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May 9, 2023
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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.
PRESENTED BY
THE TOP
Happy Tuesday morning.
At 4 p.m. today, President Joe Biden will host the Big Four at the White House to discuss the debt limit.
It’s been more than three months since Biden first met with Speaker Kevin McCarthy about the borrowing cap. And now there are just weeks until the Treasury Department hits the “X date” and a possible U.S. government default on its $31 trillion-plus debt.
As this crisis has ever so slowly unfolded throughout 2023, positions have only hardened on both sides.
House and Senate Republicans are unified behind McCarthy’s strategy to negotiate a spending cut package alongside a debt-limit boost.
Democrats believed for months that they could split McCarthy and Senate Minority Leader Mitch McConnell. That somehow the Kentucky Republican will swoop in to negotiate a deal like he did in 2011. McConnell has made clear that this won’t happen.
For their part, Biden and Democratic leaders on Capitol Hill are sticking with their line — Republicans must take default off the table. Only then will a deal to reduce spending be possible.
“This is their constitutional duty. Congress must act,” White House Press Secretary Karine Jean-Pierre said on Monday. “That’s what the president is going to make very clear with the leaders tomorrow.”
Here’s some news: White House staff and aides to the Big Four quietly met on Friday to begin talking about the debt limit. Top leadership aides were in the meeting, as was Louisa Terrell, the head of the White House Legislative Affairs Office, and representatives from the Office of Management and Budget and the National Economic Council.
The session, according to multiple participants, mostly dealt with the protocol of bringing the four leaders in to meet with Biden and the policy groundwork for the meeting. It was clear to several participants that any potential agreement would have to be cut between Biden and McCarthy. And administration officials discussed the need to get votes for an eventual bipartisan package, according to sources present.
Remember: What McCarthy is truly aiming for is a deal that puts spending caps in place and cuts spending year over year. He also wants permitting reform, which the White House has been open to in the past. It will be up to McCarthy to sell a deal like this to House Republicans — if it happens.
Here’s what each side is thinking going into the meeting:
No. 1: Democrats tell us that they’re going to push McCarthy and McConnell to take default off the table. In other words, Congress must approve a clean debt-limit boost immediately. McCarthy and McConnell have said repeatedly that that’s something they’re not willing to do.
In the last day or so, we have noticed a softening of Democrats’ private position and a new recognition that they may have to accept some sort of deal.
No. 2: Republicans tell us that they believe Senate Majority Leader Chuck Schumer and Biden are playing a weak hand. Schumer, in Republicans’ view, doesn’t have the votes to pass a clean debt-limit increase and Biden is saddled with sagging approval ratings. So Democrats have an incentive to make a deal, Republicans think.
The issue right now is how does either side alter their hard-line position. House Republicans argued that they passed a bill — the Limit, Save, Grow Act — and it’s time for Democrats to do something. Democrats counter that the GOP continues to hold the U.S. economy hostage only when they don’t control the presidency.
Neither side wants to pass a short-term debt limit deal to avoid default on June 1. The question now is, what does each side want to do? Or better yet, what can they accept?
— Jake Sherman and John Bresnahan
Reminders: There’s still time to RSVP to join us in-person or on the livestream today at 8:30 a.m. ET for Women Challenging Washington. Punchbowl News Founder and CEO Anna Palmer and Managing Editor Heather Caygle will interview Sens. Joni Ernst (R-Iowa) and Jeanne Shaheen (D-N.H.), and Reps. Stephanie Bice (R-Okla.), Lisa Blunt Rochester (D-Del.) and Mikie Sherrill (D-N.J.). The conversations will focus on their bipartisan policy work and disrupting partisan culture on Capitol Hill.
THE VAULT
Sneak peek: What’s inside The Vault
Jamie Dimon, the CEO of JPMorgan Chase and one of the most important figures in global finance, said he fears a “mistake” in dealing with the debt limit and called for the borrowing cap to be eliminated altogether.
This interview with Dimon is part of The Vault, which will debut Wednesday. The Vault is our new newsletter about the future of finance, money and power in Washington. Brendan Pedersen is at the helm of this exciting venture.
Here are some more snippets from our conversation with Dimon.
No. 1: Dimon told us that Congress might bumble into a “mistake” in dealing with the debt limit. “I think there’s a higher chance of a mistake here because of the politics of the situation,” Dimon said in an interview.
No. 2: Dimon also said he hopes Congress eliminates the debt limit.
“I hope, one day, we get rid of it,” Dimon said.
Lawmakers have periodically toyed with eliminating the debt limit, but the concept has never caught on. The idea of allowing Congress and the president to accumulate debt without any check has been a step too far for many members and senators.
There’s much more where this came from, including Dimon on how he thinks Washington is handling its relationship with China. We can’t wait to let you into The Vault tomorrow and stay in the know here.
— Jake Sherman and Brendan Pedersen
THE SENATE
Vance-Brown railway safety bill gets Trump’s backing ahead of markup
Sen. J.D. Vance (R-Ohio) was on the phone with former President Donald Trump a few days ago talking about the 2024 presidential race. Vance, an early backer and close ally of the former president, had other things on his mind, though.
Trump, according to Vance’s recounting, asked for an update about the February devastating train derailment in East Palestine, Ohio. Vance told Trump it would be helpful if the former president could back his bill with Sen. Sherrod Brown (D-Ohio), the Railway Safety Act, ahead of a Senate Commerce Committee markup on Wednesday.
The ex-president, who did a campaign-style visit in East Palestine after the Norfolk Southern derailment, agreed. And on Monday, Trump officially endorsed the bill, while also slamming President Joe Biden for his response to the disaster.
The legislation would mandate new safety requirements for railroad operators and boost penalties for violations. It has broad bipartisan support and is on track to get a vote in the Senate in the coming weeks. Trump’s backing will likely encourage other Republicans to follow suit, and key Democrats like Brown have already backed it.
“It’s the sort of issue where common sense should prevail over partisan politics. And I think largely in this case it has,” Vance told us in an interview shortly after Trump backed the legislation. “That’s not always the case in this town.”
It’s a rare example of where Trump’s endorsement could actually improve the prospects for a piece of legislation in the Senate.
And while the effort has been largely nonpartisan, there are some notable political factors at play here. Brown, a progressive Democrat, is up for reelection in 2024, and Trump is widely popular in the Buckeye State.
Vance said he doesn’t expect the Commerce Committee markup to be a partisan affair, and the freshman senator has deferred to Senate Majority Leader Chuck Schumer’s vow to address railway safety in the aftermath of the East Palestine disaster.
Vance suggested that the effort isn’t necessarily a reflection of the Biden administration’s handling — or, in his view, mishandling — of the East Palestine derailment. Biden and Transportation Secretary Pete Buttigieg, of course, were heavily criticized by Republicans in the aftermath of the disaster.
Here’s more from Vance:
Vance said he expects the House could act on the bill by the fall, and a strong Senate vote — combined with Trump’s backing — could get it over the finish line.
— Andrew Desiderio
PRESENTED BY CHEVRON
At Chevron, we’re developing lower carbon intensity renewable diesel, made from bio feedstocks, ready for fuel tanks today.
THE REPUBLICAN MAJORITY
House GOP leadership works to quell concerns on immigration bill
House Republican leaders are moving ahead this week with a floor vote on their high-profile immigration and border security bill. After months of stops and starts within the GOP Conference, a vote is expected Thursday for H.R. 2.
The House Rules Committee is slated to mark up the bill today. A floor vote on the rule is expected Wednesday, with final passage on the 213-page Secure the Border Act slated for the following day. Senate Democrats and the White House are opposed to the legislation.
Thursday is also when Title 42 public health authority is expiring, which border agents have used since the Trump administration to quickly expel hundreds of thousands of migrants at the U.S.-Mexico border. Biden administration officials are anxiously preparing for another migrant surge at the southern border, and House GOP leaders want to go on record with their approach to the crisis.
With a slim four-seat majority, a crop of rank-and-file House Republicans making noise in opposition to the package may give leadership some headaches. To be sure, the GOP leadership has shown an ability to twist arms and convert “no” votes into supporters.
Here are the key groups to watch over the next few days in the House.
E-Verify skeptics:
A number of Republicans are objecting to provisions in the bill that would expand E-Verify, the federal database that registers an individual’s immigration status. Employers use this system to confirm a potential employee is eligible to work in the United States.
The bulk of the complaints come from members representing agriculture-heavy districts. Chief among these is Rep. Dan Newhouse (R-Wash.). Newhouse has expressed concerns to leadership that the E-Verify portions of the bill would exacerbate the farm labor worker shortage.
Newhouse’s office is currently working with leadership to tweak some of the bill text related to E-Verify, we’re told by multiple leadership sources.
Rep. David Valadao (R-Calif.) has also expressed concern to Republican leadership “about the consequences of mandating E-Verify before making reforms to the H-2A program,” he told us in a statement. Valadao has secured a commitment from senior House GOP lawmakers, however, that there will be legislative text that addresses the impact of E-Verify expansion on agriculture operations before its full implementation. Plus, Valadao is a close ally of Speaker Kevin McCarthy and seems unlikely to stick it to him here.
House Agriculture Committee Chair G.T. Thompson (R-Pa.) also has qualms about E-Verify and expects leadership to provide concessions to ag-focused members. A source familiar with Thompson’s thinking said he was “frustrated that it was even added” into the package.
Rep. Thomas Massie (R-Ky.) opposes the E-Verify expansion as well, citing concerns about government overreach.
Massie tweeted Sunday that his party was making a “huge mistake” by passing a bill with the E-Verify provisions included.
Border hawks:
Rep. Dan Crenshaw (R-Texas) is notably protesting that the bill doesn’t address transnational criminal cartels, which is his top issue. Crenshaw introduced a bill earlier this Congress that would greatly expand the U.S. government’s ability to combat these groups. This bill is being “finessed” to address this concern, according to sources familiar with the situation.
South Florida Republicans:
The proposed legislation still contains major changes to U.S. asylum law, which may make this a tough vote for Florida Republicans who represent communities with large migrant populations from Latin America.
While Rep. Tony Gonzales (R-Texas) — a member who was previously vocally opposed to asylum changes — is now backing the bill, it will be interesting to watch how members such as Rep. Maria Elvira Salazar (R-Fla.) will vote.
— Max Cohen, Mica Soellner and John Bresnahan
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Presented by Wells Fargo
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.