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Patrick McHenry

McHenry’s hardball NDAA tactics rattle GOP hawks

Rep. Patrick McHenry’s (R-N.C.) attempt to cram crypto reform legislation into the annual defense authorization bill is ruffling feathers across the Capitol as lawmakers race to finalize legislative text this week for the must-pass measure.

As we wrote Tuesday night, McHenry – the House Financial Services Committee chair – has been threatening for weeks to block significant bipartisan banking policy tucked in the Senate-passed NDAA from being included in a final package.

The North Carolina Republican wants crypto legislation from the House Financial Services Committee, which he chairs, to be included in the final NDAA. Senate Majority Leader Chuck Schumer flagged the hangup as a concern during Democrats’ lunch on Tuesday.

That means popular Senate legislation is on the line, including a major bipartisan package aimed at cracking down on the production of fentanyl.

Another potential victim of McHenry’s crypto push is Sen. John Cornyn’s (R-Texas) bill restricting certain U.S. investments in countries like China, which passed the Senate with a big bipartisan margin.

That bill, as well as the fentanyl legislation, are now at risk of being left out of the final defense authorization since Speaker Mike Johnson — who has veto power during the NDAA conference process — has thus far sided with McHenry, according to multiple sources close to the negotiations.

Even fellow committee chairs are airing some misgivings over McHenry’s hardball approach. House Foreign Affairs Committee Chair Michael McCaul (R-Texas) is a co-sponsor of the fentanyl package. And while McCaul said his committee was working “in good faith” with the Financial Services panel, he had this to say about McHenry Tuesday night:

McCaul is also a supporter of Cornyn’s approach to inbound-outbound investment reform. McCaul said lawmakers would try to get the reforms done through regular order if it gets left out of the NDAA.

Rep. Blaine Luetkemeyer (R-Mo.) said he wasn’t familiar with McHenry’s threats to strip Senate financial policy out of the NDAA, but he acknowledged disagreements with the Senate over the right approach to inbound-outbound investment reform.

“We don’t like the Cornyn bill,” Luetkemeyer told us. Rep. Andy Barr (R-Ky.) “has a much better bill here,” he added.

Zoom out for a second: GOP national-security hawks — particularly in the Senate — fear Johnson is abandoning key policy goals for conservatives by siding with McHenry.

Groups such as the Heritage Foundation and the America First Policy Institute called on congressional leaders just two weeks ago to ensure that the outbound-investment restrictions remain in the final NDAA package.

But these aren’t just Republican priorities. The outbound-investment provisions were added to the Senate’s NDAA bill by a 91-6 vote. The fentanyl bill had a massive list of co-sponsors, including the bipartisan leaders of the Senate Banking and Armed Services committees.

It’s worth noting that Johnson could still give his consent for these provisions to be added to the final NDAA bill. Anger from the right could ultimately prompt him to reverse course.

— Brendan Pedersen and Andrew Desiderio

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