially said Tuesday that it is up to McCarthy and Biden to find a deal on their own. Vaya con dios!
| → | Opportunities: The ultimate question is if there’s a sweet spot where Biden and McCarthy can both get what they want. Is there some sort of compromise where McCarthy can freeze spending at 2022 levels – not 2023 levels – and Biden can say that he staved off deep cuts to entitlement programs or other progressive initiatives? |
Remember the failed “Grand Bargain” of July 2011, when former President Barack Obama and former Speaker John Boehner got close to a major tax-and-spending deal but everything fell apart at the end? So do Biden and McCarthy, who had front-row seats to that episode.
McCarthy, like Boehner, can’t or won’t agree to tax increases. Biden isn’t going to cut entitlement programs. So any deal here is going to be relatively humble and will be focused on the spending side.
| → | Threats: The threats here are almost too numerous to count. Will McCarthy have the support of his fellow House GOP leaders if he cuts a deal? How about his lawmakers? Will conservatives rebel? Will financial markets start to tumble if talks drag out? Can McCarthy keep his razor-thin majority intact during a protracted battle with Biden? Will Biden decide that his own 2024 interests preclude the kind of concessions that McCarthy is seeking? |
The basic question both men will have to face is how long they want to engage in this staring contest. Washington and Wall Street are keenly aware this will be a showdown. Will they take it to the brink or be eager to find an offramp?
– Jake Sherman and John Bresnahan
NEW: We’re excited to announce our first two February events! Join us for two timely conversations in the coming weeks.
First, we’re interviewing Transportation Secretary Pete Buttigieg for a virtual event on Thursday, Feb. 2 at 9 a.m. ET to discuss how the recent investment in infrastructure will impact communities for decades. Presented by Public Private Strategies. RSVP here!
Then, we’re sitting down with House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) for an in-person event on Wednesday, Feb. 8 at 9 a.m. ET at Hawk ‘N’ Dove. We’ll talk to CMR about her priorities in the 118th Congress for this key panel, including spectrum and the discussion around wireless data. Presented by CTIA. RSVP here!
Diversity across the aisle
Last year, Punchbowl News launched The Punch Up, an equity platform focused on bringing the public and private sector together on issues of equity and inclusion. We’re excited to continue The Punch Up in its second year … and we’ll be sharing more over the coming months.
In the spirit of the Punch Up, Punchbowl News is proud to be the media partner for an important celebration of the 118th Congress for #DiversityAcrossTheAisle. Together with the Diversity Staff Associations and other organizations in Washington, we’ll be welcoming lawmakers and staffers to Washington.
THE SPEAKER
NEW: McCarthy gathers big donors for D.C. fete
Speaker Kevin McCarthy is gathering top donors and allies in D.C. beginning today for a celebration of the new House Republican majority.
Sure, it’s a slim majority – a mere 222 seats – but McCarthy’s team felt as if they were robbed of a celebration when the speaker election went 15 ballots. This week, they’re making up for that.
Tonight at 5:45 p.m., donors and lawmakers will gather at the Conrad Hotel for a reception. That’s followed by a 6:45 p.m. dinner with McCarthy and other House Republican members. At 8 p.m. until “TBD,” there will be a dessert reception and open bar.
On Thursday at 10 a.m., House Republican freshmen will gather at tobacco giant Altria’s event space for a reception. At noon, McCarthy and Congressional Leadership Fund President Dan Conston will give a political update over lunch. At 7 p.m., McCarthy will host a “118th majority celebration” at the Library of Congress.
– Jake Sherman
OVERSIGHT WATCH
NARA ignores Oversight request in Biden docs probe
On Jan. 10, House Oversight and Accountability Committee Chair James Comer (R-Ky.) sent a wide-reaching request to the head of the National Archives and Records Administration seeking information on how the independent agency handled the discovery of classified documents at the Penn Biden Center. Comer gave acting Archivist Debra Steidel Wall a deadline of Jan. 24 to turn over documents.
But according to the committee, that deadline has come and gone without Wall or NARA responding.
“The National Archives has not produced the requested documents to the Committee at this time,” an Oversight Committee spokesperson told us. “Chairman Comer’s request still stands and [he] anticipates moving forward with a transcribed interview with NARA’s general counsel soon.”
Comer reached out to NARA one day after CBS reported that classified documents from President Joe Biden’s tenure as vice president were discovered in the D.C. office of the Penn Biden Center. Since then, more classified documents have been found at Biden’s Wilmington, Del., residence — first by Biden’s personal lawyers and later by FBI agents conducting a voluntary search of the property.
Biden lawyers initially came across the documents at the Penn Biden Center on Nov. 2, 2022. The gap between when the documents were discovered and the CBS report concerned Comer, who said he was investigating whether there was “political bias” at NARA.
“NARA’s inconsistent treatment of recovering classified records held by former President [Donald] Trump and President Biden raises questions about political bias at the agency,” Comer wrote.
Here’s a list of what Comer was seeking from NARA:
The National Archives declined to comment when we asked them whether they had complied with the Oversight inquiry.
Welcome to the majority. You don’t always get documents exactly when you want. Sometimes these fights become all consuming.
— Max Cohen
PRESENTED BY INSTAGRAM
THE MONEY GAME
| → | House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) raised more than $500,000 at a fundraiser at La Vie Tuesday night. More than 200 lobbyists and lawmakers toasted CMR, who is the first female chair of E&C in its history. Attendees got gavel-shaped cookies from a baker in Spokane, Wash. |
| → | The New Three continue to up their fundraising game. |
On Feb. 9, House Minority Whip Katherine Clark is attending a breakfast fundraiser at the offices of theGROUP DC.
And on March 29, House Democratic Caucus Chair Pete Aguilar is the beneficiary of the same firm for a lunch fundraiser. The firm also plans to hold an event for House Minority Leader Hakeem Jeffries later in the spring.
— Max Cohen and Jake Sherman
STOCK WATCH
Craig reintroduces stock ban bill
News: Rep. Angie Craig (D-Minn.) is reintroducing a bill that bans members of Congress from owning or trading individual stocks, working as lobbyists after they leave office and using taxpayer money to fly first class.
Craig’s legislation — the Halt Unchecked Member Benefits with Lobbying Elimination (HUMBLE) Act — is the latest effort among lawmakers to restrict members from reaping financial gain from their congressional service or the sensitive information they learn while in office.
The bill, which had four cosponsors last Congress, currently doesn’t have any other members signed on.
The HUMBLE Act joins the TRUST in Congress Act — led by Reps. Abigail Spanberger (D-Va.) and Chip Roy (R-Texas) — in seeking to restrict members from trading stocks. The TRUST Act requires members, spouses and their dependents to place stock holdings in qualified blind trusts. Sen. Josh Hawley (R-Mo.) also introduced a bill on Tuesday that bans members and spouses from trading or owning stocks.
Craig is in her third-term after winning another extremely competitive and expensive House race in November.
— Max Cohen
PRESENTED BY INSTAGRAM
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