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May 22, 2023
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THE TOP
Happy Monday morning.
President Joe Biden and Speaker Kevin McCarthy will meet today, their first one-on-one session in months, with just 10 days until the U.S. government defaults on its $31 trillion-plus debt.
The stakes for both men couldn’t get much higher. The two sides are tens of billions of dollars apart over what the federal government will spend next year, as well as spending caps for future years. And there are ongoing disputes over beefed-up work requirements for social-welfare programs, permitting reform and IRS funding, too.
White House officials and House GOP negotiators met for more than two hours Sunday night in advance of today’s White House sitdown. That negotiating session followed a call between Biden and McCarthy designed to get everything back on track after the negotiations sputtered throughout the weekend.
Up until now, neither Biden nor McCarthy has shown any ability — or willingness — to reach an agreement. The recent history of such one-on-ones between speakers and presidents doesn’t augur well either. Think President Barack Obama and Speaker John Boehner facing off a decade ago on the “Grand Bargain.”
Biden and McCarthy are under pressure from the hardline wings of their parties not to make too many concessions during the negotiations. This is especially true of Republicans, who have played the debt-limit and government shutdown cards repeatedly when there’s a Democrat in the White House. Republicans haven’t won any of these fights, although they did cause serious political uproars.
Biden is being pressed by House and Senate progressives to invoke the 14th Amendment to keep the government functioning in the event of a default. Biden and Treasury Secretary Janet Yellen expressed doubts on Sunday whether this could be done quickly enough to meet the June 1 deadline. There’s also huge questions over whether it could withstand a court challenge and what happens if it doesn’t. We’d expect to see Hill Republicans react very harshly and retaliate against Biden, even if some of them privately supported such a move.
“I think we have the authority,” Biden said during a news conference Sunday during the G7 meeting in Hiroshima. “The question is, could it be done and invoked in time.”
For McCarthy, his tenure as speaker — a job he has sought for much of his time in Congress — could end up being defined by this moment. McCarthy has requested this one-on-one showdown with Biden, arguing that he and the president can work something out.
But Biden has vastly more experience than McCarthy in such high-stakes talks, as do the president’s top aides, some of whom have served with the president since he was in the Senate or vice president. McCarthy is relying closely on Reps. Garret Graves (R-La.) and Patrick McHenry (R-N.C.), as well as his own staff. The experience gap is heavily in Biden’s favor here.
Biden and McCarthy have repeatedly attempted throughout this crisis to portray themselves as the more reasonable figure. Biden points out that Democrats raised the debt limit three times under former President Donald Trump without threatening an economic or financial catastrophe. The White House has offered a spending freeze for FY2024 while seeking GOP backing for tax increases on corporations and wealthy Americans to close the deficit, both politically popular proposals. But McCarthy won’t even consider this idea.
McCarthy counters that the federal government is on path for a $1.5 trillion deficit next year as the nation’s fiscal picture worsens. Higher interest rates mean payments to service the massive federal debt soak up even more of the budget. Interest payments on the national debt — very manageable when rates are low — are projected by CBO to cost $663 billion this year alone, and it could get worse in 2024. A lot worse. McCarthy complains that Democrats still don’t want to do anything to cut spending.
“I think we can solve some of these problems if he understands what we’re looking at,” McCarthy told Capitol Hill reporters on Sunday following his phone call with Biden. “But I’ve been very clear to him from the very beginning. We have to spend less money than we spent last year.”
Indeed, lowering spending is key to this deal for McCarthy. He has very little leeway on that front.
One thing we’ll be watching in the coming days: Do any House Republicans get nervous about the status of the negotiations? Democrats have a discharge petition that could be used for a clean debt-limit increase. That discharge petition currently has 210 signatures. They expect to have all 213 House Democrats by the end of today, we’re told.
But getting to the magic 218 number is still a long shot. Yet it’s worth keeping an eye on whether any moderate House Republicans start wondering whether McCarthy and Biden can ever get a deal.
— John Bresnahan and Jake Sherman
McCaul to view dissent cable this week
News: House Foreign Affairs Committee Chair Michael McCaul (R-Texas) is planning on viewing crucial Afghanistan-related documents at the State Department on Tuesday.
McCaul subpoenaed the State Department for access to a 2021 dissent cable written by Kabul embassy staff criticizing the U.S. pullout from Afghanistan, in addition to the State Department’s response to that cable. After a lengthy back-and-forth that ended with McCaul threatening to hold Secretary of State Antony Blinken in contempt of Congress, the Texas Republican is finally set to view the documents this week.
There will be some conditions, however. State is currently only allowing McCaul and Rep. Greg Meeks (D-N.Y.) — the panel’s top Democrat — to view the documents in person. McCaul has pushed for every member of the Foreign Affairs Committee to get access to the documents, arguing the Afghanistan veterans on his panel deserve the privilege as well.
And the names of the signatories on the dissent cable will be redacted, a request State made in order to protect the confidentiality of the medium.
Remember: McCaul postponed a May 24 markup on a Blinken contempt resolution because of State’s accommodation. But the markup isn’t canceled altogether. McCaul will reevaluate the next steps after he reviews the dissent cable this week.
Biden investigations: House Oversight and Accountability Committee Chair James Comer (R-Ky.) is continuing to press the FBI to comply with his subpoena. Earlier this month, Comer requested an FBI document that allegedly contains details of a bribery plot involving then-Vice President Joe Biden.
Comer set a May 10 deadline for the FBI to provide the FD-1023 form, but the FBI didn’t hand over the document. Oversight Committee staff then met with FBI staff on May 15, in a meeting that Comer described as “troubling” due to the FBI’s failure to “disclose whether the FD-1023 form exists.”
FBI staff will brief Oversight staff today “regarding confidential human source reporting,” according to Comer.
“The FBI’s delay in producing a single FD-1023 form is unacceptable,” Comer wrote to FBI Director Christopher Wray on Friday. “Notwithstanding these difficulties, the Committee will continue participating in the accommodations process in the hopes that the FBI will change course and begin discussing accommodations that will meet the Committee’s needs.”
For context, an FD-1023 form isn’t evidence of wrongdoing. It’s just the record of an interview conducted by the FBI with a source.
— Max Cohen
BANKING BULLETIN
Here’s what’s next for banking legislation in Congress
We’re more than two months into a slow-moving banking crisis. There’s been lots of hearings, reports and calls for action. So what’s next on Capitol Hill?
For now, lawmakers remain interested in legislative reform. The trick will be maintaining that momentum. Even the most basic bipartisan reforms of the financial system face long odds in the Senate. And the banking lobby’s influence can be overwhelming.
Start with clawback reform: The Senate is interested in an effort that would bolster bank regulators’ authority to claw back executive pay at failed, mismanaged banks.
Senate Banking Committee Chair Sherrod Brown (D-Ohio) told us he continued to see “a lot of bipartisan interest” in clawback reform, although there are some GOP holdouts. “But I think it’s going to get a good bipartisan vote, if you watch and listen to the people asking questions,” Brown added.
There are a few clawback bills out there now, like the Failed Bank Executives Clawback Act versus the Deliver Executive Profits on Seized Institutions to Taxpayers (DEPOSIT) Act.
Whatever approach the Senate Banking Committee lines up behind will carry a lot of heft. Brown wants to introduce his own bill aimed at “accountability” among bank executives, but he said the timing is unclear. “I hope sooner rather than later,” he said.
Sen. Cynthia Lummis (R-Wyo.) told us she was still supportive of the effort broadly. But Lummis wanted to wait for guidance from the Banking Committee’s top Republican, Sen. Tim Scott (S.C.), who is keeping his cards close for now. Scott also has other things on his mind, like running for president.
A Scott spokesperson directed us to remarks he gave during last week’s hearing with bank executives. Scott cautioned against an “overly prescriptive approach.”
The cold water to all of this could be the Republican-controlled House. We previously reported our surprise over how much interest we’d heard from the lower chamber GOP about clawback reform.
That seems to be fading a bit now. Republicans, though, are keeping their options open. Here’s Rep. Bill Huizenga (R-Mich.) on where his colleagues and him stand:
Federal deposit reform: If clawback reform in the House is a dodgy proposition, other potential legislative fixes face worse odds. Reforming federal deposit insurance has gotten plenty of play since March, but lawmakers have been clear it would be a big lift.
“In general, I think there’s been a waning in the interest of doing something quote-unquote big,” Huizenga said.
And Rep. Blaine Luetkemeyer (R-Mo.), said he thought deposit insurance reform was increasingly becoming a Democrat-led issue in the House. “I didn’t see a lot of that in discussion in the committee when I was there,” Luetkemeyer said.
— Brendan Pedersen
PRESENTED BY INSTAGRAM
THE CAMPAIGN
Carper’s call: Sen. Tom Carper (D-Del.) will announce today whether he’s running again next year, a decision that’s being very closely watched for a variety of reasons, not the least of which is Carper’s own future.
The 76-year-old Carper, who chairs the Environment and Public Works Committee, is a veritable institution in Delaware politics. Carper served three tours in Vietnam as a naval flight officer. He was then elected as state treasurer in 1976 at age 29. He won a House seat in 1982. After a decade in Congress, Carper moved on to become Delaware’s governor for two terms. In 2000, Carper won his first of four Senate terms. For the lives of most Delawareans, the Carper has always been there. He’s won election statewide 14 times.
If Carper doesn’t run — and we’ll find out by 11 a.m. — Democratic Rep. Lisa Blunt Rochester is widely expected to jump into the race to succeed him, and she’d be a heavy favorite.
Carper would join fellow Democrats Ben Cardin (Md.) and Debbie Stabenow (Mich.) in retiring if he does forgo another term.
A few other points worth noting here, Senate Majority Leader Chuck Schumer, who already faces a brutal cycle, is still waiting on Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (I-Ariz.) and Bernie Sanders (I-Vt.) to announce whether they’re running next year.
Also, if Carper retires, it would set off a little scramble inside Senate committees. If Carper leaves, Sen. Sheldon Whitehouse (D-R.I.) would take over as the top Democrat on EPW, which could get interesting. And Sen. Jeff Merkley (D-Ore.) would move up on Budget. Whether these are up as chairs or ranking members depends on what happens in November 2024.
New: Democrat Will Rollins is launching the first ad of his congressional rematch against Rep. Ken Calvert (R-Calif.). Rollins, who lost to Calvert by just under four points in 2022, slams the incumbent as a corrupt public official who uses earmarks for his personal financial gain.
Check out the two-minute spot, which is part-candidate bio and part-reality TV parody. It’s not your average campaign ad.
Rollins, who worked in counter-terrorism, plays up his law enforcement background in the spot.
Also: The NRCC reported raising $5.6 million during the month of April. This lags behind the DCCC’s tally of $9.1 million during the same timespan.
Democrats point to the fact that House Minority Leader Hakeem Jeffries hauled in $7.9 million alone in April, more than the entire NRCC total. Republicans say that their incumbents in competitive seats still hold fundraising advantages over Frontline Democrats after Q1.
And just last week we broke the news that the NRCC raised $12.4 million at a Tampa, Fla. fundraiser.
— John Bresnahan and Max Cohen
📅
What we’re watching
Tuesday: The House Judiciary Committee is holding a hearing on the border. The House Appropriations Committee will mark up the FY2024 Military Construction-Veterans Affairs and Legislative Branch spending bills.
Wednesday: The House Appropriations Committee will mark up the FY2024 Homeland Security and Agriculture spending bills.
Thursday: The House Oversight Committee is holding a hearing on “International Financial Institutions in an Era of Great Power Competition.”
— Jake Sherman and John Bresnahan
PRESENTED BY INSTAGRAM
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Presented by Apollo Global Management
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