‘Inching towards a deal’ on the debt ceiling

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May 25, 2023 View in browser   By Calder McHugh Speaker of the House Kevin McCarthy speaks to reporters as he arrives at the Capitol today. | Kevin Dietsch/Getty Images ANTSY — After another week of promises of progress mixed with trading barbs on the debt ceiling, it’s safe to say that Congress and the White House are on the slow train. But the June 1 deadline is looming — when the U.S. could default for the first time in history, sending global markets into crisis and potentially depriving Americans of essential social services. Speaker Kevin McCarthy said today that there are “outstanding issues” still to tackle and “I don’t think everybody is going to be happy at the end of the day.” And while the two sides are “closer,” according to Rep. Patrick McHenry (R-N.C.), they are still meaningfully apart on the issue of spending freezes or cuts. Meanwhile, some Democrats are getting antsy. “It’s time to bring the president off the bench, or bring somebody off the bench. No one’s responding to anything. Kevin’s consistently on message,” said one House Democrat to POLITICO, who was granted anonymity to speak freely. “We have the Oval Office. I’ve never seen anything like it.” Republicans hold a slim majority in the House, making it all but certain that McCarthy will need to rely on Democratic votes to pass an increase, as some hardliners in his party will likely view any compromise with the White House as not going far enough. Similarly, some Democrats are holding fast to the position that President Joe Biden shouldn’t be making any concessions on spending cuts and are likely to be automatic no votes. As we inch closer to the brink, Nightly spoke with POLITICO’s Nicholas Wu, a Congress reporter who has been closely following negotiations, which appear to change every hour. This conversation has been edited. Give us a sense of where the parties stand right now. What are Republican and Democratic negotiators looking for? Things are still really fluid here on the Hill, but negotiators look like they’re inching towards a deal. Broadly speaking, Democratic negotiators want a hike to the debt ceiling past the 2024 election with as few conditions as possible attached. Republicans aren’t going to give them that. Instead, the GOP is looking for spending caps, changes to energy permitting, tightened work requirements for food aid recipients and clawing back unspent Covid dollars. Meanwhile, conservative Republicans are using the debt limit and spending cuts they passed last month as their baseline. What are some of the specific sticking points holding this up and how close or far away does a deal look? This is all changing rapidly — but one sticking point is the duration of the deal. Democrats like House Minority Leader Hakeem Jeffries have suggested a freeze in spending should go as long as the hike to the debt ceiling. Negotiators are striking a more positive tone about a deal than they were earlier in the week, but there’s still a lot of moving parts that have to come together. And the clock is ticking to reach a deal, draft text, and pass it before the so-called X-date on June 1, when the government could run out of cash. What are some of the frustrations that members of the Democratic Caucus have expressed with the process, whether it be with the White House or other Democratic leadership? For a lot of Democrats, hindsight on the debt ceiling is 20/20. Some Hill Dems have talked about how they should have raised the ceiling when they had control of both chambers of Congress (something there weren’t the votes for in the Senate anyway). Others have wanted the White House to get more aggressive with its messaging rather than ceding airtime to Republicans. And liberals throughout the caucus are concerned they’ll get a bad deal in the end. What about on the Republican side? Do some Congressional Republicans have frustration with their leadership?  There’s less angst on the Republican side, and conservatives have stayed united around McCarthy, but any deal is going to roil the leftmost and rightmost factions of both parties. And when it comes time to vote on a bill, it’ll be a major test of his leadership and hold over the conference. What’s the timeline moving forward? Lawmakers are all set to leave for Memorial Day weekend, but key negotiators are sticking around. The House isn’t scheduled to come back until Tuesday, but lawmakers have been told they’ll have 24 hours notice before returning, and 72 hours to review any legislation. So, next Tuesday is the earliest day on the schedule for them to pass a bill, unless House leaders claw back part of the Memorial Day weekend. Meanwhile, the Senate is also out until Tuesday, and President Joe Biden is scheduled to leave this weekend for Camp David and Delaware. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at cmchugh@politico.com on Twitter at @calder_mchugh.   GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.     What'd I Miss? — Supreme Court dramatically shrinks Clean Water Act’s reach: The Supreme Court today significantly shrank the reach of federal clean water protections, dealing a major blow to President Joe Biden’s efforts to restore protections to millions of acres of wetlands and delivering a victory to multiple powerful industries. The ruling from the court’s conservative majority vastly narrows the federal government’s authority over marshes and bogs is a win for industries such as homebuilding and oil and gas, which must seek Clean Water Act permits to damage federally protected wetlands. Those industries have fought for decades to limit the law’s reach. — NOAA expects near-normal Atlantic hurricane season with ‘a lot of uncertainty’: The National Oceanic and Atmospheric Administration projected a “near normal” Atlantic hurricane season today, though officials cautioned unusually high sea-surface temperatures and a likely El Niño complicates the forecast. NOAA said the season, which runs from June 1 through Nov. 30, could bring between 12 and 17 named storms. Five to nine of those could become hurricanes, with one to four hitting Category 3 or higher. — House GOP floats blocking FBI’s new HQ: House Republicans have privately discussed blocking a new FBI headquarters by hitting the project’s funding — a potential escalation in the party’s increasingly antagonistic relationship with the bureau. It’s far from clear that such a move would unite House Republicans, much less pass muster with the Senate or White House. But as Republicans increasingly view the FBI with suspicion over investigations into Donald Trump and other political issues — and look for ways to cut spending — the party’s appropriators are under pressure to use spending bills to place new limits on the bureau, with the new headquarters being an early target. Nightly Road to 2024 EARLY STATE OUTLOOK — Ron DeSantis’ top political advisers today detailed the path forward for the Florida governor in the Republican presidential primary – and brushed aside bad headlines surrounding his rocky campaign launch the night before, reports POLITICO’s Alex Isenstadt. Appearing before a private gathering of around 150 donors at the Four Seasons Hotel, three top DeSantis lieutenants argued that the governor remained poised throughout a malfunction-plagued appearance on Twitter Spaces, where he unveiled his candidacy in a conversation with billionaire entrepreneur Elon Musk. They said DeSantis had a clear path to defeat former President Donald Trump, and added their belief that Florida would emerge as a key state that could help to determine the outcome of the nomination contest, according to two people present for the presentation. The group of DeSantis advisers also walked through polling in four early primary states — Iowa, New Hampshire, South Carolina and Nevada — and made the case that the governor was viewed more favorably than Trump in each. WHAT TWITTER CRASH? — Ron DeSantis’ campaign announcement was exploding on the launch pad, but in a sweaty warehouse of an old machine supply company in western Iowa late Wednesday night, it was hard to find anyone among some 300 voters gathered for a Tim Scott town hall who knew it happened, let alone cared or thought it would alter the race, according to POLITICO’s Adam Wren. Not Clinton Vos, a 63-year-old agricultural sales professional who wore a cowboy hat and milled around before the town hall began — just as official Washington was still gawking at the Twitter app crashing several times amid DeSantis’ highly anticipated campaign launch. “I knew that it was going to happen today on Twitter,” he acknowledged, “but I’m not a Twitter follower.” AROUND THE WORLD German Chancellor Olaf Scholz walks out of the chancellery to greet the President of Cyprus, as a German honor guard is reflected in the glass facade of the building in Berlin today. | John MacDougall/AFP via Getty Images BERLIN BUDGET CUTS — Europe’s largest economy has money problems for the first time in nearly a decade — and it’s up to three squabbling parties to fix them, write Hans von der Burchard and Peter Wilke. Germany has officially fallen into a recession, official figures showed today, with economic output falling by 0.3 percent during the first quarter of the year— the second quarter in a row with a decreasing gross domestic product. The drop was largely attributed to lower consumer spending due to higher prices amid inflation of 7.2 percent. This adds to previously existing pressure on the trio of coalition partners in Berlin’s government to cut costs. That requires tough decisions, but their approaches to the problem are vastly different: The environmentalist Greens want to invest more in things like climate protection by taxing the rich — a prospect rejected by the business-friendly Free Democrats (FDP), who want to deregulate. Caught in the middle, Chancellor Olaf Scholz’s Social Democrats hope attracting skilled foreign labor and investing in new, green industries will create growth, though it’s not clear how. “The prospects for the German economy are very good. We will work out the challenges we face,” Scholz said at a press conference today. But not everyone is as optimistic, with Scholz’s Vice Chancellor and Economy Minister Robert Habeck, from the Greens, warning earlier this week that Germany faces potential budget cuts of up to €22 billion ($23.6 billion) next year. “It’s the first time in many years that the federal budget is getting smaller, and … of course, the whole system is not attuned to that,” Habeck said. Battles over how to mitigate the country’s fiscal woes will only add to mounting fights within the ruling coalition, most recently over a contentious ban on oil and gas heating in homes that has pushed Germany to the brink of a government crisis. The last time Berlin had to make such tough budget cut decisions was in 2014 after the global financial crisis, and just two political blocs were in power: the Social Democrats and Angela Merkel’s conservative CDU/CSU.   DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The Covid-19 pandemic helped spur innovation in health care, from the wide adoption of telemedicine, health apps and online pharmacies to mRNA vaccines. But what will the next health care innovations look like? Join POLITICO on Wednesday June 7 for our Health Care Summit to explore how tech and innovation are transforming care and the challenges ahead for access and delivery in the United States. REGISTER NOW.     Nightly Number 18 years The length of the prison sentence for Oath Keepers founder Stewart Rhodes for his part in the Jan. 6 attack on the Capitol — the longest sentence handed down to date and the first for a charge of seditious conspiracy. Rhodes, 58, is the first of 14 Jan. 6 defendants, including nine Oath Keepers, to face sentencing after being convicted of — or pleading guilty to — seditious conspiracy. Enrique Tarrio, who was the national chairman of the far-right Proud Boys on Jan. 6, was convicted of the charge earlier this month. RADAR SWEEP BACK IN TIME — Increasingly, members of “fandoms” on the internet — people ultra-devoted to a particular character, musician or actor, for example — are blurring the lines between fiction and real life. If a character in a television show does something that fans of the show deem problematic, for example, the actor might receive death threats. This blend has created an internet culture that’s puritanical; one that has trouble appreciating artistic nuances or viewing them as valuable. And it’s not confined to the internet, either. Gen-Z has adopted a more puritan approach to life than past generations, having less casual sex and going on fewer dates. Aja Romano explored the phenomenon in detail for Vox. Parting Image On this date in 1943: British Prime Minister Winston Churchill, left, and U.S. President Franklin D. Roosevelt meet at the White House to discuss the ongoing war effort. Standing, left to right are: Gen. Sir Alan Brooke, chief of the British imperial staff; Adm. Sir Dudley Pound, first British Sea Lord and chief of the naval staff; Adm. William D. Leahy, U.S. chief of staff to the commander in-chief of the Army and Navy; Gen. C. Marshall, chief of staff of the U.S. Army; Adm. Ernest J. King, commander-in-chief, U.S. fleet and chief of naval operations; and Lieut. Gen. J.T. McNarney, deputy chief of staff, U.S. Army. | AP Photo Did someone forward this email to you? Sign up here.   Follow us on Twitter Charlie Mahtesian @PoliticoCharlie Calder McHugh @calder_mchugh Katherine Long @katherinealong   Follow us

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