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June 12, 2023
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THE TOP
Happy Monday morning.
The federal criminal indictment of former President Donald Trump is the biggest story in the country, of course. And we expect Trump’s arraignment in Miami on Tuesday — rightly — will dominate the political conversation all week.
But there are two storylines playing out in Congress that can’t be ignored — the stunning standoff between Speaker Kevin McCarthy and the House Freedom Caucus, and the fate of Julie Su’s nomination to be the next Labor secretary. Let’s get into it.
The nearly week-long stalemate between McCarthy and his conservative critics hasn’t been resolved as of Sunday night, so the floor outlook for this week is up in the air.
The House is scheduled to vote at 6:30 p.m. on a motion to reconsider the rule vote from last Tuesday. Eleven conservatives staged a floor rebellion against McCarthy at that time, using a procedural vote on gas stoves to show their anger over the Fiscal Responsibility Act, the bipartisan debt-limit deal between President Joe Biden and the speaker.
Conservatives also said they were upset over the House GOP leadership’s handling of a pistol-brace rule disapproval resolution drafted by Rep. Andrew Clyde (R-Ga.). Clyde told colleagues he was “threatened” because he voted against the rule on the debt-limit bill, but leadership says he was only warned that GOP colleagues may vote against his resolution.
McCarthy held talks with Freedom Caucus members to try to find a solution to the floor impasse, but there was no truce to end the dispute. McCarthy sent members home on Wednesday in a bid to cool things off.
The House Rules Committee is coming in at 4 p.m. today and has five bills on its schedule, including Clyde’s pistol-brace resolution and the two gas stove bills that were stalled last week. GOP leadership aides said the Rules Committee will wait to see what happens on the floor with the motion to reconsider tonight before deciding what to do next.
To say this is an important moment for McCarthy, the House GOP leadership and the entire Republican Conference is a serious understatement.
It’s not only McCarthy’s relationship with the Freedom Caucus that has to be patched up, but McCarthy and House Majority Leader Steve Scalise have to figure out where things stand between them. McCarthy’s allies blamed Scalise for the Clyde incident, but Scalise told us in an interview last week that the anger he heard from conservatives on the floor during Tuesday’s rebellion was aimed at McCarthy, not him.
And there’s a backlash toward the Freedom Caucus from the rest of the Republican Conference. Some GOP lawmakers are privately threatening to vote against anything offered by Freedom Caucus members.
This impasse is happening at a critical moment for House Republicans. The Ways and Means Committee is marking up a GOP tax-cut bill this week, and the Appropriations Committee is taking up the first of the 12 annual appropriations bills, Milcon-VA. The House Armed Services Committee is set to vote on the annual defense authorization bill next week (as is its Senate counterpart). Some Republicans want to move ahead with the impeachment of Homeland Security Secretary Alejandro Mayorkas. While we’re sure there will be calls to retaliate against the Justice Department, Attorney General Merrick Garland, special counsel Jack Smith and even Biden over the Trump indictment.
If the floor dispute is resolved, the House will vote this week on the two gas stove bills, the anti-regulation REINS Act and the Separation of Powers Restoration Act, which is designed to limit the reach of federal agencies. Clyde’s pistol-brace resolution could get a floor vote, and there’ll be a veto-override vote on the Georgia Republican’s resolution overturning a 2022 D.C. city law on police reform. The annual congressional baseball game is Wednesday, too.
All this will require McCarthy, Scalise and House GOP leaders to be on the same page. There was no sign of that last week, and we’re wondering — as are Democrats and the White House — whether House Republicans can get it together this week.
Across the Capitol, Su’s nomination is still in limbo. Senate Republicans remain uniformly opposed to Su’s confirmation, while three moderates on the Democratic side — Sens. Joe Manchin (D-W.Va.), Jon Tester (D-Mont.) and Kyrsten Sinema (I-Ariz.) — are uncommitted. All three voted for Su to serve as deputy secretary in July 2021, but they’ve withheld their votes so far for her nomination to permanently replace Marty Walsh in the post.
Senate Majority Leader Chuck Schumer hasn’t scheduled a vote on Su’s nomination while the White House and union leaders scramble to find 50 votes. Some labor insiders have suggested to us that this is the critical week for Su. However, the White House says it’s continuing to press for her confirmation. We’ll stay on top of this.
2024 move: Andy Quinn, a top aide to Senate Minority Leader Mitch McConnell, is joining the political consulting and advertising firm FP1 Strategies.
Quinn will serve as a senior adviser on policy, strategy and speechwriting for Sen. Tim Scott’s (R-S.C.) presidential campaign. He’ll also work with the firm’s other candidates and clients.
Quinn has been McConnell’s chief speechwriter from 2017 until his departure last week. He also served as a senior adviser and strategic communications director.
— John Bresnahan
Tomorrow: Join us at 9 a.m. ET for a conversation with Rep. Steny Hoyer (D-Md.). Punchbowl News Founder Jake Sherman will discuss digital equity and opportunity with Hoyer. There’s still time to RSVP to join us in person or on the livestream.
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What we’re watching
Tuesday: The House Appropriations Committee will mark up the FY2024 Milcon-VA bill. House Homeland Security will have FEMA Administrator Deanne Criswell testify. House Financial Services will hear from Treasury Secretary Janet Yellen on the state of the global financial system and, in a separate hearing, will probe digital assets.
The House Administration Committee will have an oversight hearing on the Office of Congressional Ethics. Senate Judiciary will have a hearing on artificial intelligence.
The House Ways and Means Committee will mark up a GOP tax-cut package.
Wednesday: The House Homeland Security Committee will have a hearing on Homeland Security Secretary Alejandro Mayorkas’ “Dereliction of Duty on the Border Crisis.” The House Financial Services Committee will have a hearing on CFPB with Director Rohit Chopra. The Senate Environment and Public Works Committee will have a hearing with Federal Highway Administration Administrator Shailen Bhatt.
The Senate Judiciary Committee will have a hearing on the safety of unaccompanied minors at the border. The House Foreign Affairs Committee will have a hearing on China. The Senate Foreign Affairs Committee will have a hearing with Nicholas Burns, the ambassador to China.
— Jake Sherman
Some Republicans soften calls for rate hikes as Fed convenes
The Federal Reserve’s governors meet this week to decide whether the U.S. economy will face another interest rate hike. More than any other meeting in months, the expected outcome is a coin flip.
On Capitol Hill, the script on inflation has been pretty cut-and-dry for a while. Republicans have urged the Fed to keep up the pressure with rate increases. An increasing number of Democrats have called for the Fed to slow or stop these hikes, citing the risks to America’s historically low unemployment rate. “I’m hopeful they stop them,” Senate Banking Committee Chair Sherrod Brown (D-Ohio) told us.
But we’ve started to detect a subtle change among some in the GOP on hikes. To be sure, conservatives aren’t exactly clamoring for rate cuts. But they do appear to be softening their stance on rate hikes as the Federal Open Market Committee convenes starting Tuesday, however. Federal Reserve Chair Jay Powell will announce the Fed’s decision Wednesday afternoon.
Virtually every Republican we’ve asked continued to criticize the U.S. central bank for responding to 2021’s inflation surge too slowly. Yet conservative lawmakers are becoming more circumspect about whether or not the Fed should continue to hike this week, which would mark the 11th straight increase.
At just under 5%, inflation is still too high. But the spring collapses of Silicon Valley Bank, Signature Bank and First Republic — each one of the largest bank failures in American history — are still weighing on the Fed’s policymakers. Higher interest rates can be a serious squeeze on bank balance sheets.
Sen. Bill Hagerty (R-Tenn.) summed up the dilemma to us:
Several Republicans we spoke to urged the Fed to “follow the data,” which is a tidy way of not demanding a particular outcome. Rep. Bill Huizenga (R-Mich.) said he wanted the Fed “to do their job and do independent analysis.”
Sen. Kevin Cramer (R-N.D.) said the Fed should do “what the data supports and [not] worry about the political blowback, either way, from people like me. My preference is that they’re the experts.”
That said, those same Republicans are also warning the Fed it shouldn’t slow down its anti-inflation campaign due to political pressure.
“What I’m way more likely to criticize them for is a decision not to raise the rates because it’s politically unpopular,” Cramer told us. And Huizenga said he saw “lots of reasons why they would, quote-unquote, need to continue to hike, but the unfortunate part may be that it’s not just the data that drives that.”
Other Republicans are happy to keep calling for hikes. Rep. Andy Barr (R-Ky.) said disinflation was “not moving fast enough to where it ultimately needs to go. The Fed’s tightening program probably does need to continue.”
Barr acknowledged interest rate hikes’ role in the banking sector’s instability. But he said that “doesn’t mean the Fed should not — now that we are where we are — should not demonstrate resilience.”
— Brendan Pedersen
PRESENTED BY AMERICAN BEVERAGE ASSOCIATION
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THE TOURNAMENT
On Friday, Punchbowl News hosted our first annual cornhole tournament in partnership with General Motors. Attendees enjoyed drinks, light bites, and friendly competition at Dacha Navy Yard to kick off the summer. They also heard from Punchbowl News founder and CEO, Anna Palmer, and GM’s Vice President & Head of Global Public Policy, Omar Vargas. Congratulations to the Cruise team for taking the championship!
Tossing cornhole bags: Chris Socha, Jensen Cheong, and Kelsey Kelleher of the Senate Foreign Relations Committee; Spenser Horton of the Senate Energy and Natural Resources Committee; Beau Brooks, Will Barry, and Laura Peavey of the House Financial Services Committee; Sam Runyon and Charlotte Laracy of Sen. Joe Manchin’s (D-W.Va.) office; Klye Von Ende and James Payne of Rep. Cathy McMorris Rodgers’ (R-Wash.) office; Matthew Miller of Business Roundtable; Jodi Sakol of AARP; Amanda Russo of Crypto Council for Innovation; Justin Kintz of Peloton; and Craig Glidden, Hollyn Schuemann, Ashley Lerner, Jeannine Ginivan Hyde and Matt Ybarra of GM.
House GOP prepares to investigate the Trump investigators again
The big story in investigations this week is the effort by former President Donald Trump’s allies in the House to dig into the former president’s latest indictment.
House Judiciary Committee Chair Jim Jordan (R-Ohio) has set a June 16 deadline for the Justice Department to turn over a variety of documents and communications relating to the execution of the search warrant on Trump’s Mar-a-Lago residence.
The FBI searched for — and found — many classified documents from Trump’s time as president scattered throughout his Palm Beach, Fla., resort. Some Republicans, such as Jordan, allege the search was partisan and wasn’t aimed at other political figures to investigate their treatment of classified documents. Meaning President Joe Biden and former Secretary of State Hillary Clinton, in particular.
Here’s a crucial section of Jordan’s June 9 letter to Attorney General Merrick Garland:
House Republicans are hammering home this message of alleged political bias at the FBI. As we reported last week, Speaker Kevin McCarthy is threatening to oppose funding for a new FBI headquarters. McCarthy repeated this vow to Breitbart on Saturday.
— Max Cohen
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