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PRESENTED BY

BY JOHN BRESNAHAN, ANNA PALMER AND JAKE SHERMAN
WITH MAX COHEN AND CHRISTIAN HALL

THE TOP

Good Wednesday morning. 

At sometime after 2:30 p.m. today, the Senate will vote to overcome a Republican filibuster to suspend the debt limit until December 2022. The vote will fail — it needs 60 to pass — and then we’ll all collectively ask “Now what?”

Let’s be abundantly clear: The process to raise the debt ceiling is nowhere. In fact, they’re actually worse off than nowhere, if that’s possible. But there are a bunch of dynamics worth exploring here, so let’s jump right in. 

→ Will the cloture vote clarify anything? The cloture vote today is, again, designed to end debate and move forward with legislation to suspend the debt limit. It will fail. If you’re reading this and you work in finance, banking or some related industry, then please prepare yourself so we don’t have to go through histrionics later. The Republicans will stick together and block action on the debt limit, 12 days before the Treasury Department runs out of the ability to obtain new loans.

But Republicans have this hope — maybe it’s a fever dream? — that today’s failed cloture vote will force Democrats to realize they need to shift to lifting the debt limit via reconciliation. Democrats have firmly ruled this out all week, so we don’t see how they’ll get from here to there, but let’s just take it step by step.

→ What will Senate Majority Leader Chuck Schumer do? Schumer has declared that he wants a debt-limit bill passed by the Senate by the end of this week. That doesn’t appear possible now. It’s also clear that Schumer can’t just let the Senate go on recess next week as scheduled, not with this crisis hanging out there. So we expect some schedule changes, at a minimum.

→ Is the nuclear option real? With President Joe Biden saying Tuesday night that a carveout in the filibuster for raising the debt limit is “a real possibility,” the issue is going to dominate discussion Wednesday. Democrats talked about it at the party luncheon earlier in the day, but even Democratic senators calling for an end to the filibuster didn’t think it would happen at that point. That dynamic may be different now.

Washington will spend the next 48 hours going crazy over Biden’s comments, but let’s put all our cards on the table.

1) Sen. Joe Manchin (D-W.Va.) told reporters to “forget the filibuster” Monday because there are other ways to lift the debt limit. In order to blow up the filibuster, Manchin will have to move.

2) Sen. Kyrsten Sinema (D-Ariz.) — also against blowing up the filibuster — is getting attacked by progressives and would appear unlikely to support eliminating the 60-vote threshold.

3) Getting rid of the filibuster just for the debt limit really means the legislative filibuster is gone forever. Democrats can pretend otherwise, but look what happened when the nuclear option was used to “limit” the filibuster on executive-branch nominations in 2013. Now all executive branch nominees are subject to simple majority votes. Once the door is opened, it’ll be hard to close it again. If you allow an exception for the debt limit, why not voting rights? Or guns? Or health care? Or climate change? 

4) What about “reforms” of the filibuster, such as the “talking filibuster?” These are difficult to make work. In fact, the current filibuster process was implemented because the old format was even more effective in blocking legislation.

Schumer and other Democratic leaders haven’t wanted to focus on the filibuster up until now. The New York Democrat is clearly interested in changing the filibuster if he can, but it’s truly a momentous step, one that will alter the Senate forever. And, as McConnell has warned, Republicans would retaliate in a massive way. Remember this McConnell quote from March? “Let me say this very clearly for all 99 of my colleagues: Nobody serving in this chamber can even begin — can even begin — to imagine what a completely scorched-earth Senate would look like,” McConnell said on the floor. “None of us have served one minute in a Senate that was completely drained of comity, and this is an institution that requires unanimous consent to turn the lights on before noon.”

Think about that. Democrats could win this round, and even pass their broader reconciliation package. But Republicans would drag out every other procedural move for the rest of the 117th so as to make the Senate practically unworkable. It would be a war.

Getting rid of the filibuster allows for a simple-majority vote. But you know what else allows for a simple majority vote? Reconciliation. You may hear Manchin say that getting rid of the filibuster is not necessary when there is another easy option to pass the debt limit. 

→ What else can Democrats do? There’s been talk about having Biden invoke the 14th Amendment to essentially just ignore the debt limit and order the Treasury Department to continue borrowing money, but that would provoke a huge separation-of-powers challenge. It’s a complex legal question that may take a while to sort out. Would the courts even allow it? And who knows how the financial markets would react in the meantime. All Wall Street would see is chaos in Washington, so we may be plunged into a huge financial crisis in this scenario.

So let’s assume that Democrats don’t do that and the filibuster is still intact. Then what’s left? Reconciliation. Which is what McConnell and Republicans have been saying for two-plus months now. Let’s explore this option.

→ Is a stopgap possible? A few smart Republicans suggested that if Democrats move toward lifting the debt limit using the reconciliation process, the GOP would allow Democrats to lift the debt limit for a few weeks while things unfold. This would require a lot of cooperation by the GOP, but they are signaling to us they are game to make reconciliation easy for Democrats.

→ Would reconciliation still be painful? Yes, the process won’t be easy or as fast as some Republicans have suggested. Senate Democrats will have to move a budget resolution, face a vote-a-rama, wait for the House to pass a reconciliation package, face another vote-a-rama, and then pass the legislation. And they need to do this faster than ever before by a huge margin.

Now Senate Republicans told us that there’s very little talk of the GOP forcing the 72-hour rule in the Budget Committee, using all time during floor debate or forcing all-night vote-a-ramas. If Democrats were to concede defeat and move toward reconciliation, Republicans tell us they’d back off. You may hear something from GOP leaders on this today following the cloture vote. 

But we heard it from Senate GOP leadership yesterday. Here’s Senate Minority Whip John Thune (R-S.D.): “I think if they get past this vote tomorrow, and they commit to using [the reconciliation] process, our members are not interested in making it overly cumbersome. And honestly, it can’t be. It’s a very short amendment [process]. There are very few germane amendments. I don’t think we’d have a lot of interest in non-germane amendments. The debate time, I think a lot of that could be yielded back.”

→ Will Democrats get rid of the debt limit in reconciliation? We’ve heard Democrats have talked to the parliamentarian about how a narrow, debt-limit-only reconciliation process would work. Could they get rid of the debt limit? Democratic leadership was mum on this last night, but keep your eyes peeled for this. Usually when they’re quiet, it means they’re up to something.

So what should you be looking for: A change of tone after the cloture vote. Any action to blow up the filibuster. Republicans aren’t moving — if they start moving, we’ll let you know.

What they’re saying:

→ Sen. Chris Murphy (D-Conn.): “We need 10 of them, they need 50 of us. The path to cloture is so much simpler. It requires less people, and less time. To me, the path forward is to find 10 people [Republicans] who are for cloture but against final passage.”

→ Sen. Richard Shelby (R-Ala.) doesn’t believe the situation is as dire as Democrats say it is:  “I’ve been here a while. I think the Democrats can pass it through reconciliation without any problem. They had to put a number on it, which we think they ought to put a number on it and let the American people see. They don’t want to put a number on it, but they might have to. First of all, I don’t think the Treasury is up against the window yet. I don’t know how long they have, they might have a month. It’s like the sky is falling.”

The Coverage:

→ CNN: “Democrats explore new options to raise debt ceiling amid deepening standoff with GOP" by Manu Raju and Lauren Fox

→ Politico: “GOP’s debt limit challenge: Don’t be ‘a complete a–hole,’” by Burgess Everett and Caitlin Emma

→ WaPo: “Biden says changing filibuster rules to raise debt ceiling is a ‘real possibility,’” by Tony Romm

Reminder: Sen. Tom Carper (D-Del.) is joining Anna this afternoon at 2:30 p.m. EDT to talk about the role of private capital in the renewable energy and infrastructure sectors. RSVP to join the conversation here. 

ON THE RIGHT

McCarthy: Chamber? What Chamber?

It’s been quite the week for the U.S. Chamber of Commerce and its relationship with Capitol Hill. We reported Monday that the House GOP leadership had booted the high-profile business group off its strategy calls.

Then Alayna Treene of Axios reported that the Chamber was backing away from its support for the bipartisan infrastructure bill because it was linked to the Democrats’ massive, multi-trillion dollar reconciliation package. Then they kind of backed away from that. 

So we asked House Minority Leader Kevin McCarthy what he thought of the Chamber. The organization has had warm relations with House Republicans for decades.

Here’s McCarthy: “I didn’t even know the Chamber was around anymore.” 

We asked if the Chamber would be influential if Republicans won the House majority in 2022: “As much as they are now.”

Note — McCarthy leadership just banned the Chamber from strategy calls. So they have zero influence now. 

The House Republican leader basically has no interest in dealing with the Chamber. That is quite the statement from the man who could be the next speaker. And that can’t make businesses across America very happy.

2022

The NRSC’s big quarter, plus an Arizona Senate ad on the wall

With both sides vying for control of the 50-50 Senate in 2022, the National Republican Senatorial Committee announced another strong fundraising effort in the third quarter.

The NRSC took in more than $25 million for the 3rd quarter, raking in $9.5 million in September alone.

Overall, the NRSC under Sen. Rick Scott of Florida has raised $76-million plus for the year, has more than $27 million in cash on hand and no debts. In just the first nine months of 2021, the NRSC hauled in more than it did for all of 2019.

Another Arizona Senate ad from Thiel funded PAC

Blake Masters is running against Arizona Attorney General Mark Brnovich in a GOP primary to take on Sen. Mark Kelly (D-Ariz.) in 2022. 

Peter Thiel, who Masters is very close with, put $10 million into Saving Arizona PAC, a super PAC that’s playing in the race.

Here’s a new ad that we noticed courtesy of Ad Impact, which links Masters to former President Donald Trump and touts building the wall between the United States and Mexico. 

“Pro Trump, pro border wall, anti illegals,” the ad says, describing Masters.

FRONTS

MOMENTS

10 a.m.: President Joe Biden and Vice President Kamala Harris will get their daily intelligence briefing.

Noon: Biden and Harris will have lunch.

12:30 p.m.: Jen Psaki will brief. … Republican senators will hold a news conference about the border.

1 p.m.: Biden will host a meeting with “business leaders and CEOs on the need to immediately address the debt limit and the damaging consequences for American families, small businesses, and the economy if unnecessary delay continues any further.”

2:30 p.m.: Harris will meet with the Council of Presidents of the National Pan-Hellenic Council.

3 p.m.: The Covid-19 team will brief.

CLIP FILE

NYT

→ “Democrats Lost the Most in Midwestern ‘Factory Towns,’ Report Says,” by Jonathan Martin

→ “Federal Reserve Chair Jerome Powell Faces Reappointment Amid Tumult,” by Jeanna Smialek and Jim Tankersley

→ “Blinken, in Paris, Tries to Restore Trust After Submarine Snub,” by Lara Jakes and Steven Erlanger in Paris

WaPo

→ “The expectations game hounds Democrats as they try to deliver their vast agenda,” by Mike DeBonis

→ “The Trailer: In New Jersey, a Democratic governor runs against the ‘Trump Team’,” by Dave Weigel

WSJ

→ WSJ Editorial Board: “The Debt Ceiling Deception”

AP

→ “In budget turning point, Biden conceding smaller price tag,” by Alan Fram

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Editorial photos provided by Getty Images