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What McCarthy told House Republicans about the upcoming spending fight

On the private House GOP conference call: Speaker Kevin McCarthy used a Monday night all-member conference call to implore House Republicans to pass their versions of the FY2024 spending bills in order to counter Senate Democrats, who’ve passed their own bills with a “97% yes vote.”

McCarthy’s remark that the Senate is much more united than the House on spending helps illustrate the current reality on Capitol Hill — House Republicans have put themselves behind the eight ball in trying to exert their limited leverage over the annual appropriations bills. House GOP leaders want to cut more than $100 billion from last year’s funding total, a move strongly opposed by senators in both parties and White House.

“We’re walking into a battle to save the country,” McCarthy told House Republicans. “We’re going to be at a disadvantage, especially if we don’t get all of our work done.”

McCarthy took the call from his annual donor retreat in Jackson Hole, Wyo., where he is hobnobbing with many of the country’s most prolific House Republican donors.

McCarthy also said he is against a “yearlong” stopgap spending bill, which would “lock in place … Democrats’” policy provisions that the federal government is currently operating under. Democrats ran both the House and Senate during the previous Congress.

McCarthy did let on that he expects a “short-term CR” will be needed to allow the House and Senate to “finish all the work we set out to do.” This is an acknowledgement that the House and Senate won’t come close to finishing their work on FY2024 spending bills by Sept. 30, when government funding expires.

This signals that the House will be forced to reckon with a CR early in September.

On the White House’s $40 billion supplemental spending request, McCarthy said the Biden administration “did not work with us. They did not talk to our members. They did not work with the leadership here.” He added that House GOP leaders will “explore potential offsets.” White House officials insist they informed House Republicans what was in the bill during the drafting process.

We reported the idea of offsetting any supplemental spending with cuts to other bills on Monday. That will be an extremely high hurdle for the House GOP considering the Senate and the White House are more than willing to approve this as emergency spending without any offsets.

McCarthy tied passage of the supplemental spending bill to changes to border policy, something that is exceedingly unlikely to happen.

GOP lawmakers also spoke briefly about the possibility of an impeachment inquiry into President Joe Biden. Rep. Jeff Van Drew (R-N.J.), who began his term in Congress as a Democrat, said it’s “definitely time” to begin an inquiry when the House comes back in September.

But Rep. Don Bacon, a vulnerable Nebraska Republican, warned his colleagues to be careful about pursuing impeachment efforts.

“I’m reluctant to go down an inquiry until we get better evidence of a high crime or misdemeanor,” Bacon told his colleagues. “We don’t want to do the same thing Pelosi did when she cut corners left and right and she lowered the bar [for impeachment.]”

Oversight Committee Chair James Comer (R-Ky.) and Foreign Affairs Committee Chair Michael McCaul (R-Texas) gave updates on their respective probes into the Biden family and the chaotic 2021 withdrawal from Afghanistan.

Finally, McCarthy vowed House Republicans will continue their independent investigation into Hunter Biden, despite the appointment of U.S. Attorney David Weiss as a special counsel in the case.

McCarthy praised Comer, Judiciary Committee Chair Jim Jordan (R-Ohio) and Ways and Means Chair Jason Smith (R-Mo.) for their efforts to investigate Biden and his family. The speaker gave his members credit for prompting the DOJ to appoint a special counsel in the first place.

House Republicans are expected to hold one more full conference call before the end of recess.

— Jake Sherman, Mica Soellner and John Bresnahan

2024 WATCH

Perry pushes conservative candidate to primary Fitzpatrick

News: Rep. Brian Fitzpatrick, a moderate Pennsylvania Republican, has a primary challenger. And that opponent, conservative activist Mark Houck, said the reason he’s challenging Fitzpatrick is because Rep. Scott Perry (R-Pa.), the chair of the House Freedom Caucus, pushed him to get into the race.

“He said, ‘This is a decision you need to make,’ but if he were in my shoes, he would do it, were kind of his words, which is exactly what he did, so yeah, he did encourage me,” Houck said of Perry during an interview on Tuesday.

Let’s pause here to say how stunning this is. A sitting Pennsylvania House Republican urging someone to challenge another Pennsylvania House Republican is unheard of. And Fitzpatrick represents a purple district. If he were to lose in a GOP primary, Democrats could easily win the seat.

Houck said he fostered a relationship with Perry after the HFC chair brought him as a guest to this year’s State of the Union address. They had a conversation in June where Perry told Houck he needed to make a decision on any run before the end of July, according to Houck.

To be clear, the more likely scenario here is that Perry is far more likely to come off looking bad. Fitzpatrick has easily dispatched his last three primary challenges by well over 60% of the vote.

Perry’s campaign downplayed the GOP lawmaker’s involvement in recruiting Houck to challenge Fitzpatrick.

“While Congressman Perry greatly respects Mr. Houck’s tireless dedication to fighting for the unborn, he only encouraged Mr. Houck to pray about a decision to run for Congress,” Matt Beynon, a spokesperson for Perry’s campaign, told us.

Fitzpatrick declined to comment.

Houck made headlines last year after the FBI raided his home over an allegedly violent encounter he had with a Planned Parenthood escort outside of an abortion clinic.

Houck was arrested and charged with violating the Freedom of Access to Clinic Entrances — or FACE — Act. He was acquitted by a Pennsylvania jury earlier this year.

Houck is running as an “America-First” and HFC-aligned candidate who is using his arrest by the FBI to bolster the House GOP’s accusations that the Justice Department is “weaponized” against conservatives. We should note that Fitzpatrick is a former FBI agent.

Houck also accused Fitzpatrick of using bipartisanship as a cover for wanting to vote with Democrats.

“We just think we can do better for the First District,” Houck said. “When it comes to traditional American values, as well as Republican values, Brian does not reflect them.”

Biden won Fitzpatrick’s district by nearly five points in 2020. Hillary Clinton beat former President Donald Trump here in 2016 by less than a point.

Fitzpatrick co-chairs the bipartisan Problem Solvers Caucus, which welcomes the most moderate members from both parties. Perry, who is also in a purple district, served in the group for his first two terms in Congress before quitting in 2017.

— Mica Soellner

INVESTIGATION NATION

All Hunter Biden, all the time

Hunter Biden continues to dominate the House Republican investigative agenda.

To start the week, House Oversight Committee Chair James Comer (R-Ky.) released a transcript from an interview with an FBI special agent assigned to the Hunter Biden case.

And the Justice Department revealed no new information in response to a request from three House committee chairs on the previous plea deal in the Hunter Biden case.

The twin updates are the latest signs that President Joe Biden’s son and his legal troubles continue to be front and center for the GOP. This isn’t an issue that’s going away anytime soon.

Let’s start with the transcript, which was released in full nearly a month after the interview itself. Republicans portrayed the release as evidence that U.S. Attorney for Delaware David Weiss — the newly appointed special counsel overseeing the Hunter Biden case — isn’t fit to run the investigation.

At issue here is a December 2020 incident where the FBI special agent — whose name isn’t disclosed — was prevented from interviewing Hunter Biden.

The agent wanted to speak to the president’s son as part of the agent’s work on Weiss’ probe into Hunter Biden’s tax and gun charges. But because the FBI tipped off the Secret Service, the agent said the Secret Service wouldn’t allow the agent to access Hunter Biden’s house.

In the agent’s 20-year career, this situation — sitting near a subject’s house and waiting to be contacted for an interview — had never occurred before, the agent declared.

Speaker Kevin McCarthy reacted by saying this revealed that “family members of Biden Inc get special treatment from the law.”

But left unsaid by Republicans is that the 2020 episode took place under former President Donald Trump’s administration and when Attorney General Bill Barr helmed the DOJ. This, of course, doesn’t align with GOP charges that Biden has weaponized the DOJ.

When pressed about the specifics of the incident, the agent said they didn’t believe this was an example of political interference in the FBI. And the FBI agent said that Weiss — a Trump appointee — wasn’t known to let political considerations get in the way of his job.

“We have no confidence in U.S. Attorney Weiss as Special Counsel given his inability to prevent the Biden transition team from being contacted and other misconduct during the Biden criminal investigation,” Oversight Committee Republicans said in a statement, however.

Now onto the plea deal investigation. House Judiciary Committee Chair Jim Jordan (R-Ohio), Ways and Means Committee Chair Jason Smith (R-Mo.) and Comer wrote to Attorney General Merrick Garland on July 3 seeking information on the deal federal prosecutors reached with Hunter Biden.

Predictably, the DOJ responded with no new information. While Carlos Uriarte, the DOJ’s legislative affairs chief, did “commit to supplementing this response,” it’s unlikely more will be revealed given the active nature of the investigation.

The plea deal has since fallen apart and the case appears to be headed toward a trial. The GOP trio allege that Hunter Biden benefited from political connections to receive a “sweetheart deal.”

— Max Cohen

FDIC chief pushes for more aggressive bank safeguards

The Biden administration’s top bank regulators aren’t done cleaning up the mess that almost tripped up the financial system last spring.

Federal Deposit Insurance Corp. Chair Martin Gruenberg told an audience gathered at the Brookings Institution Monday afternoon that the government would continue to roll out revamped regulations targeting banks with more than $100 billion of assets in the coming weeks and months.

Gruenberg said an upcoming proposal would introduce beefier requirements for banks’ “living wills,” a regulatory document that explains how a large financial institution could be broken down and sold off in the event of a failure.

The long-time veteran of bank regulation also alluded to more changes under consideration, saying that tweaks to the rules around “long-term debt, bank supervision and deposit insurance pricing” would make it less likely that a single regional bank’s failure could trigger a near-panic in the United States in the future.

The speech came just weeks after regulators, led by Federal Reserve Vice Chair for Supervision Michael Barr, introduced a substantial rewrite of those same banks’ capital requirements.

But Gruenberg made the case that more changes must be made.

Expect the banking industry and its allies in Congress to continue pushing back on these changes, arguing that such “resilience” will come at a significant economic cost if the financial sector is required to keep a bunch of its money locked up in safer, less-profitable assets.

But as long as Democrats hold the White House, there’s not a ton that can be done to stop regulators from using the spring’s crisis as a policymaking opportunity.

— Brendan Pedersen

THE CAMPAIGN

News: Democrat Jason Blazakis is launching a campaign to take on freshman Rep. Tom Kean (R-N.J.) in one of the most competitive districts in the country.

Blazakis, a former State Department official who specializes in counterterrorism, told us in an interview that he views Kean as “an enabler of an extremist agenda.”

“[Kean] tries to paint himself as a moderate, but time and again he votes along the lines of the worst of the Republican Party: The Marjorie Taylor Greenes, the Lauren Boeberts, essentially the QAnon wing of the party,” Blazakis said.

New Jersey’s 7th District flipped red in 2022, when Kean defeated then-Rep. Tom Malinowski (D-N.J.) by under three points in an expensive campaign.

Blazakis’ entrance into the Democratic primary comes months after Sue Altman announced her run. Altman is a staunch progressive who leads the New Jersey branch of the leftist Working Families Party. Democrats had raised concerns she might struggle in the purple district.

Blazakis declined to take a direct shot at Altman but made clear he identified as a “centrist, moderate” Democrat who opposes efforts to defund the police.

And Blazakis had plenty of criticism for Kean’s votes in Congress, citing a lack of support for abortion rights and weakness on combating climate change.

Currently, Blazakis is a professor at the Middlebury Institute of International Studies in Monterey, Calif. But he resides in the New Jersey district and currently teaches his courses remotely.

— Max Cohen

MOMENTS

All times eastern

9 a.m.: President Joe Biden will get his daily intelligence briefing.

10:20 a.m.: Biden will leave for Andrews, where he will fly to Milwaukee. Olivia Dalton will brief on board.

10:45 a.m.: The Senate will meet in a pro forma session.

11 a.m.: The House will meet in a pro forma session.

12:25 p.m.: Biden will arrive in Milwaukee, where he will tour Ingeteam Inc. at 1:05 p.m.

2 p.m.: Biden will speak about Bidenomics at Ingeteam.

3:20 p.m.: Biden will leave Milwaukee for Andrews. The president is set to arrive at the White House at 5:20 p.m.

CLIP FILE

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