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May 23, 2023
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PRESENTED BY
THE TOP
Happy Tuesday morning. The U.S. government could default on its debt in just nine days.
Speaker Kevin McCarthy’s negotiators and top aides to President Joe Biden met in the Capitol late into Monday night as they continue to seek an elusive deal to lift the debt limit and pare back federal spending.
Biden and McCarthy met again Monday — this time, the speaker had House Financial Services Committee Chair Patrick McHenry (R-N.C.) in tow — in a bid to break the impasse. There wasn’t any breakthrough, but the two sides are still talking respectfully, which is a good sign. McCarthy, in fact, predicted he’d talk with Biden every day until a deal is completed, and negotiators huddled for another hour late Monday night.
The House Appropriations Committee also canceled planned markups this week of four FY2024 spending bills drafted by Republicans, the panel announced at midnight Monday.
Remember the contours of a potential deal — a debt-limit increase, curbing federal spending, permitting reform and new work requirements for social-welfare programs. The big disagreement here is that the White House has offered to freeze federal spending at current levels while McCarthy wants to go back to FY2022 levels. This is a difference of roughly $130 billion.
Let’s go over some of the dynamics at play right now.
No. 1: A shrinking circle. McCarthy described the meeting with Biden as “productive” but shied away from saying “progress” was made. Of course, progress is often made after meetings with the principals, where staff — and, in this case McHenry — are able to take high-level concepts and turn them into legislation.
Most importantly, McCarthy said that the “circle” of issues is getting “smaller, smaller, smaller.” “We’re getting closer,” McCarthy said.
Remember that this deal, should it materialize — and we think it will eventually — is going to be relatively narrow.
No 2.: Timing and the forcing mechanism. There’s a very serious time crunch right now. Treasury Secretary Janet Yellen made clear once again on Monday that June 1 is the default deadline.
Now keep this in mind — if and when the two sides get an agreement, negotiators still have to turn that framework into legislative text, obtain a budget “score” from the Congressional Budget Office and then allow members 72 hours to read the bill. Administration officials privately take umbrage with the idea that McCarthy needs to abide by the 72-hour rule, but the speaker doesn’t believe he has any wiggle room on that.
The best case scenario at this point is that the House will vote on a bill over Memorial Day weekend. But that vote could easily slip into next week — if a deal is reached.
And then the Senate still has to act. That would take a week or so under normal circumstances, although McCarthy said he’s been assured by Senate Majority Leader Chuck Schumer that senators may move faster in this case.
No. 3: No clean debt limit or short-term increase. If for some reason this message hadn’t sunk in already, McCarthy again reiterated that he won’t pass a clean debt limit or move a short-term extension. Sources close to McCarthy said the House could pass a short-term boost if there was a deal and the Treasury Department needed a very brief patch to avoid default. But barring that, don’t expect it to happen. Both sides know that if you give negotiators more time to talk, they will find a way to fill it.
No. 4: Charm offensive. McCarthy has gone out of his way to shower Biden’s team — counselor Steve Ricchetti and Office of Management and Budget Director Shalanda Young — with praise. Check this out:
McCarthy left it to McHenry to say that Republicans sense a “lack of urgency” from the White House.
No. 5: McHenry’s Moment. McHenry’s role in this negotiation is fascinating on several levels. The 47-year old North Carolina Republican has been in Congress for 18 years and is very close to McCarthy. In fact, McHenry was the chief deputy whip to then-House Majority Whip Steve Scalise from 2014 to 2019. McHenry’s friendship with McCarthy caused some tension in Scalise-world, to put it mildly. McCarthy and Scalise have had their rough spots, although that’s mostly history now.
McHenry considered making a bid for House GOP leadership after Republicans took the majority. Instead, McHenry opted to become Financial Services chair because he wanted to focus on policy and stay out of the internal Republican food fights. Yet he finds himself in the middle of the highest stakes negotiations in years. McCarthy benefits because McHenry knows where the tripwires are inside the House Republican Conference.
No. 6: Good cop, bad cop. Biden issued a somewhat positive statement following his session with McCarthy:
But House Minority Leader Hakeem Jeffries — who would be called upon to deliver a big chunk of votes for any deal — took a much harsher tone.
Jeffries backed up the White House’s offer, saying that Democrats are willing to “discuss freezing spending at current levels. That’s an inherently reasonable position that many in our party might be uncomfortable with.”
Yet Republicans won’t even entertain the offer while now putting things on the table that are outside the agreed upon universe of discussions, Jeffries complained.
“Their proposals haven’t gotten more reasonable, they’ve gotten more extreme,” Jeffries said of Republicans.
— Jake Sherman, John Bresnahan and Heather Caygle
Reminder: Join Punchbowl News Founder and CEO Anna Palmer and Senior Congressional Reporter Andrew Desiderio on Thursday, June 8 at 9 a.m. ET for a conversation with Vice Chair of the Senate Appropriations Committee Susan Collins (R-Maine). The interview will focus on national security and foreign relations. RSVP now to join us in person or on the livestream!
WAR REPORT
House, Senate at impasse over Iraq AUMF repeal
Two months after the Senate repealed the Iraq war authorizations, the effort appears to be stalling out.
The ball is in the House Foreign Affairs Committee’s court, according to Speaker Kevin McCarthy. And the panel’s chair, Rep. Michael McCaul (R-Texas), says he wants to use the Senate’s Iraq AUMF repeal bill as a vehicle to rewrite the post-9/11 counterterrorism AUMF.
It’s a move that the Senate bill’s co-sponsors have been warning against, as it would effectively jeopardize the underlying effort to repeal the outdated Iraq war authorizations.
“We’re having listening sessions right now to see if there’s a replacement vehicle that we could agree to. And that would be the optimum way to do this,” McCaul told us in a recent interview. “Because this would be the 2001 as well — repealing 2001 and replacing it with something that’s modernized.”
The bill repealing the 1991 and 2002 Iraq AUMFs got 66 votes in the Senate in March. Since then, the leaders of the effort have insisted that the House should pass their bill and not loop in the 2001 AUMF, arguing this is a larger and more complicated conversation. The Biden administration has said it’s open to rewriting that AUMF, but this is a longer-term negotiation with the Hill.
“Step one needs to be repealing the 1991 and 2002 AUMFs… It’s super straightforward and I hope the House will take it up soon,” Sen. Tim Kaine (D-Va.), the lead sponsor of the Senate bill, told us. “Step two should be replacing the open-ended 2001 AUMF with a narrower authorization. This will be a very complicated process and I’m committed to working with my colleagues across the aisle.”
Kaine’s GOP counterpart, Sen. Todd Young of Indiana, said simply: “I hope we can work through it.”
Young previously told us that while he agrees with McCaul that the 2001 authorization — passed in the aftermath of the Sept. 11 terror attacks — should be revised, the Indiana Republican doesn’t think it would be wise to use the Iraq AUMF repeal effort to achieve that.
Specifically, McCaul wants the new AUMF to have a five-year expiration date, which would require the White House to once again seek congressional approval for overseas military operations.
This is a reflection of the desire among hawkish Republicans to give the president new and updated authorities to target Iran and its proxies in the Middle East. That includes in Iraq, where Tehran’s affiliates have attacked U.S. troop positions, sometimes prompting counter-strikes from the United States.
The saga is also underscoring GOP divisions on presidential war powers. The party is split between hawks and non-interventionists, the latter of whom are gaining increased sway within the House and Senate GOP conferences.
Indeed, there has been a notable shift. For example, House Armed Services Committee Chair Mike Rogers (R-Ala.) told us recently that he’s comfortable with repealing the Iraq war authorizations. Rogers was previously vehemently opposed to this.
There’s reason for optimism if you’re in the Kaine-Young camp here. Rep. Tom Cole (R-Okla.) is the lead GOP sponsor of their companion bill. Cole chairs the House Rules Committee and is a close ally of McCarthy. The legislation also has backing from members of the hardline House Freedom Caucus, which has an extraordinary amount of power in the GOP-controlled House.
There’s little doubt that the Senate bill would pass overwhelmingly in the House, despite the desire among some lawmakers to update the 2001 AUMF.
— Andrew Desiderio and Max Cohen
BIPARTISAN WATCH
Fentanyl bill gains bipartisan interest
A GOP-led bill aimed at tackling the fentanyl crisis may end up getting bipartisan support on the House floor this week, with a significant number of Frontline Democrats likely to back the bill.
The HALT Fentanyl Act, led by Reps. Morgan Griffith (R-Va.) and Bob Latta (R-Ohio), would reclassify fentanyl-related substances into Schedule I drugs under the Controlled Substances Act. It would also shore up resources for law enforcement to confiscate the synthetic opioid.
Democrats on the House Energy and Commerce Committee expressed frustration that they weren’t included in the drafting process. All but two of them voted against it during the committee markup.
“We’re still hoping it’ll be bipartisan but we don’t have it right now,” said Rep. Frank Pallone (D-N.J.), the ranking member of the E&C panel.
Yet Rep. Scott Peters (D-Calif.) said despite these concerns, he expected Frontliners to back the bill due to political pressure.
“The idea is bipartisan,” Peters told us, while adding he thought the sentencing requirements in the bill are overly broad. “It’s gonna be a messaging bill for them: ‘We’re all for fentanyl.’”
Right now, the bill has 52 co-sponsors, all of whom are Republican. But Democratic Reps. Angie Craig (Minn.) and Kim Schrier (Wash.) voted for it in the Energy and Commerce Committee last week.
And a number of Democratic incumbents facing tough races in 2024 — Reps. Dan Kildee (Mich.), Wiley Nickel (N.C.) and Vicente Gonzalez (Texas) — told us they were likely to support the bill on the floor.
The White House also issued a positive Statement of Administrative Policy Monday. The Biden administration didn’t explicitly endorse the bill, but it didn’t threaten to veto the measure either.
The statement said that classifying fentanyl-related substances as a Schedule l drug and expediting research into them, both of which the bill would do, are priorities for the Biden administration.
Griffith said he found the statement “interesting” and a sign that Democrats could get on board.
“I believe we’re going to see many more with the president’s statement,” Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) said of Democratic Frontliners. “To get these fentanyl-related substances scheduled, that’s the number one priority of the DEA.”
— Mica Soellner, Max Cohen and John Bresnahan
PRESENTED BY INSTAGRAM
THE CAMPAIGN
First in Punchbowl News: The DSCC filed a lawsuit against West Virginia GOP Gov. Jim Justice’s office in an attempt to force the Senate candidate to turn over records related to his official schedule as governor.
Justice has faced questions over his time in the governor’s office, with opponents claiming he’s more focused on his business empire than his government duties.
The DSCC lawsuit argues Justice’s office is violating the West Virginia Freedom of Information Act.
Of course, Justice is running in the GOP primary for a chance to unseat vulnerable Sen. Joe Manchin (D-W.Va.). Manchin hasn’t announced whether he’s seeking reelection yet.
New: CHC BOLD PAC, the campaign arm of the Congressional Hispanic Caucus, is endorsing two Democratic candidates in key California House races.
BOLD PAC is backing Tim Sanchez in California’s 12th District and Kim Nguyen in California’s 45th District.
Sanchez, an Afghanistan veteran and entrepreneur, is aiming to succeed Rep. Barbara Lee (D-Calif.), who is running for Senate and leaving behind her Oakland-area seat.
Nguyen is running to unseat Rep. Michelle Steel (R-Calif.). Despite representing a district President Joe Biden won in 2020, Steel has proven difficult to defeat in the past two cycles. Nguyen currently sits on the Garden Grove, Calif., city council.
— Max Cohen
2024
Tim Scott’s D.C. fundraiser
In case you missed it — you didn’t, but in case you did — Sen. Tim Scott (R-S.C.) is running for president. He’s hosting a D.C. fundraiser June 21.
— Jake Sherman
PRESENTED BY INSTAGRAM
COCKTAILS & CONVERSATIONS
Last night, we hosted communications staffers from the Hill at the Sazerac House for an evening of cocktails and conversations. Thank you, as always, to Elizabeth Wise and Laura Pinsky of Sazerac for hosting us.
Raising a glass: Jamari Torrence; Rosemary Boeglin and Ahmad Ali of Sen. Ed Markey’s (D-Mass.) office; Kristen Morris and Alex Siegal of Rep. Chris Pappas’ (D-N.H.) office; Jake Abbott and Marcus Robinson from the Senate Environment and Public Works Committee; Kristen Cianci of Rep. Andrew Garbarino’s (R-N.Y.) office; and Ben Kamens of Rep. Marcy Kaptur’s (D-Ohio) office, among others.
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At Wells Fargo, we cover more rural markets than many large banks, and nearly 30% of our branches are in low- or moderate-income census tracts. What we say, we do. See how.