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July 21, 2023
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PRESENTED BY
THE TOP
Happy Friday morning.
Senate appropriators’ decision to add $13.7 billion to the FY2024 spending caps cements a reality that’s been hovering over the Capitol for the last few months.
Come September when government funding runs dry, it will be Speaker Kevin McCarthy who wants to deeply cut spending, versus House Democrats, Senate Democrats, Senate Republicans and the White House, all of whom think the spending deal was far too skimpy on a variety of fronts — mostly on defense spending.
McCarthy will be behind the eight ball in the government funding fight unlike perhaps any congressional leader we’ve seen in recent years.
And consider this: Not only is McCarthy going to have to do battle with the rest of Washington. He’ll go into this war with a conference that’s unflinching in its opposition to, well, everything. The right doesn’t want to vote for any appropriations bills, which continues to weaken McCarthy’s hand at every turn. A chunk of House Republicans don’t trust him. And most of them relish legislative combat.
The House Appropriations Committee has already approved funding caps that are well below those outlined in the debt-limit agreement. The panel is slated to continue marking up funding bills and McCarthy said he would bring a few to the floor next week.
Now, the Senate is flexing its muscles in the appropriations fight with an agreement by the chamber’s top appropriators to add $8 billion to the defense topline and $5.7 billion to the non-defense topline. They downplayed the significance of this boost by insisting that it’s routine authority for emergency spending, and they argue it doesn’t circumvent the debt-limit deal.
But Sen. Susan Collins of Maine, the top Republican on the Senate Appropriations Committee, suggested her agreement with Chair Patty Murray (D-Wash.) was a first step in the effort by defense hawks to get more money for the Pentagon — something McCarthy has consistently batted down.
“Many of us have been very concerned that defense was under-funded [in the debt-limit bill], and that it was really important that we start in the appropriations process to remedy the problem,” Collins told us of her agreement with Murray.
Of course, the increase defense hawks are seeking is much more than $8 billion — they want a supplemental funding bill for Ukraine and other national-security priorities. That’s not including presidential drawdown authority, which is what the administration has used to primarily supply the Ukrainian armed forces. So this is yet another example of the rest of the Capitol mobilizing against McCarthy to secure more Pentagon funding.
And it’s not just Collins. Thursday night, Politico’s Joe Gould reported that Mississippi Sen. Roger Wicker, the top Republican on the Armed Services Committee, is blocking a nuclear submarine transfer as part of the AUKUS pact with Australia. Wicker’s effort is aimed at forcing the administration to request a supplemental funding bill for those subs and other Pentagon-related matters.
Interestingly, McCarthy has at least one ally who’s not a House Republican. Sen. Joe Manchin (D-W.Va.) immediately objected to the Murray-Collins agreement during the Appropriations Committee meeting Thursday, offering an amendment to go back down to the agreed-upon spending caps — before ultimately withdrawing the amendment.
“The bottom line is I’m not going to put a poison pill that’s going to hurt [the appropriations process],” Manchin told us. “We’re on track to get 12 bills done by Sept. 30 and get a budget, but by God if someone doesn’t take seriously the debt of this nation, we’re all accomplices.”
Manchin added: “$13.7 [billion] — that’s not going to fly in the House anyway. So I knew that would be the backstop there anyway. But I want to make sure the Senate knows what’s going on.”
McCarthy’s allies are already piling on, too. Here’s Rep. Dusty Johnson (R-S.D.):
Remember this: Congress has 71 days to figure this all out.
Also: The White House said this morning it has secured “voluntary commitments” from artificial intelligence companies to “manage the risks posed by AI.” Here’s their release.
— Andrew Desiderio and Jake Sherman
Don’t forget! There’s still time to RSVP to Investing in Small Business: Conversation with Rep. Beth Van Duyne (R-Texas) on Thursday, July 27 at 8:45 a.m. ET. We’re discussing the role of private capital in supporting small businesses, jobs and the economy.
Credit card fight casts shadow over NDAA
Passing the NDAA will be hard enough this year. A battle brewing over credit card fees probably won’t help.
Sen. Roger Marshall (R-Kan.) is pushing behind the scenes for the Credit Card Competition Act to get an amendment vote in the NDAA process, as we first previewed for premium subscribers Thursday.
Several sources told us Marshall had even threatened to hold up proceedings without that vote. The Kansas Republican strongly denied that in a statement Thursday night. “I have no desire to derail the NDAA and have always supported our military,” Marshall said.
Marshall’s campaign for an amendment vote on the CCCA is just one of many efforts from senators who want to leverage the policy bill.
But the drama here underscores just how controversial the proposal continues to be.
We’re not sure the bill has particularly good odds of passage if it gets that vote — which remains to be seen. But even getting a vote at this stage would be a bit of a coup for the reform’s supporters.
Senators would be forced to choose sides in what’s sometimes called the “unholy war” between the banking lobby and the retail-merchant lobby. That might be uncomfortable territory for any senator with a tough reelection in 2024.
Marshall co-championed the CCCA with longtime supporter Sen. Dick Durbin (D-Ill.) beginning in 2022. The legislation would effectively crack down on the credit card industry’s fee income by requiring issuers to offer a choice of at least two payment companies in electronic transactions.
The status quo — dominated by the Mastercard and Visa duopoly — is an extremely lucrative source of profit for many banks. And supporters think that cracking open that duopoly is good politics. “I’m really appreciative of [Marshall’s] strong leadership on this,” Sen. Peter Welch (D-Vt.) told us.
But there would certainly be senators who have few quibbles voting down the bill, retail sector be damned. “I don’t have any problems voting against Durbin-Marshall in its current form,” Sen. Thom Tillis (R-N.C.) told us.
For what it’s worth, Tillis isn’t worried about the NDAA being derailed — by credit card fees fights, anyway. “This is only one of several things that could derail the NDAA,” Tillis said.
— Brendan Pedersen
IMPLEMENTATION NATION
House Dems tout broadband expansion
It’s hot implementation summer for House Democrats.
Ahead of the August recess, top Democrats are working to help members sharpen their message on the legislative accomplishments of the 117th Congress — starting with expanded broadband access.
The Regional Leadership Council — the initiative launched by House Minority Leader Hakeem Jeffries and helmed by former Majority Leader Steny Hoyer — is distributing district-by-district implementation reports to Democratic members.
The RLC effort is part of a wider goal for Democrats. A common refrain from Democrats is they accomplished a ton last Congress, but voters are in the dark that it was their party that delivered.
The first batch of reports were distributed to members’ offices this week, focusing on how the Affordable Broadband Connectivity Program has helped Americans save money on internet services. This was a program started under the American Rescue Plan and expanded under the bipartisan infrastructure law.
“Each report includes the number of people in your district who benefit from this program, the money they are saving each year, the number of people in your district who qualify for the ACP but have yet to sign up, and a variety of other insightful statistics,” Hoyer wrote to his Democratic colleagues this week.
House Democratic leadership is a big fan of the idea. At the weekly Democratic Caucus meeting on Tuesday, Jeffries spoke of the importance of Democrats playing offense by pointing to the real-life impacts of their legislative accomplishments. The RLC effort, Jeffries said, is crucial to the positive Democratic message.
We got our hands on the materials for two districts — Maryland’s 5th and New York’s 8th — which are represented by Hoyer and Jeffries respectively. Here is the Maryland briefing and handout, and here is the New York briefing and handout.
The timing here is important. With just a week left in session before a long district work period, House offices are in crunch time for August recess planning. What’s next? Future reports on health care savings and insulin caps are coming from the RLC.
— Max Cohen
PUNCHBOWL NEWS EVENTS
Miss our interview with Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.) on competition with China and modernizing the national supply chain? You can watch the full conversation here:
THE CAMPAIGN
Speaking of credit-card legislation, the Consumer Credit Card Protection Coalition is running a new ad in D.C., saying the Durbin-Marshall bill will result in more credit-card fraud.
— Jake Sherman
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