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Happy Wednesday morning.
Let’s start here: House Republican leaders declared repeatedly over the last few days that they wouldn’t change their $4.8 trillion debt-limit package before it hit the floor. Speaker Kevin McCarthy and his top lieutenants vowed to muscle the Limit, Save, Grow Act through the chamber without altering the underlying measure.
But late Tuesday night, McCarthy’s leadership crew bent to an uncomfortable reality — the bill needed to be changed, so they changed it.
Following a marathon House Rules Committee meeting that stretched into early this morning, House Republican leaders included an amendment softening a provision that repealed a host of biofuel tax credits. They did that to win over holdout Midwestern Republicans who threatened to sink the bill.
GOP leadership also accelerated implementation of strict work requirements for social safety-net programs to placate hardline conservatives who threatened to oppose the measure.
But they still have to pass their bill on the House floor.
McCarthy can only lose four Republican votes and pass the measure, which he hopes will kick off negotiations with President Joe Biden and Democratic leaders.
The House GOP leadership, which promised regular order and a floor open to amendments, made just one amendment in order: a tweak to the Limit, Save and Grow Act that, among other things, puts in place new work requirements for 2024 instead of 2025. Party leaders had previously said that change was unworkable.
More importantly, McCarthy’s leadership team eliminated the repeal of three biofuel tax credits. For the remaining two — created by the Democrats’ Inflation Reduction Act — the GOP said they didn’t apply to taxpayers who made investment decisions based on the credits.
In addition, the leadership-drafted amendment rescinds funding from the Inflation Reduction Act for green building construction, Energy Department loan guarantees, deferred maintenance for national parks, air pollution for states and municipalities and for a neighborhood access and equity grant program.
These tweaks are aimed at mollifying conservatives and Iowa Republicans, two pockets of resistance McCarthy faced, in order to pass this dead-on-arrival-in-the-Senate debt limit package.
We’ll know more about whether these changes took care of all of the problems inside the GOP conference after their closed-party meeting at 9 a.m. today.
But for everyone confident that the debt-limit dispute will eventually be resolved without a potentially disastrous default, let’s note that Republicans struggled mightily to rally behind a legislative package designed to give McCarthy some leverage in potential talks with Biden.
As of late Tuesday night, the nos were piling up. Genial Tennessee Rep. Tim Burchett is a “no,” as is perennial thorn-in-the-side Rep. Matt Gaetz (R-Fla.). House Freedom Caucus Chair Scott Perry (R-Pa.) has been non-committal publicly and privately. Rep. Andy Biggs (R-Ariz.) sounds skeptical, as do Reps. Matt Rosendale (R-Mont.) and Eli Crane (R-Ariz.). Rep. Nancy Mace (R-S.C.) told reporters she’s “still a no.”
And both GOP and Democratic leaders are also scrambling to head off attendance problems later this week as well.
Gripes from conservatives are nothing new for McCarthy. Remember January? Republican hardliners are known to get everything they want and still bellyache. CBO says this proposal cuts spending by $4.8 trillion over the next decade — which is exactly what conservatives want. But they’re still balking.
The Iowans, generally team players in the House GOP, have been the most difficult pocket to mollify. Party leaders underestimated the mettle of the four-person Iowa delegation and their unwillingness to roll back Democratic-passed tax breaks for the ethanol industry.
The operating theory inside leadership ranks was that Iowa Reps. Ashley Hinson, Zach Nunn, Mariannette Miller-Meeks and Randy Feenstra were team players, so they’d kowtow to McCarthy when he asked. But the Hawkeye State Republicans, led by Hinson, didn’t back down under pressure from the leadership. In fact, the leadership backed down.
Remember: Sen. Chuck Grassley (R-Iowa) is 89 years old. Hinson is 39, Nunn is 43, and Feenstra is 54. All of these House Republicans may be looking at the Senate as a viable next step.
McCarthy and other senior Republicans remain confident that they’ll pass the measure by week’s end. They note today will be the first time in weeks that House GOP lawmakers will all be in the same room.
When McCarthy was asked Tuesday how he’d limit potential GOP no votes, he responded: “The same way we’ve done it every week when you talk to me about every other bill we’re bringing to the floor.”
“I think we’re doing well. I think we’re doing fine,” House Majority Whip Tom Emmer insisted on Tuesday night. “It just depends on when the speaker decides he’s ready to go.”
Happening today: McCarthy and House Minority Leader Hakeem Jeffries are hosting a briefing today with MIT Professors Antonio Torralba and Aleksander Madry, experts in AI.
MIT runs an AI program for military officers. McCarthy had them develop a course to educate Congress about AI. “Whatever country captures AI and quantum first has an advantage and China’s not going to slow down,” McCarthy said Tuesday.
McCarthy is planning to have OpenAI’s Sam Altman in to talk to members as well.
New! RSVP to join us in person at The Roost or on the livestream on Wednesday, May 17 at 9 a.m. ET for our conversation with Rep. Nancy Mace (R-S.C.). We’ll discuss innovative approaches to job creation, economic growth and sustainability. This event is the conclusion of The Leaders, Punchbowl News’ spotlight on elected leaders at the center of their state and local economies, presented by Google.
– Jake Sherman, John Bresnahan, Mica Soellner and Max Cohen
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MEANWHILE, IN THE SENATE…
Julie Su on the hot seat
The Senate HELP Committee will approve Julie Su’s Labor secretary nomination to the Senate floor Wednesday morning.
That might be as far as she gets.
Su, who faces likely unanimous GOP opposition, can’t afford to lose any Democratic or independent votes on the floor so long as Sen. Dianne Feinstein (D-Calif.) is absent. And at least two Democrats and one independent are still on the fence over the nomination.
“They can pass it on a party-line vote, but I think there’s a reasonable chance it fails on the floor,” Sen. Bill Cassidy of Louisiana, the top Republican on the HELP Committee, said of Su’s nomination.
The swing vote everyone is watching — as is often the case — is Sen. Joe Manchin (D-W.Va.). Manchin has been on a tear against the Biden administration lately over its implementation of the Inflation Reduction Act. Manchin even threatened earlier this week to vote to repeal the legislation, which he helped craft in the first place.
Manchin has been mum about Su, refusing to answer reporters’ questions about her nomination. Senate Majority Whip Dick Durbin told us Tuesday night that he wasn’t sure whether Su has the votes on the floor.
Another swing vote is Sen. Jon Tester (D-Mont.), who, like Manchin, is up for reelection in 2024 in a ruby-red state. Tester met with Su on Tuesday and is still undecided. Sen. Kyrsten Sinema (I-Ariz.) is also a concern for Democratic leadership.
The White House has a lot riding on Su’s nomination and senior aides are paying close attention to what happens with these three senators.
“We are in touch with Manchin’s office,” a White House official said when asked whether Su will meet with the West Virginia Democrat.
More from the official:
“Su also had a conversation with Sinema, and had her meeting with Tester. Su has met with Republican and Democratic senators, and offered meetings to every senator on the HELP committee, on both sides of the aisle.”
It hasn’t been a great stretch for the White House when it comes to nominations. Phil Washington had to withdraw from consideration as FAA administrator recently after Sinema made clear she wouldn’t support him in committee. And Gigi Sohn withdrew in March after Manchin announced he’d oppose her nomination for the FCC.
Su didn’t get any GOP support when she was confirmed as deputy Labor secretary in 2021 on a party-line vote. Republicans blistered Su over her tenure as California’s labor chief, during which the agency allegedly mismanaged the unemployment insurance program amid the Covid-19 pandemic. Tens of billions of dollars in fraudulent payments were handed out by the state.
“I am going to oppose Julie Su unless there’s some information that comes to my attention that changes how she managed the unemployment compensation benefits in California,” Sen. Susan Collins (R-Maine) told us.
— Andrew Desiderio and John Bresnahan
SENATE MAP 2024
Senate GOP sticks by Daines after Trump endorsement
Senate Republicans were careful to not rock the boat on Tuesday after learning that Sen. Steve Daines (R-Mont.) — who runs the GOP campaign arm — endorsed Donald Trump for president in 2024.
Daines’ endorsement surprised many Republican senators, especially those who’ve openly blamed Trump for their losses in the 2020 and 2022 elections. Around 20% of the Senate Republican conference has endorsed Trump, but GOP leaders and those aligned with leadership aren’t fans of the former president.
We caught up with many of them on Tuesday night. These GOP senators largely explained away Daines’ endorsement by arguing that it’s beneficial to have Trump in their corner — rather than working against them — as they try to win back control of the Senate.
“He’s got a job to do, and he’s trying to do it in the best way he can and get as many allies as possible on the team to help us get the Senate back,” said Senate Minority Whip John Thune, who has been on the receiving end of Trump’s barbs over the years.
Republicans have one of their best Senate maps in years in 2024, with multiple pickup opportunities in red states with Democratic incumbents. But some still fear that Trump’s influence will have a negative impact on their efforts to win back control of the chamber, especially after many of his preferred candidates in 2022 lost winnable races.
“We’re going to keep working together to ensure that we have candidates who can win primaries and general elections,” Daines said Tuesday night.
The problem for Republicans is that these two things are often in conflict. In consecutive election cycles, the GOP has been saddled with Trump-backed candidates who can get through a Republican primary easily but can’t win in a general election. This was the case in Georgia in 2022, for example, where Trump’s endorsement of Herschel Walker proved to be disastrous for the party.
Sen. John Cornyn (R-Texas), an ally of Minority Leader Mitch McConnell and a former NRSC chair himself, said Daines is “entitled to some latitude given the complexity of the political environment.”
“The goal is to win the majority back. And I really don’t care what the tactics are. I do care about what the result is. And if it helps achieve that result, then I’m fine with it,” Cornyn said. “There’s still a lot of voters who like the former president, and they are Republican primary voters. And so that’s a fact that we have to manage.”
Cornyn said he’s comfortable with the GOP campaign arm embracing Trump in competitive states this time around, even though that hasn’t always been a winning strategy.
“If it helps us win those elections, I’m OK with that. Unfortunately in the last two cycles, it does not appear to have been beneficial,” Cornyn added. “I’m sure it’s a complex and delicate thought process, but [Daines] certainly has got my support… I’m happy to give him all the flexibility he needs.”
Some GOP senators speculated that Daines made the decision to endorse Trump as part of an effort to keep the former president at bay while the NRSC focuses on the must-win races.
“As the chair of the NRSC, he’s making strategic decisions about how we best execute in three or four states,” said Sen. Thom Tillis (R-N.C.), who recently joined the Senate GOP leadership team. “I don’t think Steve Daines does anything that doesn’t go through a strategic consideration.”
— Andrew Desiderio and Heather Caygle
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What we’re looking for in today’s financial services hearings
Today’s another big day for financial-related hearings on Capitol Hill. Here’s what you need to know.
Senate Banking Committee: There’s not much agreement between Democrats and Republicans on this panel, but the need for more housing might be the exception. We’ll hear more about that this morning as Chair Sherrod Brown (D-Ohio) convenes a hearing aimed at “building consensus” around housing reform.
Finding that consensus won’t be easy. Many fundamental problems with the U.S. housing system are self-evident — there’s not enough housing available, and much of what does exist is too expensive. But the parties have historically diverged on solutions, including whether there’s too little federal investment in the housing sector or too much.
Brown and his Republican counterpart Sen. Tim Scott (S.C.) see this as one of the few areas where the Senate Banking Committee could make real headway this year. Be on the lookout for signs of life during today’s hearing.
In his opening remarks, Brown will say the committee is focused on proposals “to make housing more affordable, safer, and easier to find.”
“We may not all agree on every idea,” Brown will say, “but today’s hearing is another important step as we continue our work to build consensus on legislation that can help address the many challenges facing the people and communities that we represent.”
Meanwhile, Scott has spent recent weeks floating bits of housing policy. He’ll tout a discussion draft this morning of this bill — the Renewing Opportunity in the American Dream (ROAD) to Housing Act — as a potential starting point of negotiations.
On an unrelated but bipartisan note: Scott and Brown introduced a new bill Tuesday night along with top members of the Senate Armed Services Committee, Chair Jack Reed (D-R.I.) and Ranking Member Roger Wicker (R-Miss.). The Fentanyl Eradication and Narcotics Deterrence (FEND) Off Fentanyl Act would broaden the federal government’s ability to target opioid traffickers with sanctions and anti-money laundering measures.
House Financial Services Committee: We’ve got another markup courtesy of Chair Patrick McHenry (R-N.C.) this morning. There are more than a dozen bills on the docket today — see them all here — but there are two pieces of legislation we want to highlight.
First: McHenry will introduce the Expanding Access to Capital Act. This is a package of 19 other bills from Reps. Bryan Steil (R-Wis.), Roger Williams (R-Texas), Blaine Luetkemeyer (R-Mo.), Ann Wagner (R-Mo.) and others that amounts to a significant revamp of the laws around private and public capital markets, small business formation and investing.
Startup folks and entrepreneurs are pumped: You can read this letter of support from more than 100 organizations here.
Second: Rep. Andy Barr (R-Ky.) will introduce more legislation targeting the Consumer Financial Protection Bureau — the CFPB Transparency and Accountability Reform Act. This is another package of several bills that would effectively remake the agency’s core functions, remodeling its leadership structure and bringing the regulator directly into the appropriations process.
Top consumer groups are strongly opposed to Barr’s package. Read this letter signed by several dozen of them, including the AFL-CIO, Center for Responsible Lending, UnidosUS, Public Citizen and Americans for Financial Reform.
– Brendan Pedersen
News: EMILYs List, the pro-abortion rights group that aims to elect Democratic women to office, is endorsing Sen. Kirsten Gillibrand (D-N.Y.) for reelection. The early backing from a major Democratic campaign group is notable due to whispers that Gillibrand may face a primary challenge from the left in 2024.
Rumors are circulating that Rep. Alexandria Ocasio-Cortez (D-N.Y.) is eyeing Gilibrand’s seat. AOC passed on challenging Senate Majority Leader Chuck Schumer last cycle, but notably didn’t rule out a primary run against Gillibrand in a recent interview with Politico.
EMILYs List President Laphonza Butler labeled Gillibrand a “pro-choice champion” in her endorsement message.
The group is also backing Sen. Elizabeth Warren (D-Mass.) in her reelection bid. Warren is considered a shoo-in to win another six-year term. Read the Warren endorsement here. EMILYs List also endorsed Warren’s presidential bid in 2020.
In the Michigan Senate race, EMILYs List recently backed Rep. Elissa Slotkin (D-Mich.) to replace retiring Sen. Debbie Stabenow (D-Mich.).
— Max Cohen
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8 a.m.: President Joe Biden will get his daily intelligence briefing.
9:30 a.m.: Democrats from the House Budget Committee, Congressional Progressive Caucus and New Democrat Coalition hold a press conference on the GOP debt-limit plan.
10 a.m.: The Bidens will greet South Korean President Yoon Suk Yeol and his wife at the White House. … House Majority Leader Steve Scalise, House Republican Conference Chair Elise Stefanik and other House Republicans will hold a news conference after their party meeting.
10:20 a.m.: Sens. Tom Cotton (R-Ark.), Katie Britt (R-Ala.), Brian Schatz (D-Hawaii) and Chris Murphy (D-Conn.) will hold a news conference about their social media bill.
10:45 a.m.: Biden will meet with Yoon. … House Democratic leadership will hold a news conference.
12:30 p.m.: Biden and Yoon will hold a news conference.
2 p.m.: Senate leadership will hold their post-lunch news conference.
7:25 p.m.: The Bidens, Yoon and his wife will hold a photo opportunity at the Grand Staircase.
8:30 p.m.: The Bidens will hold a state dinner for the South Korean president.
Editorial photos provided by Getty Images. Political ads courtesy of AdImpact.
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