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June 16, 2023
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PRESENTED BY
THE TOP
Happy Friday morning.
Fresh off grinding the House floor to a halt last week, hardline House conservatives are already gunning for a new fight: Forcing a government shutdown this fall if they don’t get desired spending cuts.
With the Senate and the House likely to pass appropriations bills that are about $120 billion apart, compromise will be necessary to keep the government funded past the end of September. The Senate Appropriations Committee will begin marking up FY2024 spending bills next week at the levels agreed to in the debt-limit deal.
But House Freedom Caucus members are showing little appetite for buckling to the upper chamber’s demands so soon after forcing Speaker Kevin McCarthy to direct the appropriations bills to be marked up at FY2022 spending levels.
“We shouldn’t fear a government shutdown,” Rep. Bob Good (R-Va.) said. “If we shut it down in order to try to bring fiscal stability and fiscal solvency, that will save the country from an economic and fiscal standpoint for our kids and grandkids.”
Rep. Eli Crane (R-Ariz.) pledged to continue to “push for fiscal conservative policy” and said he wasn’t concerned about any blowback he would receive from his House colleagues on taking a stand on government funding.
“The fact is that this place is like a big old grift and everybody’s in on it,” Crane told us. “If you’re not, you’re an outsider. Lots of people in this town won’t like you very much, and that’s okay. I didn’t come up here to be popular.”
Rep. Byron Donalds (R-Fla.) said he agreed with Crane on the need to stand up for conservatives’ fiscal goals.
“I’m not afraid of shutdowns,” Donalds told us. “American life doesn’t halt because government offices are closed … We have to be serious about spending.”
It’s a familiar dynamic. Members of the Freedom Caucus flex their muscles and illustrate their power to push the Republican agenda rightward, while more moderate majority makers wring their hands.
“Republicans should not be standing for shutdown,” Rep. Don Bacon (R-Neb.) said, adding the party’s right flank is in “denial mode” on the spending process.
Here’s more from Bacon:
Top appropriators like Rep. Steve Womack (R-Ark.) agree with Bacon and concede the FY2022-level cuts will be ignored by the Democratic-controlled Senate. This reality — that the Senate may steamroll the House on appropriations topline numbers — contributed to a fractious couple days of House Appropriations Committee meetings this week.
And Bacon’s frustration is shared by a number of his House colleagues who bemoan the recent tactics of the hardliners.
Referencing the conservative rebellion on last week’s rules vote, Rep. John Duarte (R-Calif.) told us “it’s too bad that we stopped the [House floor] process over differences.”
“This whole constitutional democracy that we enjoy is about hashing out our differences with debate and voting,” Duarte added. “Shutting down debate and voting is kind of anti-democratic to me.”
But even some members within the conservative wing of the GOP bristled at the idea of a government shutdown.
“I’m not gunning for a shutdown. I’m not one of these to cause maximum pain,” Rep. Tim Burchett (R-Tenn.) said.
Rep. Dan Bishop (R-N.C.) was especially sour to the notion. He even chided us for asking.
“We’re always working to avoid that,” Bishop said. “You’ve got crazy theories, rather than report[ing], huh?”
OK then! We’ll continue following what’s likely to be a very, very contentious spending battle months ahead.
— Max Cohen, Mica Soellner and Heather Caygle
THE UPPER CHAMBER
Senate Dems vent over Julie Su delay
Is it time to “put up or shut up” on President Joe Biden’s embattled Labor secretary nominee Julie Su?
That’s the feeling among many Senate Democrats, as the White House struggles to lock up the requisite support for her nomination nearly two months after her confirmation hearing. Some feel like they’re being dragged along with no clear path to success.
“Look, I wish we’d have a vote so people can vote and move on, up or down, whatever it might be,” Sen. Jon Tester (D-Mont.), one of three holdouts on the Democratic side, told us.
Senate Majority Whip Dick Durbin has grown exasperated with reporters’ questions about Su, telling us on Thursday that he doesn’t track the Su nomination every day and is “not dealing directly” with it — even as the White House is still working to secure 50 votes.
With all Republicans opposed, the White House can’t lose more than one Democrat. Sen. Joe Manchin (D-W.Va.), another holdout, has basically stopped answering questions about Su and is believed to be a “no” on her nomination — though he won’t say it outright. Sen. Kyrsten Sinema (I-Ariz.) also remains undecided.
And a look at the Senate’s calendar suggests Su won’t be coming up for a vote any time soon.
Senate Majority Leader Chuck Schumer has teed up votes for next week on two judicial nominees and a new tax treaty with Chile, making it highly unlikely that the chamber will vote on Su during what will be a shortened work week due to the Juneteenth holiday.
After next week, the Senate is on recess for two weeks, returning July 10 at the earliest.
Some Democrats told us that their leadership and the White House should continue working to lock in the votes for Su.
“We should push forward,” Sen. Richard Blumenthal (D-Conn.) said. “And I’m frustrated there’s been no vote. But I understand there has to be a lot of conversation.”
The controversy surrounding Su stems from her tenure as California’s labor chief, during which the agency was found to have doled out billions of dollars in fraudulent unemployment claims. All Democrats voted to confirm her in 2021 as deputy Labor secretary, but Manchin, Tester and Sinema aren’t yet convinced that she deserves a promotion.
Su has been serving as Labor secretary in an acting capacity since the departure of Marty Walsh earlier this year. She can continue in the role until early October under the Federal Vacancies Reform Act.
Sen. Alex Padilla (D-Calif.), one of Su’s most vocal proponents, told us that she “continues to prove her mettle” even without Senate confirmation, pointing to this week’s news that Su helped broker a labor agreement for workers at West Coast ports.
“There’s frustration, yes, but that’s not keeping her from doing the job to the best of her ability,” Padilla told us.
When reached for comment, the White House highlighted Su’s role in resolving the ports dispute and the “full court press” to get her confirmed. White House officials have been in regular contact with the holdout senators, too.
“She’s shown she’s a true leader and I think she should be confirmed,” Biden said Thursday of Su.
So far, nobody in the president’s party is calling for the White House to withdraw her nomination. But Democrats are privately wondering how much longer this saga can continue.
— Andrew Desiderio
Inside the Senate Banking clawback bill (and what comes next)
Thursday night, the Senate Banking Committee made some of its biggest news in almost four years. Chair Sherrod Brown (D-Ohio) will host a markup hearing — his first — on a much anticipated collaboration with Sen. Tim Scott (R-S.C.) to bolster bank executive accountability.
Say hello to the Recovering Executive Compensation Obtained from Unaccountable Practices Act, or RECOUP Act. You can read the text here. Here’s a summary if you’re feeling lazy. The committee’s markup is scheduled for next Wednesday, June 21.
The effort follows the sudden collapse of Silicon Valley Bank in March. One of Congress’ main memories from the episode revolves around the stock sales SVB executives made just months before the bank failed. If there’s one legislative reform coming out of the spring banking crisis, this is it.
For banks with more than $10 billion of assets, the bill would give bank regulators stronger authority to claw back incentive-based pay — namely bonuses and profits from stock sales. It would also allow regulators to temporarily ban executives from working in the sector for “misconduct,” and direct bank boards to adopt new corporate governance standards.
If passed by the Senate, the RECOUP Act would be the most consequential banking bill to clear the chamber since the Trump-era deregulation legislation in 2018. The Brown-Scott bill would also be the first legislation to introduce new curbs on banker behavior since 2010’s Dodd-Frank reforms.
There’s just one problem. The bill has stiff competition from one of the Senate’s most influential progressives.
Sen. Elizabeth Warren (D-Mass.) introduced the Failed Bank Executives Clawback Act with Sen. Josh Hawley (R-Mo.) back in March. The bill was updated in June to include a large number of bipartisan co-sponsors.
Those lawmakers include Sens. Kevin Cramer (R-N.D.), Katie Britt (R-Ala.) and J.D. Vance (R-Ohio) — all Republican members of the Senate Banking Committee.
A committee bill backed by its chair and ranking member is almost always going to be the frontrunner of any major reform effort. But the RECOUP Act is also watered down compared to the Warren-Hawley bill — a fact made more significant by the latter’s existing foundation of bipartisan support.
Case in point: the Brown-Scott reform would allow the Federal Deposit Insurance Corp. to claw back incentive-based pay over a 24-month period. The Warren-Hawley bill covers three years and includes all pay, including salary. (It’s fairly common for bank execs to receive the lion’s share of their pay outside of salary, particularly at large banks.)
Notably, Warren-Hawley would also require — rather than simply allow — regulators to clawback those funds.
This is ultimately a debate about political calculation. Brown, widely considered one of the Senate’s more progressive members, is clearly trying to push a bill with Scott that House Republicans could stomach and pass.
But we expect Warren to argue in the coming days that the Senate should not settle for weaker penalties when stronger ones have already captured real support from a significant number of Democrats and Republicans.
This will be a fascinating effort to watch. We’ll keep you apprised.
— Brendan Pedersen
PRESENTED BY AMERICAN BEVERAGE ASSOCIATION
The Coca-Cola Company, Keurig Dr Pepper and PepsiCo are offering more choices with less sugar. Today, nearly 60% of beverages sold have zero sugar. BalanceUS.org
PUNCHBOWL NEWS EVENTS
Missed our conversation with Rep. John Joyce (R-Pa.) Thursday? Catch the full event here.
STAFF MOVES
The Senate Foreign Relations Committee’s Democratic staff has a new press team under Chair Bob Menendez (D-N.J.).
Eric Harris recently started as communications director. Harris has worked on the Hill for nearly a decade, mostly recently at the House Select Committee on Economic Disparity and Fairness in Growth.
Danny Rodriguez will be press secretary. He recently worked for Sen. Alex Padilla (D-Calif.). And Kemani A. Scott will be press assistant, having just graduated from Rutgers.
— Andrew Desiderio
PRESENTED BY AMERICAN BEVERAGE ASSOCIATION
America’s beverage companies are delivering more choices with less sugar.
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