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April 18, 2023
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THE TOP
Happy Tuesday morning.
We want to run through some news we’ve picked up on the debt limit. This, of course, is the most significant legislative issue Congress will have to contend with during the next several months — and could be the most impactful issue lawmakers will deal with this Congress.
OK, here we go.
No. 1: Let’s start with this. Both Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer said Monday that the U.S. government could default on its debt. We’ve covered a lot of these debt limit skirmishes and they rarely begin with the two top lawmakers in Washington warning that the worst outcome — a default — is possible.
Part of this is posturing. McCarthy wants President Joe Biden to negotiate and Schumer wants McCarthy to back down. Neither of these seems likely at this point.
Both parties also have taken note that Wall Street still seems numb to this potential crisis in the making.
No. 2: Last Thursday, we scooped the details of the debt limit proposal that House Republicans are cobbling together. This GOP-only plan includes a cap on non-defense discretionary spending, clawing back unspent Covid money, work requirements for social programs, freezing budget increases at 1% growth for a decade, enactment of a House GOP energy package and more.
House Republican leadership will present the framework to rank-and-file members this morning in a closed party meeting. Party leaders want to move this package before the chamber leaves for recess on April 28. That means they’ll push for a vote next week.
Here’s some more news: House Republican leadership sources tell us that they won’t mark up this bill in committees. Instead, party leaders will assemble the legislation themselves and use the Rules Committee to put it on the floor. This is a marked departure from the regular order that McCarthy has promised.
But the big question is whether McCarthy and his top lieutenants can find the votes to get this package through the House.
There’s very serious doubt inside GOP leadership that this proposal can garner 218 GOP votes. No Democrats will support it, of course. And if McCarthy can’t push it through, that significantly strengthens the White House and Senate Democrats’ hand.
House Majority Whip Tom Emmer’s team will begin lobbying members for support as soon as the text is finalized. There’s some hope we could see text as soon as today.
No. 3: Generally speaking, there are two legislative approaches when it comes to lifting the debt limit. Congress can lift it by a dollar amount or by a certain date. House Republican leadership is leaning toward lifting it by a specific dollar amount. This has been a demand of some on the right flank of the conference.
No. 4: McCarthy has been saying in public and private that he believes the American public is on the Republicans’ side when it comes to using the debt limit to force budget cuts.
We got our hands on a new polling memo from the American Action Network showing that they have data that backs McCarthy’s position up.
Here’s the memo, which you should read so you can see the entirety of the polling questions. And here are some of the details:
| → | 52% say McCarthy is negotiating in good faith with Biden, compared to 36% who believe he’s not. |
| → | 50% of those polled in battleground districts oppose “increasing the debt limit without cutting government spending,” compared to 37% who support lifting the debt limit without spending cuts. |
| → | Interestingly, AAN asked about specific policies that McCarthy is proposing. 77% favor clawing back unspent Covid money. 74% favor permitting reform. 62% support enacting work requirements for social programs. |
Yet getting back to FY 2022 spending levels — as House Republicans propose — is going to require tens of billions of dollars in spending cuts. Popular programs such as education funding could be slashed by 20% or more, a huge political risk for Republicans.
This is news: Rep. Rosa DeLauro (Conn.), the top Democrat on the House Appropriations Committee, will highlight these potentially steep cuts when Education Secretary Miguel Cardona testifies before the Labor-HHS-Education subcommittee today.
We’ll note here that President Joe Biden is seeking a $10 billion-plus increase in education funding.
This is from DeLauro’s opening statement:
– Jake Sherman and John Bresnahan
THE SENATE
Dems have no good options for Feinstein quandary
Senate Republicans lined up remarkably quickly against Democrats’ bid to break the logjam on judges by temporarily replacing Sen. Dianne Feinstein (D-Calif.) on the Judiciary Committee.
So what’s next? Democrats on the panel huddled in the Capitol late Monday night with “seasoned floor staffers,” in the words of one committee member, to discuss potential options to move judicial nominees out of the committee and onto the Senate floor.
“I don’t think there are any great options,” Sen. Chris Coons (D-Del.) told us bluntly after the meeting. “I am not aware of any other path to replacing a member of a committee temporarily.”
Despite this setback, Senate Democrats are still expected to ask for unanimous consent for a Feinstein replacement on the floor this week. And Democrats will discuss who to put forward as the proposed fill-in for Feinstein at their weekly lunch later today. Yet regardless of who it is, Republicans will object to the UC request and Democrats will be forced to pump the brakes once again on judicial nominees.
To be sure, there are still some nominees in the queue for Democrats to take up on the Senate floor. But adding to that list will be exceedingly difficult — if not impossible — with the next slate of nominees. Some of these picks by President Joe Biden lack bipartisan support.
Democrats spent Monday insisting that Republicans should, as a matter of senatorial courtesy, support a new organizing resolution on the Senate floor that would temporarily replace Feinstein with another member of the Democratic caucus while the 89-year-old recovers from shingles at home.
There are two camps of Republicans here. There are those who believe they shouldn’t help Democrats confirm judicial nominees that conservatives abhor. Plus, they argued this isn’t a situation where a newly appointed or elected senator needs to be assigned to committees.
And then there are those who are framing this as a Democratic effort to force Feinstein off the Judiciary Committee permanently. This is despite the fact that Feinstein asked for the temporary replacement after facing calls to resign in the wake of her prolonged absence from Washington.
Here’s Sen. Chuck Grassley (R-Iowa), who is also 89:
Sen. Susan Collins (R-Maine), a moderate, cited what she called a “concerted campaign to force her off of the Judiciary Committee,” adding: “I will have no part of that.”
Denying a temporary replacement could fuel calls for Feinstein to resign from the Senate, especially from progressives. Judicial confirmations are a top issue for liberals, who are working to make up lost ground from the Trump era.
Yet even as they confronted a solid wall of GOP opposition on Monday, no Democrat would go there quite yet, and many said it depends on how much longer Feinstein will be out. That could change if she doesn’t return soon.
“She is obviously sensitive to the fact that her absence has an impact on the committee. I’m not going to push her into any other decision,” Judiciary Committee Chair Dick Durbin (D-Ill.) told reporters. “She’s at a delicate part of her life and of her Senate service, and [Republicans] should stand by her and give her a dignified departure from the committee.”
At the same time, Democrats have given no indication that they have any real sense of when Feinstein will return. Feinstein has said she’ll fly back to Washington when cleared by her doctors to travel. Senate Majority Leader Chuck Schumer said he’s “hopeful” that that will be “soon.”
But even drafting a resolution to replace Feinstein on the Judiciary panel suggests Democratic leaders believe she will be out for many more weeks, and as a result, their historic pace of confirming Biden’s lifetime judicial picks is at risk of stalling out.
The Senate’s unofficial deal-making caucus could be worth watching here. Sen. Thom Tillis (R-N.C.) suggested that Republicans could use the Feinstein replacement as leverage to secure concessions from Democrats on the blue slip process, which allows senators to block judicial nominees from their state. Tillis has voted for many of Biden’s judicial nominees and wants the blue slip process maintained.
“Why would I continue to invest and take the heat for supporting candidates that I believe are qualified, no evidence of activism… if you’re going to eliminate the last shred of cooperation we have with respect to judicial nominations?” Tillis said.
There are no indications that this type of arrangement is under consideration, but it shows just how heated the passions can become on the issue of judicial nominations in the Senate.
— Andrew Desiderio
NOMINATION FIGHT
AFL-CIO, other unions to step up support for Su nomination
News: With Julie Su — President Joe Biden’s pick to be the next Labor secretary — in trouble, the AFL-CIO and other top labor unions are upping the pressure on swing state senators to back her.
Union officials will begin a six-figure TV ad buy in Arizona, D.C. and other states calling for Su’s confirmation, according to sources close to the issue. And that ad buy is going to increase, the sources added.
The AFL-CIO convened a meeting of 60 affiliates on Monday to discuss the Su nomination, including AFSCME, the United Mine Workers, International Brotherhood of Electrical Workers and other building trade unions. For AFL-CIO President Liz Shuler and other top union officials, Su’s confirmation is a top priority.
The 54-year-old Su — currently acting Labor secretary — faces a confirmation hearing Thursday in the Senate HELP Committee.
A number of moderate Senate Democrats have refused to say whether they’re backing her nomination, despite supporting Su previously for the number two post at the Labor Department. And Sen. Dianne Feinstein’s (D-Calif.) uncertain status means the White House and Senate Majority Leader Chuck Schumer can’t lose any more votes.
Sen. Joe Manchin (D-W.Va.), who is undecided, declined to respond on Monday to any questions from reporters on Su. Sen. Kyrsten Sinema (I-Ariz.) is also on the fence.
Sen. Jon Tester (D-Mont.) told us he plans to meet with Su on Thursday following the HELP Committee hearing.
“I voted for her once already,” Tester said Monday. “I want to make sure she’s still right.”
Su, the first Asian-American official tapped by Biden for a Cabinet secretary position, faces concerns over her tenure as head of the California Labor and Workforce Development Agency. Su oversaw the state’s unemployment insurance program during the Covid-19 pandemic. There was as much as $30 billion in fraudulent claims paid out by the state.
The Senate confirmed Su as deputy Labor secretary in July 2021 by a 50-47 margin. Republicans strongly opposed her nomination, and they will do so again as she seeks to permanently replace former Labor Secretary Marty Walsh.
– John Bresnahan
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BANKING BULLETIN
Senate Republicans prepare a drubbing for White House’s Bernstein
There’s a committee showdown happening today that may not be on your radar quite yet. The Senate Banking Committee will consider a slate of Biden financial nominees, and Jared Bernstein will face real pushback from the panel’s GOP members.
President Joe Biden announced in February he was nominating Bernstein to be the next chair of the White House Council of Economic Advisers. If confirmed, the progressive economist would replace Cecilia Rouse, the outgoing chair.
Republicans on the Senate Banking Committee will direct much of their toughest questioning towards Bernstein. Here’s part of the playbook Republicans will be using today:
| → | Early inflation missteps: When the Biden administration declared 2021’s initial inflation spike would likely be “transitory,” Bernstein was often the face of that message. The White House has since changed its approach, but that won’t stop GOP senators from pressing Bernstein on that early miscalculation. |
| → | Racial justice and the Federal Reserve: Before joining the Biden administration, Bernstein argued that the Fed should factor the nation’s historic racial disparities into how the central bank approaches its mandate to keep unemployment low. Republicans will argue that such a change would mark a radical politicization of the Fed. |
| → | Rethinking the dollar’s global role: In 2014, Bernstein wrote that the United States should reconsider whether having the dollar as the world’s reserve currency was good policy. Bernstein argued then that the dollar’s status “is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles.” |
| → | Support for Green New Deal: Republicans will accuse Bernstein of wanting the federal government to penalize oil and gas companies. The economist wrote in 2019 that too-low costs for fossil fuels made the sector “unresponsive to the environmental challenge we face” and ignore “the pressing reality of climate change.” |
We’re still fairly bullish on Bernstein’s confirmation. As one of Biden’s longest serving economic advisers, he’s a familiar face in Washington.
But it’s unlikely Bernstein will see the same margin of Senate support as Rouse’s 94-5 confirmation vote. Ultimately, there are enough centrist Democrats in the mix for Republicans to think they’ve got a decent shot at gumming up Bernstein’s nomination.
Then again, Bernstein will be able to tout a letter signed by seven former CEA chairs who served under Republican administrations. Ben Bernanke, Michael Boskin, Tyler Goodspeed, Kevin Hassett, Glenn Hubbard, Gregory Mankiw and Tomas Phillipson wrote that Bernstein “has been a respected voice in economic policy circles for decades.” Read the full letter here.
A spokesperson for Senate Banking Committee Chair Sherrod Brown (D-Ohio) accused Republicans of “trying to politicize this position,” pointing to past bipartisanship around the CEA. Brown voted for Hassett, a Trump nominee to chair the CEA, in 2017, and former Sen. Pat Toomey (R-Pa.) voted for Rouse earlier in the Biden administration.
– Brendan Pedersen
INVESTIGATION WATCH
Moskowitz to sub onto Covid panel for origins hearing
New: Rep. Jared Moskowitz (D-Fla.) will be waived onto the coronavirus select committee for the panel’s hearing on Covid origins today. We caught up on Monday with Moskowitz, who notably served as the director of the Florida Division of Emergency Management during the pandemic, to get his take on the meeting.
“I am the only one who is on that committee tomorrow who ran a COVID operation,” Moskowitz said. “I think everyone has a right to know [where Covid came from] and everyone should stop playing politics with this.”
The freshman Democrat told us he hopes the hearing remains serious. But if Republicans try to shift blame to President Joe Biden, Moskowitz said he’ll “be plenty armed with truth” to combat attacks on the White House.
“When we were fed misinformation, about COVID — intentional misinformation — that wasn’t Joe Biden. That was the previous president,” Moskowitz added.
The subcommittee’s second hearing, titled “Investigating the Origins of COVID-19, Part 2: China and the Available Intelligence,” will feature testimony from former DNI John Ratcliffe and David Feith, a former top State Department official specializing in East Asian affairs.
— Max Cohen
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