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PRESENTED BY

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

THE TOP

Good Tuesday morning. 

Congress has a new plan to pass a debt-limit increase and the National Defense Authorization Act. We wrote about it a bit last night, but we felt as though we needed to revisit it again now with some additional reporting and context.

Here’s a disclaimer: This situation is extremely fluid, and we’re not going to make blanket predictions about what will unfold over the next several days. However, this is the latest based on our reporting last night and this morning.

The lead option is for the House to vote on a bill this week to create a new law allowing the Senate to increase the debt limit with 51 votes on a one-time basis. This legislation would also allow an expedited process for considering the debt limit and a variety of other budget issues, including delaying upcoming Medicare sequestration cuts.

The House would then send that bill onto the Senate. The Senate would have to pass that one-time rule change and send it to President Joe Biden for his signature. This initial legislation would be considered under a 60-vote threshold in the Senate, so Minority Leader Mitch McConnell would have to to deliver 10 GOP votes to get it through the chamber.

Only then — when this bill is signed into law by Biden — would the Senate take up and pass a debt-limit increase. Because of this rule change, the Senate can lift the debt limit with only Democratic votes. This debt-limit boost would extend the borrowing cap through the 2022 midterm elections. The legislation would then be sent to the House for its consideration. The House would pass the borrowing-cap increase and send it to Biden.

The NDAA would be considered separately from the debt-limit increase. Since the annual defense policy bill won’t be tied to the debt limit, it presumably will pass both chambers with bipartisan support.

A senior House Democratic aide said two other options are also under consideration. One would combine the NDAA and debt-limit increase into a single bill. The second option — which we wrote about yesterday — would have the House consider the NDAA and debt-limit increase under one rule. The two measures would be combined into one package when they leave the House.  

OK, let’s review the leading option in some detail.

→ Why the plan makes sense: The vast majority — if not all — of Senate Republicans are against raising the debt limit, so a 51-vote threshold is helpful for trying to pass it in the Senate. And Senate Democrats refuse to take up the debt-limit increase under reconciliation. That means congressional leaders are going to have to get creative to raise the debt limit by the Dec. 15 deadline laid down by Treasury Secretary Janet Yellen.

McConnell could make the argument here that Republicans aren’t voting for a debt-limit increase, but just casting a procedural vote to allow Democrats to pass it. This is the right thing to do for the Senate and the country, McConnell could argue, especially as now isn’t the right time for a showdown over the debt limit. 

→ Why this plan doesn’t make sense: If Senate Republicans are so opposed to raising the debt limit, why would they vote to allow Democrats to do so with just 51 votes? That will be seen by hardline Republicans as letting Democrats off the hook. There was a nasty internal fight in October, when McConnell had to find 10 GOP votes for a short-term debt-limit increase. This would be the same thing all over again, except now it’s two months later.

This overly complex plan was just unveiled last night, and as we said, everything is very fluid. The easy way out here is to include a debt limit hike in reconciliation, yet Democrats have been avoiding that for months. 

FWIW, the initial plan was to tie the 51-vote change to the NDAA, but House Minority Leader Kevin McCarthy nixed that.

Furthermore, the compromise NDAA bill being negotiated by the bipartisan leaders of the House and Senate Armed Services committees wasn’t released last night as expected. House leaders are projecting a vote on this measure as early as Wednesday. 

Remember: The congressional leadership has practically no room for error at all. Congress needs to lift the debt ceiling within the next eight days. Senate Majority Leader Chuck Schumer also wants to pass the Build Back Better Act in the next 18 days, although he doesn’t have agreement on the policy from Sen. Joe Manchin (D-W.Va.) and the bill is still being vetted by the parliamentarian — a process that is expected to go through next week.

INSIDE THE GOP LEADERSHIP

Nunes’ retirement presents McCarthy with some big decisions

The news yesterday that longtime California Rep. Devin Nunes is calling it quits to run former President Donald Trump’s media company was a shock to many in the Capitol and underscores the reordering of the pecking order inside the Republican Party. 

Nunes was nearly certain to become the chair of the Ways and Means Committee if Republicans take the majority, which is one of the most coveted positions in the House. Instead, he’s going to run a media company that’s already in the crosshairs of the Securities and Exchange Commission for a former president who remains hugely controversial, to say the least. This is just a stunning choice. No one walks away from a shot at Ways and Means’ gavel like this.

Nunes was elected to Congress in 2002, and he has had quite the career arc. The California Republican started out as a close ally of congressional leadership, a member of the establishment wing of the party. He was known to hang out with his close friend John Boehner when the speaker smoked cigarettes. He was ex-Rep. Paul Ryan’s sidekick on Ways and Means. But Nunes became more interested in his assignment on the Intelligence Committee during the Trump years, and eventually that became his primary calling. We don’t need to rehash the last several years for Nunes on Intel and his relationship with Trump. The notoriety it brought made Nunes a top target for Democrats, as well as one of the biggest fundraisers for House Republicans. Nunes had $11.8 million in his campaign account as of the end of September.

Nunes called House Minority Leader Kevin McCarthy, Minority Whip Steve Scalise and Republican Conference Chair Elise Stefanik on Monday to tell them of his decision to quit Congress. Nunes said he was leaving at the end of December and, in part, indicated it was because of his young children.

Now to McCarthy: Nunes’ departure presents his close friend McCarthy with a number of decisions. First, McCarthy has a vacancy atop the Intelligence Committee. This is a leadership-appointed position, and our sources tell us that the leading candidate is Utah Rep. Chris Stewart. Also in the mix is Ohio Rep. Mike Turner. Nunes’ departure will force McCarthy to fill an open rank-and-file seat on Intel as well.

McCarthy will also have a highly coveted seat to fill on Ways and Means, which will be sought after by a host of Republican lawmakers. Furthermore, the top slot on the tax-writing committee will be open in 2023 with Nunes’ departure and Rep. Kevin Brady of Texas, the current ranking member, retiring at the end of this Congress.

Next in line is Florida Rep. Vern Buchanan, the wealthy 70-year old former car dealer who has represented the Sarasota area since 2007. Senior Republicans breathed a sigh of relief Monday because Buchanan is considered steeped in tax policy and comfortable around big business — something they worried about with Nunes.

NEWSY HEARINGS THIS WEEK

Today: Senate Rules has an oversight hearing at 10 a.m. on the U.S. Capitol Police post Jan. 6. I.G. Michael Bolton will testify. … Senate Commerce will explore supply chain backups at 10 a.m. with various shipping CEOs, including the CEO of the World Shipping Council. … Senate Judiciary has a hearing on closing the U.S. detention facility at Guantanamo Bay at 10 a.m. … Senate Foreign Relations has a hearing on Russia policy with Under Secretary of State for Political Affairs Victoria Nuland at 2:30 p.m.

Wednesday: House Ways and Means has an Oversight hearing at 10:00 a.m. on the “Pandora Papers and Hidden Wealth.”… Senate Foreign Relations has a  2:30 p.m. hearing on the future of U.S. policy on Taiwan.

Thursday: House Energy and Commerce holds a subcommittee hearing at 10:30 a.m. on “Holding Big Tech Accountable: Legislation to Build a Safer Internet”…. House Financial Services holds an 11 a.m. hearing on “Diversity and Inclusion at America’s Largest Investment Firms.”

Alabama GOP Gov. Kay Ivey is up for re-election in 2022, and she’s running a new ad around the state that says “Sometimes, it’s like the world’s gone crazy. Thank God we live in Alabama.” The ad reminds Alabama voters that critical race theory isn’t being taught in their schools and that she stood with former President Donald Trump to “ensure no election here could ever be stolen.” Thanks to our friends at AdImpact for this clip.

FRONTS

MOMENTS

8:30 a.m.: President Joe Biden will get his intelligence briefing.

10 a.m.: Biden will hold a video meeting with Russian President Vladimir Putin. … Vice President Kamala Harris will speak “on the Maternal Health Day of Action about how the Biden-Harris Administration will reduce maternal mortality and morbidity.”

11:10 a.m.: Harris will hold a conversation with Allyson Felix about maternal health. 

12 p.m.: Senate Republicans will talk Build Back Better.

12:30 p.m.: The Covid-19 team will brief reporters.

1 p.m.: Republican Reps. Marjorie Taylor Greene (Ga.), Matt Gaetz (Fla.), Louie Gohmert (Texas) and Paul Gosar (Ariz.) will talk about the treatment of Jan. 6 rioters in D.C. jails.

1:30 p.m.: Democratic Reps. Chuy Garcia (Ill.), Adriano Espaillat (N.Y.) and Alexandria Ocasio-Cortez (N.Y.) will speak about the inclusion of immigration provisions in the BBB.

2 p.m.: Jen Psaki will brief reporters. … Senate leaders will speak after their party lunches.

CLIP FILE

NYT

→ “Right vs. Right vs. Left: Governor’s Race Puts Georgia at Center of 2022 Drama,” by Richard Fausset and Jonathan Martin

→ “Biden’s Supreme Court Commission Prepares to Vote on Final Report,” by Charlie Savage

→ “Ahead of Biden’s Democracy Summit, China Says: We’re Also a Democracy,” by Keith Bradsher in Beijing and Steven Lee Meyers in Seoul

WaPo

→ “Biden’s ‘Summit for Democracy’ includes countries that hardly seem to qualify,” by Ashley Parker and John Hudson

→ “Justice Dept. sues Texas over redistricting, citing discrimination against Latinos,” by David Nakamura and Devlin Barrett

WSJ

→  “Stocks Get a Boost as Omicron Concerns Ease,” by Hardika Singh

AP

→ “Biden to warn Putin of economic pain if he invades Ukraine,” by Aamer Madhani and Dasha Litvinova 

Politico

→ “Dems weigh forcing Manchin’s hand on their $1.7T megabill,” by Burgess Everett and Marianne Levine

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Editorial photos provided by Getty Images