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June 6, 2023
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PRESENTED BY
THE TOP
Happy Tuesday morning.
News: The prospects for Congress approving more Ukraine funding seem to be getting dim.
Speaker Kevin McCarthy told us Monday that a supplemental spending package for Ukraine is “not going anywhere” in the House, essentially putting the brakes on any immediate plan to send more money to Kyiv — or get around new spending caps.
McCarthy signaled any additional aid for Ukraine would have to come as part of the annual appropriations process within the Pentagon’s $886 billion in discretionary spending, as agreed to under the Fiscal Responsibility Act, the bipartisan legislation that ended the debt-limit showdown.
McCarthy’s comments set the stage for a consequential Senate-vs.-House fight centered on Ukraine funding, an issue that has already bitterly divided the GOP.
For now, McCarthy’s pronouncement is a blow to defense hawks in both parties, but especially in the Senate. A group of GOP senators held up the debt-limit bill last week until they got assurances from Senate leaders that the chamber would take up a separate funding bill for Ukraine and other defense needs.
This was an effort to lay the groundwork for circumventing the debt-limit agreement’s $886 billion defense spending cap — a number many Republicans and some Democrats see as insufficient. McCarthy made clear he won’t go for that.
When asked if his thinking would change if Ukraine needed a funding boost, McCarthy responded: “You first have to show, what do you need money for? We’ve got an approps process. We’re just going to work through an approps process. They’re not going to circumvent what we’re doing here.”
Congress has already appropriated more than $110 billion following Russia’s February 2022 invasion of Ukraine, with the bulk of that going to Kyiv as economic and military aid.
Last week, Sen. Lindsey Graham (R-S.C.) convened a group of fellow GOP defense hawks in Minority Leader Mitch McConnell’s office to plot a strategy to make up for what they see as a low defense cap. McConnell and Majority Leader Chuck Schumer then released joint statements committing to considering supplemental funding requests for both defense and non-defense needs.
McCarthy said “the senators are not paying attention to how the system works,” adding: “We will go through the appropriations process and we will do the numbers that we just agreed to.”
Asked for a response to McCarthy’s comments, Graham told us Monday it’s a “shame” and indicated he’s prepared to put up a fight over it. The South Carolina Republican said he’s already talking with senators from both parties about finding offsets elsewhere in the budget to boost the defense topline.
Here’s more from Graham:
McConnell and other GOP leaders agree with Graham, who told us last week that McCarthy would have to decide “if he wants to help defeat Putin.” McConnell has called the defense cap the “worst part” of the bill, although he ultimately backed the legislation because it froze non-defense spending and prevented a first-ever debt default.
House Foreign Affairs Committee Chair Michael McCaul (R-Texas) also signaled some disagreement with McCarthy, telling us that “there will come a time when we need to” appropriate more funds for Ukraine. McCaul said the success of Ukraine’s counteroffensive, which may be underway as soon as this week, will dictate Congress’ action. Here’s McCaul:
In fact, it may be difficult to pass a supplemental regardless of whether Ukraine is winning or losing. Here’s Rep. Dusty Johnson (R-S.D.), a close McCarthy ally:
There’s bipartisan agreement in the Senate, however, when it comes to boosting the defense number. Senate Armed Services Committee Chair Jack Reed (D-R.I.) told us that he sees a Ukraine-focused supplemental package as the best way to get around the $886 billion cap, which matches President Joe Biden’s FY2024 budget request.
But this won’t be possible unless there’s an agreement reached between Republicans in the House and Senate.
— Andrew Desiderio, Jake Sherman and Heather Caygle
Don’t forget: Next week on Tuesday, June 13 at 9 a.m. ET, join us as Punchbowl News Founder Jake Sherman discusses digital equity and opportunity with Rep. Steny Hoyer (D-Md.). RSVP today!
CONSERVATIVE AGENDA
Freedom Caucus tables motion to vacate push
The House Freedom Caucus seems uninterested in launching a motion to vacate campaign against Speaker Kevin McCarthy any time soon, despite deep internal frustrations and “a great loss of trust” in his leadership.
Conservatives are still furious over the debt-limit deal McCarthy struck with President Joe Biden. But any effort to try to boot McCarthy has largely stalled out.
The motion to vacate didn’t come up at all during the Freedom Caucus’ weekly meeting Monday night, per several members who were present. Instead, House Ways and Means Committee Chair Jason Smith (R-Mo.) presented a proposal for a new tax-cut bill.
Rep. Dan Bishop (R-N.C.), who last week said he was considering trying to oust McCarthy, didn’t attend the group’s meeting Monday. And Rep. Ken Buck (R-Colo.) said “it’s not the time,” after previously saying the idea should be discussed.
Rep. Andy Biggs (R-Ariz.) wouldn’t say if he personally supported ousting McCarthy from his post. But Biggs added that there are ongoing talks among some members.
“There’s some people who are talking about it,” Biggs told us. “My biggest concern is what kind of coalition is forming and how long it will last.”
Biggs was referring to the bipartisan group of House Republicans and Democrats that passed the debt-limit bill last week. That coalition, however, is fleeting and we can’t imagine it will last.
Now, though, conservative hardliners are shifting strategies. Several HFC members told us they are looking at other ways to hold McCarthy and his leadership team more accountable to the GOP conference’s right flank.
Freedom Caucus Chair Scott Perry (R-Pa.) told us he wanted to get a plan in place “in the next week or so.”
And Rep. Ralph Norman (R-S.C.) said he wants to see more conservative policies implemented through the appropriations process.
“Kevin is going to have to come through with amendments,” Norman said.
Of course, with just one member able to trigger a snap referendum on McCarthy’s leadership, any plan to shelf the motion to vacate could just be temporary.
For what it’s worth, McCarthy doesn’t seem at all concerned about his conference’s right flank. Rep. Chip Roy (R-Texas), who serves in Freedom Caucus leadership, said last week that he’s demanded a meeting with McCarthy to go over his gripes with leadership during the debt-limit deal.
Here’s an exchange we had with McCarthy Monday evening on that topic. The speaker sarcastically brushed off Roy’s complaints.
— Mica Soellner and Max Cohen
Inside crypto’s evolving money, messaging playbook
When the crypto exchange FTX dissolved into bankruptcy and fraud last fall, much of the sector’s good standing in Washington collapsed along with it.
But after months of bad press and regulatory crackdown, the crypto sector is launching a new effort this summer to try to turn things around.
We sat down with Ryan Selkis, CEO of the crypto research firm Messari, who has volunteered himself as an unofficial frontman for that push. Selkis has spent months calling for the industry to allocate more than $100 million toward Washington in the next year or so — a significant uptick from what the sector currently spends on lobbying.
“There’s maybe a 2-3x gap in terms of where we are, where we want to be and where we need to be,” Selkis told us Monday, referring to the sector’s lobbying and messaging costs.
One leg of the effort is a new advocacy organization Selkis is launching — a 501(c)4 called the Digital Freedom Alliance — which will focus on honing the crypto sector’s messaging in Washington and to the public at large.
A focus on communication will sound basic to Beltway insiders. Selkis says it’s one core thing the crypto sector has been lagging behind on since the collapse of FTX.
“We are fighting with one hand tied behind our back as long as sentiment is this negative” around crypto, Selkis said. “There’s a gap in the market right now around running an actual campaign, and a pro-crypto messaging campaign in particular, that is going to change the sentiment in D.C. It’s been a brutal six months.”
That’s easier said than done. While many Republicans remain generally supportive of crypto — including House Financial Services Committee Chair Patrick McHenry (R-N.C.) — most Democrats are as skeptical as they’ve ever been. Senior Democrats in particular have soured significantly on the crypto sector, including Reps. Maxine Waters (D-Calif.) and Stephen Lynch (D-Mass.).
We reviewed a pitch deck distributed by the DFA to several prominent crypto executives in recent weeks. The organization argued that advocates “are still significantly underspending on coordinated policy efforts given the various challenges that lie ahead.”
DFA wants to raise $10 million for an 18-month messaging campaign, according to the pitch deck. But Selkis and others connected to the organization declined to tell us how much the group has raised to date.
One source familiar with the broader crypto sector’s lobbying efforts told us the DFA has secured a seven-figure commitment from Paradigm, a prominent crypto investment firm.
The rest of the sector’s political activity has picked up notably over the last month. An expensive TV advertising campaign from Coinbase targeting the DMV area has already raised some eyebrows as federal regulators escalate their scrutiny of America’s best-known crypto company.
Coinbase also launched a “global advisory council” last month stacked with some D.C. heavy hitters — among them, former Sen. Patrick Toomey (R-Pa.), former Reps. Tim Ryan (D-Ohio) and Sean Patrick Maloney (D-N.Y.) and former Clinton administration adviser Chris Lehane. (Maloney was just nominated to be ambassador to the OECD, so his tenure may be short lived.)
— Brendan Pedersen
PRESENTED BY CITI
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INVESTIGATION NATION
McCarthy backs Comer’s contempt play
Speaker Kevin McCarthy is throwing his support behind House Oversight Committee Chair James Comer’s effort to hold FBI Director Christopher Wray in contempt of Congress.
Comer is arguing Wray has failed to fully comply with a panel subpoena by only allowing the top two lawmakers on the Oversight Committee to view an FBI document in camera at the House’s secure facility. Comer wants the entire committee to view the document and for the FBI to turn over the form to the panel.
The document in question contains uncorroborated corruption allegations against Joe Biden dating back to his time as vice president.
“Everybody on that committee has a responsibility of oversight. He needs to supply it to everybody on the committee,” McCarthy said of Wray.
McCarthy compared the Wray situation to House Foreign Affairs Committee Chair Michael McCaul’s (R-Texas) dispute with Secretary of State Antony Blinken over access to Afghanistan withdrawal documents. Blinken relented on Monday and allowed all HFAC members to view the documents.
The speaker said he “had a long conversation” with Wray where McCarthy emphasized “the importance of providing this document.”
The FBI has called contempt proceedings an unwarranted escalation and Hill Democrats have also sharply criticized Comer’s move.
Rep. Jamie Raskin (D-Md.), the panel’s ranking member, accused Comer of “weaponizing the powers of this committee to hold Director Wray in contempt as part of MAGA Republicans’ efforts to discredit and ultimately ‘dismantle’ the FBI.”
Democrats point to evidence that the FBI form was part of a tranche of documents Rudy Giuliani provided to the DOJ in 2020 after traveling to Ukraine. At the time, former Attorney General Bill Barr referred the materials to the Pittsburgh field office, Raskin said, and the Trump-era DOJ decided to not pursue any charges based on the information delivered by Giuliani.
— Max Cohen
THE MONEY GAME
How are you feeling about the Washington Nationals’ season? Disappointed? Yeah, same. Here’s a way to brighten it up if you’re a Democrat looking to spend some money. You can attend tonight’s game against the Arizona Diamondbacks with one of two members of the House Democratic Caucus. Rep. Greg Stanton (D-Ariz.) of Phoenix is charging $2,500 for two tickets or $1,500 for one ticket. And Rep. Stephen Lynch (D-Mass.) has the same deal going.
Want to celebrate life with House Minority Whip Katherine Clark? She’s holding her annual spring reception hosted by Akin Gump PAC. This will cost you between $500 and $5,000 to attend.
— Jake Sherman
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