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October 3, 2023
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PRESENTED BY
THE TOP
Happy Tuesday morning.
News: With his speakership on the line, Kevin McCarthy made a late Monday call to House Minority Leader Hakeem Jeffries, perhaps the only person in Washington who could save his career.
But it might be too late.
With the House on the brink of voting on a motion to oust McCarthy, there’s very strong sentiment inside the Democratic Caucus against helping the speaker, according to multiple aides and lawmakers. Jeffries won’t try to save McCarthy without approval from his Democratic colleagues. Rank-and-file Democrats won’t make a move without Jeffries’ OK.
McCarthy’s allies, for their part, say the California Republican is opposed to cutting any deals with Democrats — deals that would be necessary to blunt the support of Rep. Matt Gaetz’s (R-Fla.) motion to vacate the speaker’s office.
So let’s be abundantly clear where things are for McCarthy — he’s in immediate danger of losing his speakership. Even though McCarthy’s allies are publicly expressing confidence, behind the scenes, his leadership team is taking the threat very seriously.
McCarthy has two days — today and tomorrow — to schedule a vote on Gaetz’s resolution. That vote could come up as early as noon today.
McCarthy is stuck. He probably can’t win with Republican votes alone. Democrats don’t trust him and are less than eager to waltz into the middle of a Republican civil war in order to prop McCarthy up.
The big moment today: The House Democratic Caucus and Republican Conference will both meet separately at 9 a.m. McCarthy’s and Jeffries’ tone, tenor and message in these sessions will go a long way toward determining what happens next.
Democratic leadership told their members to prepare for an “extended” caucus meeting. They’re also not allowing members to bring their phones or their staff into the closed-door session.
The count: There are seven House Republicans who told us last night that they plan to vote to oust McCarthy or are leaning in that direction.
If that holds, the only way McCarthy could remain speaker is if Democrats bail him out.
Let’s start with the caveat that’s necessary to repeat every time we write about vote counts — they change. Members can be persuaded one way or another. And, as of now, McCarthy has the support of roughly 200 or more House Republicans. But here’s the breakdown as of this morning:
Want to dump McCarthy: Gaetz and Reps. Bob Good (R-Va.), Tim Burchett (R-Tenn.) and Eli Crane (R-Ariz.).
Lean yes: Reps. Matt Rosendale (R-Mont.), Dan Bishop (R-N.C.) and Andy Biggs (R-
Ariz.).
Undecided: Reps. Mike Cloud (R-Texas), Andy Ogles (R-Tenn.), Keith Self (R-Texas), Ken Buck (R-Colo.) and Ralph Norman (R-S.C.).
Remember: McCarthy can only lose four votes if all members are present and casting votes. So enough opposition has already materialized to oust McCarthy absent Democratic support. Gaetz predicted that would happen Monday night after filing his motion.
No one is sure what it would look like if Democrats support the California Republican. Would Democrats want a true “coalition government” with equal representation on the Rules Committee and other key panels? What happens to the impeachment inquiry into President Joe Biden? Democrats aren’t going to want that to continue, but if McCarthy agrees to end the probe, the speaker would face a huge backlash internally.
Also, how does McCarthy keep fundraising for 2024 if he’s overseeing a jointly run House? What is his message to donors — especially pro-Donald Trump donors?
Democrats: Jeffries met Monday night with his leadership team — including Minority Whip Katherine Clark and Democratic Caucus Chair Pete Aguilar — plus lawmakers representing disparate factions of the caucus.
According to multiple attendees, the overwhelming sense was that Democrats shouldn’t intervene to save McCarthy. And if they do, everything must go through Jeffries.
To be fair, Team McCarthy and his allies are making a series of wholly unconvincing arguments to Democrats. In conversations with otherwise gettable House Democrats, McCarthy allies are suggesting that Democrats back McCarthy — or block a vote — for the good of the institution. They are also suggesting Democrats shouldn’t line up with Gaetz.
To put it lightly, this isn’t landing well with House Democrats, who hardly see McCarthy as the beacon of institutional values.
Republicans are pointing to remarks Jeffries made eight months ago on “Pod Save America,” a progressive podcast. Jeffries said “once the House elects a speaker, the House should elect a speaker for that term — that’s kind of my view of it.” But this may be wishful thinking on the part of Republicans.
Democrats we’ve spoken to — ranging from progressives to moderates — say they will follow Jeffries’ cues here. They’re also preparing for the possibility that Republicans try to jam them by suddenly calling the vote today when they’re not ready. Both sides had attendance issues Monday night, but Democratic leaders say they’ll have as many members as possible prepared to vote today.
Republicans: McCarthy has been keeping his own counsel more than usual in recent days. During high-level GOP leadership meetings on Monday, McCarthy said nothing about the motion to vacate, but rather discussed the appropriations process and other legislative matters.
McCarthy’s chief lieutenants right now are House Financial Services Chair Patrick McHenry (R-N.C.) and Rep. Garret Graves (R-La.). McCarthy’s leadership colleagues — House Majority Leader Steve Scalise and House Majority Whip Tom Emmer — aren’t involved here.
Conservatives: The House Freedom Caucus huddled Monday night to discuss their strategy on the motion to vacate. Sen. Mike Lee (R-Utah) attended to provide perspective on the ongoing FY2024 funding fight.
HFC Chair Scott Perry (R-Pa.) told us after the meeting that he’s a “no” on the motion to vacate, but wasn’t shy of being critical of McCarthy’s leadership.
“Kevin has earned the situation that we have, in my opinion. But I want to be focused on what we asked for in the beginning, which is 12 separate appropriations bills,” Perry said.
— Jake Sherman, Heather Caygle, Mica Soellner and John Bresnahan
Today: Punchbowl News founder and CEO Anna Palmer and senior congressional reporter Andrew Desiderio will sit down with Sen. Mark Warner (D-Va.) to discuss national security and foreign policy. RSVP now!
Update: Our Thursday event with Sen. Shelley Moore Capito (R-W.Va.) is postponed. A new date will be announced soon.
THE SENATE X THE WORLD
Schumer, bipartisan group heading to China this week
News: Senate Majority Leader Chuck Schumer will travel to China later this week as part of a bipartisan three-country swing through Asia, according to his office.
The significance of Schumer’s visit cannot be overstated. The New York Democrat is a longtime China hawk, and tensions between Washington and Beijing are sky-high on a range of issues. Schumer’s office told us that his goal is to “advance U.S. economic and national security interests in the region.”
Schumer will lead the trip alongside Sen. Mike Crapo (R-Idaho), ranking member of the Senate Finance Committee. The group — which includes Sens. Bill Cassidy (R-La.), Maggie Hassan (D-N.H.), John Kennedy (R-La.) and Jon Ossoff (D-Ga.) — will also visit South Korea and Japan.
Interestingly, the delegation is hoping to secure a meeting with Chinese President Xi Jinping, we’re told. As of this writing, Schumer’s office would only say that the senators plan to meet with “government officials and business leaders from each country, and from U.S. companies operating in each country.”
We’re told that Schumer plans to raise several issues during his meetings in China, some of which are central to the Senate’s recent work on China policy. Schumer led the passage of the CHIPS and Science Act, which aims to boost domestic semiconductor manufacturing as a way to better compete with China. Schumer wants to pass another massive — and more comprehensive — package to counter China next year.
Schumer also plans to bring up China’s human-rights record, its role in the ongoing fentanyl crisis in the United States and its foreign policy — as well as “areas for potential cooperation,” according to the New York Democrat’s office. The latter has been a big focus recently for the Biden administration.
The United States has declared that the Chinese government is committing genocide against the Uyghur Muslim minority in the Xinjiang region. China’s increasingly aggressive posture in the South China Sea and toward Taiwan has driven efforts by the West to invest in new deterrence strategies in the Indo-Pacific.
Earlier this year, three top Biden administration officials — Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo — traveled to China with similar objectives.
The group will depart for the region sometime after the late Sen. Dianne Feinstein’s (D-Calif.) funeral in San Francisco on Thursday. The Senate is scheduled to be in recess next week.
— Andrew Desiderio
No company or individual ever wants to utter the words “I’ve been hacked.” And yet, the possibility of a cybersecurity breach is now a reality that everyone, including Capitol Hill, the Biden administration, industry and everyday Americans live with. The rise of artificial intelligence adds a new dimension to an already complicated matter.
That’s why our latest editorial project, The Future of Cybersecurity, will devote the next four weeks to covering the issue as Cybersecurity Awareness Month gets underway. We’ll delve into the efforts in Congress and the administration to regulate it, the key players and more.
In many ways, Congress — and the world — has been playing catch-up on cybersecurity. But the 2024 election brings a new sense of urgency to this issue for U.S. policymakers. Much of the concern centers around the new capabilities AI adds to the mix even as lawmakers acknowledge its benefits and potential to supercharge new workforce opportunities.
Senate Majority Leader Chuck Schumer says there’s an “immediate” need to pass legislation on AI before Americans go to the polls next year.
Similarly, Senate Intelligence Committee Chair Mark Warner (D-Va.) told us he worries AI could make Russia’s 2016 election interference “look like child’s play” with its manipulation capabilities.
Any meaningful action to regulate AI, and boosting cybersecurity requires a multi-pronged approach that involves lawmakers, the White House and Silicon Valley. Lawmakers have written multiple proposals that would tackle key areas of concern, such as regulating the Chinese government-owned TikTok, AI and foreign surveillance. We’ll dig deeper into these legislative efforts in our next installment landing Oct. 10.
Of course, passing anything in a divided government is difficult. And this particular divided government is proving to be one of the most challenging in recent memory.
“To not act would be something we want to avoid,” Schumer said. “We know it’s going to be hard.”
Follow this link to read the full first segment of The Future of Cybersecurity. To listen to the podcast, click here.
— Andrew Desiderio
PRESENTED BY WALMART
Walmart has spent nearly $1 billion with veteran-owned businesses like Bon AppéSweet, helping Navy veteran Thereasa Black and her small business gain nationwide success.
Washington braces for consumer watchdog’s day in court
The Supreme Court will hear oral arguments today that could radically reshape the future of the Consumer Financial Protection Bureau. It may also shatter the existing legal landscape for many other federal agencies, depending on who you ask.
The CFPB has spent the last several years dancing around legal challenges, with the latest coming from the payday lending industry and its delicately-named trade association, the Community Financial Services Association of America.
Here’s what you need to know.
The case: At the heart of this Supreme Court hearing is whether the CFPB’s funding structure is constitutional. The consumer watchdog receives its annual budget through the Federal Reserve, which is itself outside the appropriations process.
That 13-year-old structure hasn’t mattered until recently. We’re here thanks to the U.S. Court of Appeals for the Fifth Circuit — the country’s most reliably conservative bench — which declared last fall that the CFPB’s funding was unconstitutional.
That decision rocked the legal-administrative world. The Congressional Research Service writes that it was “the first appellate decision — and perhaps the first court decision ever — to conclude that congressional action, as opposed to executive or judicial action, can violate the Appropriations Clause.”
There are huge questions hanging over this case. If the agency’s funding has been unconstitutional since its inception, what happens to the post-financial crisis rules that now undergird the entire U.S. mortgage market? The truth is, no one knows.
The stakes: We wrote back in May about how and why federal financial regulators have historically been funded outside the appropriations process. More broadly, less than half of congressional appropriations are funded annually.
So what advocates are ultimately concerned with is how the Supreme Court’s eventual ruling here could one day show up in future challenges to other regulators, whether that’s the Federal Reserve, Federal Deposit Insurance Corp., Federal Housing Finance Authority — the list goes on.
“If the Supreme Court opens the door, the independence of the Fed, the FDIC, and others that use a funding model like the CFPB will evaporate,” Sen. Elizabeth Warren (D-Mass.) said in a speech last week.
The coalition asking the Supreme Court not to strike down the CFPB’s funding is broad, including veterans welfare organizations, the AARP, the State of New York and just about every consumer advocacy organization we’ve ever heard of. Even former FDIC Chair Sheila Bair, a Bush-era appointee, warned that a decision against the CFPB could bring “potential chaos every time Congress engages in brinkmanship over funding.”
Congressional Republicans did not share those concerns when we asked recently, even as the government barreled toward a shutdown. The case brought by CFSA has broad backing from 132 congressional Republicans, several other financial trade associations, the Chamber of Commerce and conservative political groups, including Americans for Prosperity.
“We don’t want to shut down,” Rep. Andy Barr (R-Ky.) told us. “But if there was one, and there were a few days that the CFPB or any other federal regulatory agency couldn’t function, you know, I’m not worried about that.”
— Brendan Pedersen
📅
What we’re watching
Wednesday: The Senate Appropriations Committee will have a closed briefing on Ukrainian air defenses. The Senate Commerce Committee will have a hearing examining the implementation of the CHIPS law. Commerce Secretary Gina Raimondo will testify.
Thursday: The Senate Commerce Committee will have a hearing on Michael Whitaker’s nomination to be FAA administrator.
— Jake Sherman
PRESENTED BY WALMART
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