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January 27, 2023
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PRESENTED BY
THE TOP
Happy Friday morning.
The Republican chair of the House Budget Committee is adamant that the U.S. government won’t default on its debt – even in the event of a debt-limit breach.
GOP Rep. Jodey Arrington (Texas) told us Thursday that the U.S. government has “never defaulted” on its debt. “We won’t default now,” he added.
Sure. But, hypothetically, what if we do run out the fiscal clock and breach the debt limit?
Arrington pointed to the Constitution and argued “in terms of our creditors, they will be made whole. We will make our payments.”
Here’s more:
Those “smart people,” according to Arrington, work in the Treasury Department. Washington has long wondered what Treasury would do in the event of a debt default. Some have pointed to Section 4 of the 14th Amendment, which states that “validity of the public debt of the United States … shall not be questioned.”
The core concern behind a federal debt-limit breach is the unpredictability of the event itself. At a minimum, financial markets would likely flip out. Government functions – such as Social Security payments or food programs or pay for military service members – might stop. The potential fallout here is far worse than a government shutdown.
It’s also unusual, perhaps unprecedented, to hear a Budget Committee chair make such an argument. But Republicans have quietly downplayed the impacts of a default for years.
This isn’t a conversation the Treasury Department wants to have right now. Treasury Secretary Janet Yellen has spent recent weeks writing to congressional leaders about the significant risks of default for the global financial system. The only viable approach to the debt limit, Yellen says, is raising it.
In a statement Thursday night, a Treasury spokesperson told us:
A Biden administration official said default “could throw the country into chaos and result in the loss of millions of jobs.”
Rep. Brendan Boyle (Pa.), top Democrat on the Budget Committee, strongly disagreed with Arrington’s take as well. Boyle said Democrats “are open to discussions” about spending, but Congress must first raise the debt limit without preconditions.
Boyle and Arrington – both new in their committee leadership posts this Congress – will meet today to discuss committee operations and other logistical issues. GOP leaders intend to draft a budget resolution that reduces spending to FY2022 levels, which would require tens of billions in cuts. Whether they can pass such a budget on the House floor, or FY2024 spending bills that comply with those levels, remains to be seen.
Arrington, for his part, dismissed some of the Democratic concerns over a potential default, as “apocalyptic rhetoric.”
For the Texas Republican and many other conservatives, the existential crisis facing the U.S. economy is the sheer size of the federal debt, which Arrington said is “crowding out private investment growth, affecting wages, and helping drive inflation and interest rates.”
This isn’t to say that Arrington would be willing for Congress to smash through the debt limit without transformative fiscal reforms. Arrington said he appreciated efforts by House Financial Services Committee Chair Patrick McHenry (R-N.C.) to keep GOP budget demands “thoughtful, serious and reasonable about the place we can end up” under divided government.
The Texas Republican also said that before a default occurred, the House could pass a “measure of assurance, maybe some form of resolution or legislation,” that affirms the U.S. government’s ability to make debt payments.
But that may be cold comfort for financial markets, which remain jumpy as the United States continues to wrestle with inflation at home and geopolitical conflict abroad.
– Brendan Pedersen and John Bresnahan
THE UPPER CHAMBER
Senate eases into 2023
The Senate has had a slow start to the year. Very slow.
Senators began 2023 with what was essentially a three-week recess. When they returned on Monday night, there was one vote on a Defense Department nominee. There were no votes on Tuesday or Wednesday, and committees – which haven’t been formally organized yet – were mostly dormant.
The Senate ended the week with a fly-out vote on a resolution designating January as National Stalking Awareness Month, something that would normally pass via unanimous consent. The resolution was adopted 94-0.
The Senate couldn’t do much of anything this week because Republicans have yet to figure out their committee rosters, which is preventing the chamber from passing an organizing resolution. Until that happens, most committees can’t advance legislation or move nominees to the floor.
GOP leaders are working through a number of snags when it comes to committee assignments.
Earlier this week, newly elected Sen. Eric Schmitt (R-Mo.) asked some GOP senators to relinquish their seats on the Judiciary Committee. Schmitt – the former Missouri attorney general – sought a special waiver allowing both of the state’s senators to serve on the panel. GOP Sen. Josh Hawley of Missouri – also a former Missouri attorney general – is already on Judiciary.
The GOP Conference rejected that waiver. None of the current Republican senators on Judiciary were willing to give up their seat for Schmitt either.
Another issue is that Republicans have more new members than Democrats. Majority Leader Chuck Schumer released his committee rosters yesterday afternoon, which included assignments for newly elected Sens. John Fetterman (D-Pa.) and Peter Welch (D-Vt.). Republicans have five newly elected members to place on committees.
Senate Minority Whip John Thune (R-S.D.) told us he expects this all to get worked out by early next week. The Senate will then need to vote on the organizing resolution.
In the meantime, the Senate is back on Monday night like normal. A 5:30 p.m. vote has been scheduled. It’s unclear, though, what they’ll be voting on.
The slow start to the year is in many ways an encapsulation of how the Senate will operate during the 118th Congress compared to the GOP-controlled House, which will pass dozens of bills the Senate will never consider. It’ll stand in stark contrast to the last two years, when the Senate was historically productive with several landmark bipartisan accomplishments.
— Andrew Desiderio
SENATE 2024
Schiff: My leadership record sets me apart in California race
Longtime Democratic Rep. Adam Schiff has officially announced his campaign for Senate, the latest development in what’s going to be a historic battle over one for California’s prized Senate seats.
Democratic Sen. Dianne Feinstein, 89, hasn’t announced her intentions yet, but other Democrats are already jumping into the race. Rep. Katie Porter (D-Calif.) is running, while Reps. Rep. Barbara Lee (D-Calif.) and Ro Khanna (D-Calif.) are looking at whether to get in. California is a jungle primary, with the top two candidates advancing to the general election regardless of party.
The 62-year-old Schiff is a former federal prosecutor and California state senator. He’s served in Congress since January 2001. Schiff gained national attention as the lead House manager for former President Donald Trump’s first Senate impeachment trial. Speaker Kevin McCarthy just removed Schiff from the Intelligence Committee over Trump–related issues, raising Schiff’s already high profile even more.
Here’s a Q&A with Schiff following his campaign announcement. We edited some of the responses for length.
Q: How long have you been considering a Senate campaign? Why launch this effort right now?
Schiff: “I think this is a critical moment in the history of our state and our country. When our democracy remains very fragile. When our economy is simply not working for millions of Americans who see their quality of life at risk and the future for their kids in doubt. It’s left them vulnerable to a demagogue who comes along and says he alone can fix it.
“Having led a lot of these fights in the House to protect our democracy and make our economy work for more Americans, I think I can take those same leadership skills to the Senate and be more effective on behalf of my California constituents.”
Q: Can a white man win a Senate race in California in 2024? Diversity is certainly going to be an issue here.
Schiff: “I’m confident that voters will decide what’s most important to them at this moment in our history. That they’ll look at the record of accomplishment, at the leadership, at the vision of the candidates, as well as issues of race and gender.”
Q: Rep. Porter is already in the race, other members of the delegation may get in. It could be a big Democratic field. How do you see this playing out?
Schiff: “I think what sets me apart is that in all of the pivotal struggles of the last decade over the fight for our democracy and our economy, I played a central leadership role. In the investigations of the former president, the first impeachment trial, participating in the Jan. 6 investigation hearings. I’ve been in the center of these fights. I think Californians have come to expect its senators to play that national role in championing their values.”
Q: You talked about your discussion with Feinstein prior to your announcement. Should Feinstein retire? Clearly you think you’re worthy to replace her.
Schiff: “I spoke with Sen. Feinstein yesterday. We spoke some weeks ago. I’ve been keeping in close touch with her staff. We have a very close relationship as the two heads of the Intelligence Committee, House and Senate, Democratic leads. I have the utmost admiration for her and a fondness as well.”
Q: This is going to be a very expensive race. You will have to raise $100 million or more.
Schiff: “I’m lucky to already have a very strong grassroots base of support. I’ve one of the most successful fundraisers after Speaker Pelosi. I used that to help other Democrats.”
– John Bresnahan
EXCLUSIVE
We’ve got Bernie’s HELP committee staff
Sen. Bernie Sanders (I-Vt.) is taking on a big new job this Congress as chair of the Health, Education, Labor and Pensions (HELP) Committee after two years atop the Senate Budget Committee.
Sanders is bringing over much of his staff from the Budget panel to HELP, where he’ll have huge sway on an issue he’s been vocal about for decades, health care. The HELP Committee will also have a big role in overseeing the implementation of a key tenet of the Inflation Reduction Act: Medicare’s ability to negotiate prescription drug costs.
“We’re gonna take on the greed of the pharmaceutical industry, which charges the highest prices in the world, and lower those prices,” Sanders said in a video about his goals as the new chair. “We’re gonna expand health care in this country. Our eventual goal is health care for all through a ‘Medicare for All’ single payer program. We’re gonna deal with the crisis in child care in this country… And we’re going to deal with the issue of student debt.”
We exclusively obtained the names of Sanders’ top staffers for the committee:
| → | Warren Gunnels – Staff Director |
| → | Bill Dauster – Deputy Staff Director |
| → | Sophie Kasimow – Health Policy Director |
| → | Jessica Cardichon – Education Policy Director |
| → | Elizabeth Pancotti – Labor Policy Director |
| → | Richard Phillips – Pensions & Tax Policy Director |
| → | Sarah Mueller – Disability Policy Director |
| → | Jill Harrelson – Chief Counsel |
| → | Greg Carter – Oversight Director |
More Senate news: Sen. John Barrasso (R-Wyo.), chair of the Senate GOP Conference, is launching a podcast today called “The Elephant in the Room.” The first episode is up now.
— John Bresnahan and Andrew Desiderio
PRESENTED BY INSTAGRAM
THE COMMITTEES
Foxx to Biden admin.: Prioritize the GOP
New: House Education and Workforce Committee Chair Virginia Foxx (R-N.C.) has sent three letters to top Biden administration officials with a very specific ask: be responsive to the GOP majority.
In letters to HHS Secretary Xavier Becerra, Labor Secretary Marty Walsh and Education Secretary Miguel Cardona, Foxx says that she will “watch carefully” to see whether the administration responds more quickly to Democrats than it does the GOP majority.
Ed and the Workforce is going to be a very active committee in the Republican majority. The GOP has made education policy a top priority – especially in the post-Covid era. Foxx has been the top Republican on the committee since 2017.
– Jake Sherman
THE MONEY GAME
Inside Emmer’s money operation
House Majority Whip Tom Emmer — the former chair of the NRCC — is no stranger to raising cash. Here’s a look at what the Emmer Victory Committee Donor Program has planned for 2023:
| → | Fly-in Monday lunches with new members on Feb. 27, April 17, June 12, July 17, Sept. 18 and Nov. 13. |
| → | A Spring Retreat in Charleston, S.C. |
| → | A Fall Retreat from Oct. 27-30 in Palm Springs, Calif. |
| → | A Whip Holiday Party in December in D.C. |
If you’re a personal donor to the Emmer Victory Committee, you can take part in donor roundtables, a donor retreat in the summer and quarterly political briefings. Fun stuff!
Emmer has bulked up his political operation since he became the No. 3 House Republican. Michael McAdams, who led the NRCC’s communications operation under Emmer, is a senior adviser to his political team.
— Max Cohen and Jake Sherman
PRESENTED BY INSTAGRAM
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One size rarely fits all. That’s why Apollo provides custom capital solutions designed to help companies achieve their ambitious business goals. Think Credit New