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PRESENTED BY

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

THE TOP

New: How can you tell the threat of a government shutdown is real? The Office of Management and Budget, which oversees federal agencies, will send out its shutdown guidance today.

It’s standard practice for OMB to send out such guidance seven days before funding lapses. On page 465 of OMB’s “PREPARATION, SUBMISSION, AND EXECUTION OF THE BUDGET,” it says this: 

One week prior to the expiration of appropriations bills, regardless of whether the enactment of appropriations appears imminent, OMB will communicate with agency senior officials to remind agencies of their responsibilities to review and update orderly shutdown plans, and will share a draft communication template to notify employees of the status of appropriations.

One week out from a shutdown is today. Now this doesn’t mean a shutdown will happen. But it still isn’t great news.  

Here’s Abdullah Hasan, OMB’s spokesperson, in a statement to Punchbowl News: 

We fully expect Congress to work in a bipartisan fashion to keep our government open, get disaster relief to the Americans who need it, and avoid a catastrophic default, especially as we continue to confront the pandemic and power an economic recovery. In the meantime, prudent management requires that the government plan for the possibility of a lapse in funding. Consistent with longstanding practice across multiple Administrations, OMB is preparing for any contingency, and determinations about specific programs are being actively reviewed by agencies. More importantly, there is enough time for Congress to prevent a lapse in appropriations, and we are confident they will do so.

Also, here are OMB’s links for “contingency operations,” as well as “Frequently Asked Questions During a Lapse in Appropriations.”

If you’ve somehow forgotten, government shutdowns lead to furloughs for hundreds of thousands of federal employees. Other employees are deemed “essential” and must stay on the job without pay. Federal parks, museums and monuments often closed, and federal contractors don’t get paid.

Why we think a shutdown is closer than it may appear

We’re not being histrionic, but Congress seems to be stumbling into a shutdown, despite one-party control of Washington.

The Senate is likely to wait until Monday to vote on the House-passed government funding bill, which would keep agencies open until Dec. 3. Because that legislation includes a provision suspending the debt limit until December 2022, Senate Minority Leader Mitch McConnell and his GOP colleagues will block it from being considered.

That leaves just three days for the congressional leaders and the White House to find a way to keep the government open. Congress could pass a temporary funding extension to ensure federal agencies remain open while a longer-term funding bill — sans the debt limit — is cobbled together.

But the debt limit issue still has to be dealt with, and that could take several weeks if Democrats choose to go it alone. Treasury Secretary Janet Yellen has estimated that the federal government will be unable to obtain new loans sometime in October.

→ One more note: The anger inside Democratic ranks at McConnell is palpable. Senators and staff are furious at what they see as McConnell’s hypocrisy over the debt limit. Democrats have also lashed out at reporters for not criticizing McConnell on this topic.

There is some truth to this. Republicans are just as guilty as Democrats in running up $28 trillion-plus in government debt. McConnell and other Republicans have voted for legislation that has added to that debt total, including during this last fiscal year.

However, Democrats have been aware of McConnell’s refusal to vote for the debt limit for two months. Democrats made a political calculation not to use reconciliation to hike the debt limit. Everyone on both sides of the aisle knew this moment was coming.

The Coverage

→ CNN: "Anxious Democrats float Plan B: Raise debt ceiling on party-line vote," by Manu Raju and Lauren Fox

Happening soon: Our conversation with Democratic Sen. Alex Padilla (Calif.) is this morning at 8:30 a.m. Join us to hear about the state of immigration reform and topics of the day. Register to watch here. 

PUNCHBOWL NEWS STRATEGY MEMO

Nancy Pelosi’s endgame

For the last few days, we’ve been writing about the knotty situation Democrats find themselves in when it comes to the reconciliation and infrastructure bills.

To review: The Democrats $3.5 trillion reconciliation bill isn’t finished. Speaker Nancy Pelosi promised moderates a vote on the bipartisan infrastructure bill Monday, although this really means sometime next week. Moderates, led by Rep. Josh Gottheimer (D-N.J.), aren’t going to back off their demand for that vote on the $1 trillion public works bill. Progressives, led by Rep. Pramila Jayapal (D-Wash.), meanwhile are threatening to derail the infrastructure bill because reconciliation isn’t close to being done. “No infrastructure without reconciliation” — that’s their unified position. 

It’s a mess.

But Pelosi has a plan.

The speaker, along with the White House and the Senate Democratic leadership, are planning to work frantically over the next few days to craft a framework for the reconciliation package that all sides can agree on. 

Pelosi’s goal, as described by multiple sources involved in the negotiations, is to get moderates and progressives in both the House and Senate to publicly agree on the outlines of that framework by Monday. That way, the House can try to move toward a vote on the bipartisan infrastructure bill with unified Democratic support next week.

It’s a very tall task. We spoke last night to several Democrats who met with President Joe Biden Wednesday and most of them were skeptical a framework could be reached by Sunday or Monday. 

Of course, the biggest point of contention is the topline number. But progressives will also want guarantees on certain programs — such as the Medicare prescription drug reform and Medicaid expansion — while moderates will seek deals over tax provisions. With the reconciliation legislation being so broad, there are an enormous number of issues being juggled simultaneously, which is one of the big problems for Democrats — the sheer complexity of what they’re dealing with. 

“She’s 100% in ‘deal mode’ right now,” a House Democrat taking part in the discussions told us yesterday. “She’s got that look in her eyes.”

Pelosi will go through this sequentially. First a deal over the framework. Then she’ll turn to the infrastructure vote itself. But there’s definitely a lot of work to be done still among progressives, who want the infrastructure bill delayed or they will take the bill down.

“My hope is that that vote will be delayed. If it’s not, [the infrastructure bill] should be defeated,” Sen. Bernie Sanders (I-Vt.), who huddled at the White House on Wednesday with Biden and other Democrats. “Both bills have got to go forward.”

“Look, this is a slow and torturous process when you have 50 [senators] and no votes to spare,” Sanders added. “In the House, they’re got three votes to spare. There are a lot of disagreements. I think at the end of the day, we’re gonna work it out.”

Biden will meet with more Democratic lawmakers today on both the infrastructure and reconciliation bills, trying to find common ground between the different wings of his party. 

There was discussion of a top-line number less than $3 trillion, which is where many Democrats believe the reconciliation package will end up eventually. Various formulations of Medicare and Medicaid reforms were discussed, as were taxes. But there was no detailed bargaining. Biden, instead, tried to sound out lawmakers on where they could find agreement and then build from there.

“He was very good in how he handled it,” Sen. Joe Manchin (D-W.Va.) said of Biden during Wednesday’s sessions. “Being a former senator and understanding this process really gave him the ability to have the understanding and empathy of what everybody goes through and the ways people are tugged and pulled.”

Manchin, though, called progressive threats to sink the infrastructure bill “a shame.”

“It’s a shame, truly it’s a shame, that they’re using that as a hostage toward this,” Manchin told reporters after returning from the White House. “I think a good reconciliation bill can be done whenever. It’s going to take a lot more time, it’s a lot more involved.”

However, when progressives hear Manchin say “whenever,” they interpret that as “never.” That’s the level of distrust Pelosi is having to overcome as she, Biden and Senate Majority Leader Chuck Schumer try to hammer out this framework over the next week.

The Coverage

→ NYT, A1: “Biden Huddles With Democrats as Divisions Threaten His Agenda,” by Jonathan Weisman, Emily Cochrane and Jim Tankersley

→ WaPo: "Biden huddles with warring Democrats as party’s agenda hangs in the balance" by Tony Romm, Seung Min Kim and Marianna Sotomayor

→ WSJ: “Biden Pushes Democrats to Find Consensus on Budget Package,” by Ken Thomas, Andrew Duehren and Kristina Peterson

IN SESSION

Lots of Hill action today

Today is a Thursday, which is kind of a Friday in D.C., and there’s potentially a huge number of votes queued up in both the House and Senate. 

In the House: The House will vote on making “available” $1 billion to Israel for the Iron Dome missile defense system. Here’s the bill — it’s pretty straightforward. Democrats stripped Iron Dome money from their stopgap government-funding measure earlier this week after a revolt by some progressives. This legislation is a standalone bill and should pass with overwhelming support.

The House also has 17 amendment votes plus final passage on the FY 2022 National Defense Authorization Act. And there are eight other suspension votes queued up as well.

In the Senate: Today could be one of those days in the “World’s Greatest Deliberative Body.” First of all, Senate Majority Leader Chuck Schumer could file cloture today on the stopgap funding bill, setting up that Monday vote we told you about.

Furthermore, Schumer has teed up cloture and possible confirmation votes on a number of State Department nominees, plus a top post at USTR. Here’s who is up:

→ Sarah Bianchi to be Deputy United States Trade Representative (Asia, Africa, Investment, Services, Textiles, and Industrial Competitiveness)

→  Daniel J. Kritenbrink to be an Assistant Secretary of State (East Asian and Pacific Affairs)

→  Karen Erika Donfried to be an Assistant Secretary of State (European Affairs and Eurasian Affairs)

→ Monica P. Medina to be Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs

→ Mary Catherine Phee to be an Assistant Secretary of State (African Affairs)

→ Todd D. Robinson to be an Assistant Secretary of State (International Narcotics and Law Enforcement Affairs)

→ Jessica Lewis to be an Assistant Secretary of State (Political-Military Affairs)

Along with a judicial confirmation, there could be as many as 15 votes in the Senate today, if Republicans force Democrats to jump through procedural hurdles. That would take some time. Democrats say these are non-controversial nominees. Republicans counter that they will spend all their available time hitting President Joe Biden on Afghanistan if they’re forced to stay in session.

FRONTS

MOMENTS

9:30 a.m.: President Joe Biden and Vice President Kamala Harris will get the daily intelligence briefing.

10:45 a.m.: Speaker Nancy Pelosi will hold her weekly news conference.

11:30 a.m.: House Minority Leader Kevin McCarthy will hold his weekly news conference. 

Noon: Biden will receive his economic briefing. … Jen Psaki will brief. 

12:30 p.m.: Biden and Harris will have lunch.

CLIP FILE

NYT

→ “Biden Pushes Deterrent Border Policy After Promising ‘Humane’ Approach,” by Michael D. Shear, Natalie Kitroeff, Zolan Kanno-Youngs and Eileen Sullivan

→ “Biden Declared the War Over. But Wars Go On,” by Mark Mazzetti

→ “John Kerry’s Sales Pitch to Save the Planet,” by Lisa Friedman in New Delhi

WaPo

→ “FDA authorizes Pfizer-BioNTech coronavirus vaccine booster for older Americans and those at high risk of illness,” by Laurie McGinley and Lena H. Sun

→ “France to bill Australia over submarine deal as Britain’s Johnson tells Macron: ‘Donnez-moi un break’” by Rachel Pannett in Sydney

WSJ

→ “Fed Tees Up Taper and Signals Rate Rises Possible Next Year,” by Nick Timiraos

→ “Biden Expected to Nominate Wall Street Critic as Top Banking Regulator,” by Andrew Ackerman

AP

→ “Biden presses fellow Dems: Resolve party split on $3.5T plan,” by Lisa Mascaro and Kevin Freking

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Editorial photos provided by Getty Images