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January 9, 2023
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THE TOP
Happy Monday morning.
Now the real challenge begins.
The first test of the Speaker Kevin McCarthy era will come tonight as House Republicans try to pass their rules package for the 118th Congress. It should get through, but after last week’s excruciating fiasco on the floor, House Republicans can’t take anything for granted. McCarthy will begin to find out if his seven-year struggle to get the job was worth it, especially after all the deals he cut to get there.
The rules package was at the center of McCarthy’s fight for the speakership. The 55-page document lays out the GOP priorities for the next two years and the procedures Republicans will use to run the chamber.
However, there’s also a secret three-page addendum that McCarthy and his allies hashed out during several days of grueling negotiations with the House Freedom Caucus. This pact includes the most controversial concessions McCarthy made in order to become speaker – three seats on the Rules Committee for conservatives, freezing spending at FY2022 levels, a debt-ceiling strategy, coveted committee assignments and more.
As of now, only two Republicans have publicly signaled they may vote against the rules package: Reps. Tony Gonzales (Texas) and Nancy Mace (S.C.).
Among their complaints is that McCarthy gave up too much to conservatives to get the speakership. Moderates feel like they need to stand up to GOP leadership’s catering to conservatives now or else they’ll get steamrolled for the next two years.
Moderates also point to the fact that three of the first 12 bills that the House will vote on are designed to tighten abortion restrictions. All three were put on the floor schedule without consultation from the middle of the Republican Conference. The annual March for Life is on Jan. 20, the first since the Supreme Court overturned Roe v. Wade last summer.
Furthermore, there are potential cuts to defense spending as part of the deal with McCarthy’s opponents, which rankles hawks. And social programs will get slashed by an ever bigger margin, maybe $100 billion or more. Vulnerable Republicans will have to vote for these cuts knowing they won’t go anywhere in the Senate.
The GOP leadership’s argument is that the rules package needs to pass so Congress can begin working. Without it, committees can’t get organized and thousands of committee staffers could miss a paycheck.
This is a tightrope walk. As with everything in this Congress, McCarthy, House Majority Leader Steve Scalise and House Majority Whip Tom Emmer can only afford to lose four votes if they want to pass this package.
Party leaders don’t expect any attendance issues. GOP Reps. Kevin Hern (Okla.), Wesley Hunt (Texas) and Roger Williams (Texas) are expected to be back in Washington and voting.
The House will also vote today on a bill by Rep. Adrian Smith (R-Neb.) to rescind $80 billion in IRS funding approved as part of the Inflation Reduction Act. House Republicans vowed to make this – the Family and Small Business Taxpayer Protection Act – the first measure they take up if they won the majority.
One more thing: Sen. Ben Sasse’s (R-Neb.) retirement was official at noon Sunday. The current Senate ratio is 51 Democrats (including three Independents), 48 Republicans and one vacant seat. Nebraska’s GOP Gov. Jim Pillen will appoint a replacement who can serve through 2024. Both the Sasse seat (for the final two years of the 2020 term) and Nebraska Sen. Deb Fischer (R) will be up for reelection then.
– Jake Sherman and John Bresnahan
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INSIDE THE MAJORITY
House Republican Steering Committee will meet on contested chairs today
The House Republican Steering Committee will meet today to vote on chairs for some key panels. This session was delayed from December, when Kevin McCarthy was busy whipping votes for the speakership. Now that that’s over with, the Republican Conference has to make some tough choices.
The meeting will start at 10 a.m. and is likely to stretch all day.
The contested races are:
| → | Ways and Means: Reps. Jason Smith (Mo.), Vern Buchanan (Fla.) and Adrian Smith (Neb.) are all vying for the tax-writing gavel, a huge plum. Buchanan and the Smiths – they’re not related – spent the entire election cycle filling the NRCC’s coffers with money to prove their loyalty to the party. Jason Smith and Buchanan are the favorites, although GOP insiders say the race is too close to call. Buchanan has Scalise’s support. Jason Smith is close with McCarthy, although the California Republican has not formally endorsed in the race. Adrian Smith’s team believes he’s still in the race. |
| → | Education and the Workforce: Reps. Virginia Foxx (N.C.) and Tim Walberg (Mich.) are running to lead this committee. Foxx is the ranking member and got special dispensation from the Republican Conference to circumvent GOP term-limit rules to run again. Foxx previously chaired the panel during the 115th Congress. |
| → | Homeland Security: Texas Rep. Dan Crenshaw (Texas) and Tennessee Rep. Mark Green are running against each other. Crenshaw was a staunch supporter of McCarthy throughout the speaker race. |
| → | Budget: Reps. Jodey Arrington (Texas), Lloyd Smucker (Pa.) and Buddy Carter (Ga.) are all vying for this gavel. |
– Jake Sherman and John Bresnahan
TICK TOCK
The fight over the debt ceiling is already here
The chaos around the speaker election is a poor omen for legislative activity this year. It might also portend an economic crisis later in 2023.
Buckle up, folks. We’re already fighting over the debt ceiling.
Every few years, conservatives wield enough power on Capitol Hill to threaten to block efforts to raise the federal government’s borrowing limit. They argue that they want to slow down the growth of popular mandatory programs – Social Security, Medicare, Medicaid, etc. – as well as make big cuts to discretionary spending, meaning federal agencies.
Each time, Republicans have eventually blinked, although there have been a handful of close calls. In 2011, the fight between conservative House Republicans and former President Barack Obama resulted in the first-ever downgrade of U.S. debt, long considered the world’s safest investment.
But with a tentative deadline set for sometime midway through 2023, this session of Congress feels different.
Limits on the debt ceiling featured heavily in conversations between Speaker Kevin McCarthy and his conservative GOP opponents last week, culminating in two extraordinary concessions from the Republican leader:
| → | Any increase to the debt ceiling would be accompanied by cuts to federal spending. |
| → | Discretionary spending will be capped at levels set for FY 2022. This will result in a cut of at least $130 billion to federal agencies. |
Conservatives insist these cuts will come from non-defense programs, but there’s only so much that can come out of domestic agencies, and they know it.
Conservatives also repeatedly note that the U.S. debt is at $31 trillion, and that the current spending path is unsustainable. So something has to give.
Like we said, this isn’t a new flashpoint. We asked Rep. Frank Lucas (Okla.), the House Financial Services Committee’s longest serving Republican, how he was feeling about the whole thing.
Lucas didn’t sound enthusiastic:
Rep. Andy Barr (Ky.), meanwhile, told us that raising the debt ceiling wouldn’t be as tough a sell for the GOP if the process included reforms sought by conservatives for years.
Here’s more from Barr:
That might be true for Republicans, but spending cuts are going to be a nonstarter with Democrats who control the Senate and White House.
There are moderate Republicans who have already signaled they’d try to work with Democrats to undercut conservative brinkmanship that threatens the full faith and credit of the U.S. government.
Rep. Brian Fitzpatrick (R-Pa.) told CNN that “a discharge petition would only take myself and four colleagues on the GOP side to side with Democrats, if that’s necessary to circumvent that.”
As the drama around the speaker vote ground on last week, we asked a busy Rep. Patrick McHenry (R-N.C.) about the debt ceiling and whether the week’s GOP infighting should give financial markets heartburn about Congress’s ability to raise the limit.
Walking into the speakers office, McHenry replied: “Let’s see how this plane lands.”
– Brendan Pedersen
INSIDE THE HOUSE GOP
Who helped themselves during the speaker fight
Now that Kevin McCarthy is the speaker, we wanted to take stock of who emerged from that drama strengthened, at least among House Republicans.
The McCarthy defenders: Reps. Patrick McHenry (N.C.), Garret Graves (La.), Brian Fitzpatrick (Pa.), French Hill (Ark.), Bruce Westerman (Ark.), Jim Jordan (Ohio), Guy Reschenthaler (Pa.) and House Majority Whip Tom Emmer.
When McCarthy needed a strike team to negotiate the terms of his deal with conservatives, he turned to this eight-person crew. McHenry has lots of experience bringing different GOP factions together from his days as chief deputy whip. But this was new for much of the crew. Graves was the MVP, according to those close to McCarthy.
The conservatives: Reps. Scott Perry (Pa.), Byron Donalds (Fla.), Dan Bishop (N.C.) and Chip Roy (Texas). This quartet of conservatives knew that McCarthy was against the ropes and couldn’t win the speakership without them – and they took advantage of that. Part of the opposition to McCarthy was rooted in the fact many of these lawmakers simply do not like him. Others don’t believe in his conservative credentials.
Yet unlike some of the other conservatives with personal vendettas against the California Republican, this group got to the table and cut a deal to achieve their stated ends of making the House more open and transparent.
Did Republicans hurt themselves in the process? In some ways, yes. The Republican Conference is more divided than it has been in at least a decade. But McCarthy is speaker and the 118th Congress can finally kick off for Republicans. The test will be whether they can do something with their majority before they tear themselves – and McCarthy – apart.
The staff: John Leganski and Natalie Buchanan are two of McCarthy’s longtime top aides. They are probably grimacing as they read this because, as the adage goes, staff should never be part of the story.
But Buchanan and Leganski ran McCarthy’s operation for the last few months and are getting plaudits in GOP circles. And, for everyone who has asked, Leganski was the guy in the orange tie sitting next to McCarthy on the floor.
– Jake Sherman and John Bresnahan
PRESENTED BY AMAZON
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IMMIGRATION
Biden visits the border — and the immigration scramble begins
Less than 24 hours after President Joe Biden visited the U.S.-Mexico border, a bipartisan group of senators will retrace his steps as Congress searches for a solution to the record-high illegal crossings and the resulting humanitarian crisis.
Biden toured the border city of El Paso, Texas, on Sunday as lawmakers and advocates on all sides of the issue are pushing him to come up with a solution to one of the most vexing issues in American politics. It was his first trip to the border as president.
And that was the easy part.
Eight senators — led by Sens. John Cornyn (R-Texas) and Kyrsten Sinema (I-Ariz.) — will travel to El Paso today in what the lawmakers hope will be a first step to addressing the crisis in bipartisan fashion (at least on that side of the Capitol).
Joining Cornyn and Sinema are Sens. Mark Kelly (D-Ariz.), Thom Tillis (R-N.C.), Chris Murphy (D-Conn.), James Lankford (R-Okla.), Chris Coons (D-Del.) and Jerry Moran (R-Kan.).
All of them would likely have a hand in any bipartisan deal on immigration and the border, especially Cornyn as a close leadership ally with a bipartisan track record. Sinema and Kelly — border-state senators who have been critical of Biden’s handling of the issue — will also have big roles here.
The elements of an immigration-border deal have always been there: a mix of border security measures and comprehensive immigration reform including a path toward legal status for DREAMers.
But Congress has consistently failed on the issue, most recently when former President Donald Trump tried to make a deal with Democrats on DREAMer protections in exchange for border wall funding. A 2013 bipartisan Senate bill stalled when then-Speaker John Boehner refused to put it up for a vote, something that could conceivably happen again this time around with Republicans in control of the House.
There are no signs that this year will be any different. Biden’s attempt at managing the crisis with a policy change announced last week infuriated liberals and drew complaints of “too little, too late” from Republicans — all while border communities like El Paso are being inundated with migrants seeking asylum.
The administration announced last week that it would turn away Cuban, Nicaraguan and Haitian migrants who cross the border illegally from Mexico, while expanding an existing program for migrants from those nations to remain in the United States temporarily if they come legally.
White House aides see this as a short-term patch that could help bring illegal immigration numbers down. But anything long-lasting will need to originate on Capitol Hill. The senators heading south today are prepared to at least try.
— Andrew Desiderio
DOWNTOWN DOWNLOAD
| → | The Anschutz Corporation, the holding company owned by Philip Anschutz, has hired Capitol Tax Partners to lobby on “[l]egislative and regulatory services related to Federal tax issues.” |
– Jake Sherman
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