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September 27, 2023
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PRESENTED BY
THE TOP
Happy Wednesday morning.
Based on what we know right now, it seems exceedingly likely that the federal government is going to shut down this weekend. Full stop.
This could change. It’s a fast-moving situation with a lot of different pieces. But as of this morning, the U.S. government is nearly certain to run out of money when the clock strikes 12:01 on Sunday morning. We’ll explain why in a moment.
Weekend shutdowns aren’t really all too impactful. The full scale of the shutdown won’t be felt until Monday morning when the vast majority of federal employees begin their work week.
It’s also important to note that a government shutdown is a slow-moving crisis. The situation gets more serious each day that agencies can’t fully function and hundreds of thousands of federal employees — including the military — don’t get paid.
Yet our reporting suggests that this shutdown probably won’t be limited to this weekend.
The Senate. On Tuesday evening, we scooped the details of the Senate’s bipartisan stopgap funding bill, which would keep federal agencies open until Nov. 17. The White House-endorsed bill includes roughly $6 billion in new economic and military aid for Ukraine, plus another $6 billion for disaster relief. There is no border security money nor spending cuts that House conservatives have been incessantly demanding.
The Senate voted overwhelmingly to advance the temporary funding measure Tuesday night, 77-19. But Sen. Rand Paul (R-Ky.) reiterated to us that he won’t give consent for speedy passage of the continuing resolution. Other conservative GOP senators may lock arms with Paul, but it only takes one to bog down this process.
That means the Senate could potentially vote on final passage of the CR as late as Sunday, which is after government funding expires. There could be a decent-sized number of “no” votes, too, with some GOP senators incensed at the inclusion of Ukraine aid in the package.
“I really can’t believe that we’re about to shut down the United States government because Senate Democrats want to spend another $6 billion on Ukraine,” Sen. J.D. Vance (R-Ohio) told us Tuesday evening. (Of course, many Republicans, including Senate Minority Leader Mitch McConnell, want to aid Ukraine, as well.)
But other senators said it was important for the chamber to show it can pass a CR due to the chaos on the House floor last week.
“It seems to change every hour if not by the minute in the House. I don’t think they know what they can do at this point,” Sen. John Cornyn (R-Texas) said. “But we know what we can do, I think, and that is send over a CR and see what the speaker can do with it.”
The House. Let’s just assume for a moment that the Senate can pass its version of a CR. There’s no chance — and we mean zero — that Speaker Kevin McCarthy will bring that bill to the floor in its current form. Maybe he’ll take up a clean CR a week or so into a government shutdown. McCarthy may have the leeway to consider a clean CR after he’s tried to isolate some of the conservative hardliners and it’s clear he has no option in order to get federal employees back at work.
But there’s no way he can do so now. McCarthy has to show some fight. It’s what a chunk of the House Republican Conference wants. It’s his personal inclination as well.
How will he fight? We scooped in the Midday edition that McCarthy wanted to amend the Senate’s CR with H.R. 2, the House’s border security bill. McCarthy and House GOP leaders want to portray this as a fight over border security and the deteriorating situation at the U.S.-Mexico border, not the deep spending cuts that House Republicans are pushing to social programs. We assume they can get enough Republican votes for that.
McCarthy may also call for the creation of a debt and deficit commission.
“If they want to focus on Ukraine and not focus on the southern border, I think their priorities are bad,” McCarthy said when asked about the support by McConnell and Senate Republicans for new Ukraine aid. McCarthy said he spoke with McConnell on Tuesday.
Yet if there’s a movement in the House GOP to amend the Senate CR with spending cuts or remove the Ukraine money, McCarthy will have trouble getting enough votes for passage.
McCarthy’s plan is to bring up his own stopgap funding bill later this week after voting on four other appropriations measures — Defense, Homeland Security, Agriculture and State-Foreign Operations. Whether House Republicans can pass any of them is questionable, although the Defense bill likely has the best chance.
The GOP leadership also is skeptical that the House will be able to pass the McCarthy-endorsed stopgap funding bill.
Remember: Multiple House conservatives are opposed to any kind of CR — even if it is jam-packed with provisions they support.
“I will not vote for a CR. It doesn’t matter what you attach to it,” Rep. Matt Rosendale (R-Mont.) told us.
Assuming there is a shutdown, McCarthy’s best-case scenario is convincing the Senate to negotiate with him on a CR to reopen the government while extracting some wins on the border. This will be a tall task. House Republicans will be seen as having shut down the government. Why would the Senate throw him a lifeline?
— Jake Sherman, Andrew Desiderio, John Bresnahan, Mica Soellner and Heather Caygle
Join the conversation: Punchbowl News founder and CEO Anna Palmer sits down with Sen. Raphael Warnock (D-Ga.) at 8:30 a.m. ET. They will discuss modern agriculture, focusing on sustainable farming practices and innovation. It’s not too late to RSVP.
THE SPEAKER
Gaetz inches closer to trying to boot McCarthy
Rep. Matt Gaetz (R-Fla.), a chief tormentor of Speaker Kevin McCarthy, effectively said on the House floor Tuesday evening that he was on the brink of filing a motion to vacate to try to oust the California Republican from the speaker’s chair. Here’s what Gaetz said:
The motion to vacate was raised at the House Freedom Caucus’s weekly meeting, as well.
McCarthy told reporters once again on Tuesday night that he wasn’t worried about Gaetz:
The best case for McCarthy here is that if Gaetz files a motion to vacate, some Democrats would vote with a strong majority of Republicans to table it. The question for McCarthy would then be what does he have to do in return.
And if McCarthy remains speaker with the help of Democrats, how would he be able to manage the House Republican Conference?
— Jake Sherman, Mica Soellner and John Bresnahan
THE MENENDEZ INDICTMENT
What will Schumer do about Menendez?
As of this morning, more than half of the Senate Democratic Caucus has called on Sen. Bob Menendez (D-N.J.) to step down following his federal indictment on bribery and corruption charges.
But the big question hanging over the chamber ahead of the Senate Democratic lunch today is this — what will Chuck Schumer do?
The Senate majority leader, like others, has said Menendez has a right to due process and “rightly decided” to step down as chair of the Senate Foreign Relations Committee. But Schumer has refused to go further than that. The Democratic leader is sure to face questions about it at his weekly press conference this afternoon.
Other members of Schumer’s leadership team have said Menendez should resign from the Senate, including Sen. Gary Peters (D-Mich.), who chairs Democrats’ campaign arm.
This creates a particularly awkward situation for Democrats if Menendez does indeed run for reelection in 2024. The party typically defends its incumbents, but it’s hard to see that happening now that Peters has called on Menendez to resign. What’s more, Rep. Andy Kim (D-N.J.) has already jumped into the Democratic primary. Other Democrats could follow suit.
“My focus… is to make sure we keep the seats Democrat,” Peters told us. “I continue to be focused on that.”
Of course, the party doesn’t want to be forced to spend money in deep-blue New Jersey in what’s already a difficult cycle. But the politics of it all could be what forces Schumer and other Democratic leaders to shift.
Democrats may also be soon forced to confront the substance behind the charges against Menendez — that he was allegedly taking bribes that benefitted a foreign government seeking policy concessions from the United States.
Sen. Chris Murphy (D-Conn.), who sits on the Foreign Relations Committee and said Menendez should resign, told us that there needs to be an investigation into “what Egypt is doing here and what they thought they were getting.”
Murphy has been among those calling on the Biden administration to significantly limit U.S. security assistance for Egypt due to deteriorating human rights conditions in that country. The indictment against Menendez claims that the then-chair of the Foreign Relations Committee was taking bribes in exchange for official actions that aided the Egyptian government.
“[We] have a responsibility to understand whether Egypt was running an illicit influence campaign on the Foreign Relations Committee,” Murphy said. “It’s obviously deeply problematic for our relationship with Egypt if they were operating a very illegal influence campaign directed at members of the Foreign Relations Committee.”
— Andrew Desiderio
PRESENTED BY META
Senate Banking braces for a SAFER, rougher markup
It’s another historic day for the Senate Banking Committee, which will convene a markup this morning to consider cannabis banking legislation for the first time.
This is the second markup we’ve seen from Chair Sherrod Brown (D-Ohio) this year. The first was a masterclass in bipartisan dealmaking, where ranking member Tim Scott (R-S.C.) and nearly every Republican on the committee joined Democrats to pass bank executive accountability legislation.
The markup today is going to be a bit different.
The central reform within the Secure and Fair Enforcement Regulation Banking Act, or SAFER, remains (mostly) uncontroversial. Banks want a safe harbor to work with state-legal cannabis firms. But machinations around the SAFER Banking Act have devolved into a Republican fight that has little to do with weed.
Since the unveiling of the bill text last week, lawmakers and committee staff have been scrambling to smooth over disagreements and concerns primarily about Section 10. That’s a provision limiting bank regulators’ authority to discourage banks from working with certain controversial clients. Progressives fear the Senate’s provision will limit regulators too much, but House conservatives want it strengthened.
Sen. Cynthia Lummis (R-Wyo.), a driving force behind the latest Section 10 wrangling, put it to us like this last night when asked about possible amendments heading into the markup:
Other lawmakers involved in the talks include Senate Majority Leader Chuck Schumer, Sens. Steve Daines (R-Mont.) and Kyrsten Sinema (I-Ariz.), as well as the committee’s staff.
Can I see a manager? Sources close to the committee told us some progress has been made on “technical” amendments as of Tuesday night. But it appears that there won’t be a manager’s package of more substantial changes.
Without a manager’s package, today’s markup will be more unwieldy. We expect a number of lawmakers to show up with amendments to pitch in real-time during the hearing.
Another wrinkle for the committee will be attendance. Scott, who is a “no” and will vote by proxy, will be in California tonight for the second GOP presidential debate. Sen. Tina Smith (D-Minn.) is out with a positive COVID test. And Sen. Bob Menendez (D-N.J.) will be in New York City for reasons you, dear reader, should be familiar with by now.
Still, Brown was upbeat Tuesday night about the committee’s chances of a strong bipartisan markup. “I don’t know exactly how many votes we’re going to have, but we’re going to have a comfortable majority,” Brown told reporters.
The long game: Senators are trying to create a bill that could pass muster in the Republican-led House. There are a lot of GOP House members who could support cannabis banking reform in theory.
But there are already complaints about Section 10 being too watered down for conservatives to support. This will be a tough, tough needle to thread.
— Brendan Pedersen
Don’t miss: Our second quarterly edition of The Vault lands later this morning, featuring an exclusive interview with a key financial regulator, and more. If you’re not already signed up, click here to make sure you’re in.
Inside the Ways and Means meeting on the Hunter Biden probe
The House Ways and Means Committee will vote this morning to release information on how the federal government handled the Hunter Biden investigation, one day ahead of the House Oversight Committee’s first impeachment inquiry hearing.
This is the latest effort from House Republicans to probe all facets of Hunter Biden’s business dealings as they attempt to uncover wrongdoing on the part of President Joe Biden. To date, GOP investigators haven’t found any concrete evidence of wrongdoing by the president.
What to expect: Ways and Means Republicans are set to push out more documents provided by IRS whistleblowers Gary Shapley and Joseph Ziegler following the meeting. The whistleblowers have claimed that their investigation of Hunter Biden’s tax crimes was slowwalked by the Justice Department.
Ways and Means Committee Chair Jason Smith (R-Mo.) said in a statement that the documents will be “vital to understanding efforts by top officials to protect Joe Biden.”
When Shapley and Ziegler testified before Oversight in July, they were limited in some of their responses due to regulations restricting disclosure of an individual’s tax details. The Ways and Means Committee will vote to lift these restrictions this morning.
The information gleaned from the disclosure will almost certainly be used by Oversight Republicans in their impeachment inquiry kickoff hearing on Thursday. It’s a sign of how interconnected the three panels running the inquiry — Oversight, Ways and Means and Judiciary — are.
Democrats’ view: In an opening statement, Rep. Richie Neal (D-Mass.) — the panel’s top Democrat — will blast the documents under consideration as “cherry-picked” and will say they “came to the committee heavily redacted by Shapley and Ziegler.”
Neal will also take a shot at Smith for fundraising off of his role in the impeachment inquiry, according to excerpts shared with us.
“As a point of personal privilege, I never once sent a fundraising email or even raised a dollar off our work investigating the IRS’s handling of the former president’s taxes,” Neal will say.
Oversight Committee updates: Oversight Chair James Comer (R-Ky.) told us the panel plans on holding a dedicated hearing on the Biden family’s business relationship with China in mid-October.
On Tuesday, Comer said bank wires he subpoenaed showed Hunter Biden received $260,000 from Chinese businessman Jonathan Li in 2019.
Democrats, meanwhile, claim the payment isn’t evidence of any wrongdoing. The address listed on the wires was Joe Biden’s Wilmington, Del., residence, where Hunter was residing at the time.
— Max Cohen and John Bresnahan
PRESENTED BY META
… AND THERE’S MORE
Pelosi visits a DC gay bar
Former Speaker Nancy Pelosi visited Little Gay Pub in Logan Circle last night.
Co-owners Dito Sevilla, Dusty Martinez and Ben Gander welcomed Pelosi into the bar, where she received several rounds of applause. The California Democrat posed for selfies with patrons.
The photo is courtesy of Drew Hammill, Pelosi’s former deputy chief of staff.
The Campaign: Usually, fundraising emails utilize hyperbolic screeds to claim their side is being drastically outraised by their opponents. But a recent NRCC fundraising appeal is actually accurate. In August, the DCCC outraised the NRCC by $4.3 million.
“We just found out Democrats outraised us by millions,” the email reads. “The numbers are bad.”
Endorsement news: EMILYs List is backing Democrat Monica Tranel in Montana’s 1st District. Tranel is running to set up a rematch against Rep. Ryan Zinke (R-Mont.).
— Max Cohen
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