The debt ceiling staredown

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May 03, 2023 View in browser   By Calder McHugh With additional reporting from Joanne Kenen Speaker of the House Kevin McCarthy (R-Calif.) speaks to the media at the U.S. Capitol on April 26. The House voted and passed a bill raising the nation's debt ceiling. | Tasos Katopodis/Getty Images DUG IN — With a deadline — perhaps as soon as June 1 —bearing down before the United States defaults on its debt, President Joe Biden and congressional leaders are finally meeting at the White House next week. Republican leadership says they won’t raise the debt limit without extracting cuts to the federal budget, and passed a largely symbolic bill in the House last week outlining their wants. Democrats want a debt ceiling increase with no conditions, and in particular are currently unwilling to entertain spending cuts. The staredown has Wall Street — and everyday Americans — nervous. “I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” said Treasury Secretary Janet Yellen, while updating Congress that they may only have until the end of the month before the U.S. can’t pay its bills. If America does default for the first time in history, the effects could be massive. The default could trigger a global recession. The federal government may stop paying out Social Security checks. Medicare and Medicaid, as well as SNAP food assistance, would also be at risk. Even if House and Senate leadership can reach a deal, they need to sell it to their members. Senate Majority Leader Chuck Schumer (D-N.Y.) has already traded barbs with House Speaker Kevin McCarthy (R-Calif.), saying McCarthy “capitulated to the hard right once again” on the House’s spending-cuts and debt ceiling-increase plan. For his part, the Speaker said, “Had the president agreed to negotiate in good faith, we’d already be done.” To get a sense of the month of negotiations to come, Nightly spoke with Sarah Binder, a senior fellow at the Brookings Institution and a professor of political science at George Washington University, who has written extensively on Congress and legislative politics. This interview has been edited. Factoring in the legislative calendar, how close to the debt ceiling deadline are we? There’s not very much time before the Treasury hits what we call the ‘X date,’ meaning that they’ve run out of change in their pockets to finance the obligations of the federal government. We can glance at the calendar and say, we have about a month. Realistically, though, we often think more in terms of whether or not the House and Senate are in session. [Nightly note: There are eight days left when the two chambers are in session at the same time this month.] People tend to point to that limited amount of time as a further constraint on getting lawmakers and leaders in a room to make a deal and to vote on it. In reality, though, you don’t really need 435 members and 99 or 100 senators, to make progress on a deal. And yet, time is still running out rapidly to find a deal. What are congressional leaders and Biden hoping to achieve in their May 9 meeting? There’s a lot that could go on. I think the challenge here that creates so much uncertainty is that I don’t know that the players themselves are fixed on a strategy. What people will be looking for is signals of any progress, given that both sides are currently dug in to their positions on spending cuts. I see this as kind of a semantic problem. Each side has to figure out what they want to achieve here, and whether both sides think a default is untenable. There’s still some uncertainty on the Democratic side whether or not all Republicans are willing to say we can’t default. Is there any way around each side’s line in the sand? There’s no shortage of creative legislative maneuvers to help both sides, whether that’s packaging everything into one bill or breaking up any deal they reach into different components, to give both sides political cover so that they can do a deal. But it would be helpful, I believe, for there to be an alignment of the default date with government spending deadlines, meaning the date for addressing the upcoming year fiscal spending bills lining up with the default date. We need to get both of these issues on the table so that each side can claim they’re pursuing their number one priority. Republicans want to maintain that they are pursuing spending cuts. And Democrats want to maintain that you can’t take the debt ceiling hostage, so they’re not going to negotiate over it. Put all these issues on the table so that each side can claim its most preferred outcome. What groups or people on each side are influencing party leadership on their negotiating positions?  There’s been a lot of reporting about the group of factions that make up the House Republican Conference. The rightward tug of the debt bill that was passed by the House last week is a pretty good indication that Freedom Caucus members and other conservative Republicans that have a number of seats at the table are helping to influence the direction that House Republicans are going, with fairly strong support — or willingness to go along — from more moderate groups. On the Senate side, it’s a little harder to tell. I think most Democrats in the Senate seem to be aligning with the White House stance that ‘we’re not going to negotiate.’ But you have Sen. Joe Manchin (D-W.Va.) who’s saying that Biden should get himself to the bargaining table. In the Senate on the Republican side, I think everyone is happy to line up behind Sen. Mitch McConnell (R-Ky.) who’s happy to line up behind McCarthy and not become a central figure. Are there any historical analogues to the current situation that come to mind?  The most important point may be obvious, but I don’t think we talk about it enough. In periods of unified party control, like the most recent example in 2021, the opposition party barely needs to lift a finger on raising the debt ceiling. But in split party control, historically both parties have had to pony up about half the votes each. They have to reach a real compromise, rather than just peeling off a few votes. In 2011, for example, 95 Democrats voted for the debt ceiling increase, and 95 voted against (Democrats were the minority party in the House). The one thing that makes this episode look slightly different so far is there’s some uncertainty about whether Republicans, particularly conservative House Republicans, are willing to maintain their resolve, even at the cost of a default. I think we don’t know that yet. And I don’t think markets had quite paid enough attention to the possibility of a real default. That uncertainty is what we’re going to have our eyes on for the rest of May, and it’s higher than it’s been in quite awhile. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at cmchugh@politico.com or 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? REGSITER HERE.     From the Health Desk Sen. Dianne Feinstein (D-Calif.) is surrounded by reporters as she heads to the Senate Chamber for a vote on February 14. | Chip Somodevilla/Getty Images INJURED LIST — Nowadays, when people talk about older senators who should probably move on, the subtext is usually cognitive decline, writes Joanne Kenen, the Commonwealth Fund Journalist in Residence at the Johns Hopkins Bloomberg School of Public Health. Exhibit A is 89-year-old Sen. Dianne Feinstein (D-Calif.), who hasn’t been seen in public since late February. Her office says her absence from the Senate is because of shingles; there’s some speculation she might return to Washington next week. As I wrote in Politico Magazine this morning, Feinstein is neither the first nor the last senator to receive such scrutiny, given the widespread reports of her memory lapses. And there’s no mechanism to force a senator out if they are no longer able to serve, other than a two-thirds vote for expulsion which (barring some Confederate sympathizers in the 1860s) hasn’t been used since 1797 — and that was for treason, not declining mental acuity. But while dementia has become a more common, if awkward to openly discuss, issue in an aging Senate in recent years, absences because of illness — sometimes long absences — are nothing new. The Senate historian’s office has a list of 15 senators who’ve been out for significant periods of time since 1942. There’s no mechanism for any kind of temporary replacement of a senator either. Some of those who took medical leave never returned or died in office. Others fully recovered. In one case the senator — then-Sen. Al Gore (D-Tenn.) — was in perfectly good health but had a family crisis. Gore’s little boy had been severely injured in a car crash. The most recent sick leave to make the list — and among the shortest — is Sen. John Fetterman (D-Pa.), who was out for about six weeks this year for treatment of depression. He’s back at work now, depression in remission. The longest absence, and the one most likely to have been dementia-related based on the historian’s office reference to the “infirmities of old age,” was Virginia Democrat Carter Glass. He was out for just shy of four full years — from June 1942 until his death in May 1946. He was even re-elected a few months into that absence. He wasn’t a back bencher either — he was chairman of the Appropriations Committee. One of the more memorable cases involved Sen. Clair Engle, a California Democrat, who was in the Senate on and off in the last year of his life. Paralyzed because of a brain tumor, he was carried onto the floor in June 1964 to vote for the Civil Rights Act. He was unable to speak by then, but he signaled his “Aye” vote. A month later, he died. Somewhere in the middle was a young Delaware senator named Joe Biden, away from the Senate for about seven months in 1988 recovering from a brain aneurysm. The list of ailments is varied. Tumors. Strokes. A broken hip. Several spent prolonged periods of recuperation from heart attacks — among them Majority Leader Lyndon B. Johnson. LBJ didn’t miss much of the Senate though, as it had recessed for the year. Some recovered and went on to longer careers, even in the case of Biden and LBJ, the presidency. Others, like South Dakota Republican Karl Mundt, missed half his term after a stroke but refused to step aside. Some died. Among them were Sens. Edward Kennedy (D-Mass.) and John McCain (R-Ariz.), both diagnosed with fatal brain tumors. Both returned to the Senate for key votes a few times during their illness. None were expelled from the Senate for their temporary incapacitation. But with increasingly razor-thin majorities deciding outcomes, a long absence may become harder to wave away. What'd I Miss? — World Bank taps Banga as next leader: Ajay Banga has been chosen to serve as the next president of the World Bank, taking over the global finance institution as it strives to help low-income countries overcome debt and combat climate change. The bank’s 25-member executive board voted in favor of Banga today after the former Mastercard executive traveled the globe in recent weeks to shore up support. Biden nominated him for the post in February and he was the only contender for the job. — Florida lawmakers restrict pronouns and tackle book objections in sweeping education bill: Republican senators in Florida gave final approval today to a sweeping education bill targeting how teachers and students can use their pronouns in schools, sending to Gov. Ron DeSantis a proposal meant to strengthen state’s parental rights law panned by critics as “Don’t Say Gay.” The expansions to one of the most controversial bills of 2022, which lawmakers passed on a 27-12 party-line vote, are set to widen a ban on school lessons about sexual identity and gender orientation that GOP lawmakers argue should take place at home — not in the classroom. The wide-ranging measure also requires schools to yank challenged books within five days of someone flagging it, a shift opponents equate to “book banning.” — Fed hikes rates one more time as war on inflation enters new phase: The Federal Reserve raised interest rates today for what could be the last time this year, a major milestone in the fight against inflation. Following two days of meetings this week, central bank policymakers didn’t close the door on raising borrowing costs further but suggested they’re now taking a wait-and-see approach. Price spikes have shown steady signs of cooling, and Fed officials hope they have now increased rates enough to continue the momentum — particularly in light of banking turmoil that’s expected to further slow the economy. Nightly Road to 2024 ELECTRIC SHOCK — The politically influential United Auto Workers union isn’t ready to back Biden just yet, report Shane Goldmacher and Coral Davenport in The New York Times. According to an internal memo from Shawn Fain, the Detroit-based union’s president, the UAW — which has around 400,000 workers — has lasting concerns about Biden’s plans to transition towards building electric vehicles. The UAW maintains a strong presence in Michigan in particular, likely to be an essential swing state in 2024. CHAOS THEORY — Donald Trump has always been an agent of chaos. But these days his campaign operation is a picture of order, write POLITICO’s Sally Goldenberg and Meredith McGraw. Despite the legal turmoil surrounding him, Trump has been methodically undercutting Florida Gov. Ron DeSantis — snatching up congressional endorsements, blasting attack ads and dominating news cycles. It’s a campaign operation characterized by an unusual level of organization and discipline — one that’s chipping away at his likely chief rival before he even jumps in the race. According to Fergus Cullen, a former New Hampshire Republican Party chair and early member of the “Never Trump” movement, in comparison to Trump, “the DeSantis people are rookies.” AROUND THE WORLD IN DENIAL — Ukraine has denied that it tried to assassinate Russian President Vladimir Putin during an overnight drone attack on his official residence in Moscow. Russia claims it foiled a Ukrainian-backed plot to target Putin — but Kyiv rubbished the Kremlin’s allegations which sparked a storm this afternoon. “We don’t attack Putin or Moscow. We fight on our territory. We are defending our villages and cities,” Ukrainian President Volodymyr Zelenskyy said, speaking on a visit to Finland. In an earlier statement, Russia triggered consternation in Ukraine and among its Western allies by accusing Kyiv of trying to bump off Putin. The Kremlin did not give any evidence that Ukraine had carried out the attack and POLITICO was unable to independently verify the claims. “The Russian side reserves the right to take retaliatory measures where and when it sees fit,” Putin’s office said, adding that two drones headed toward the Kremlin had been destroyed by the Russian military and special services.   DON’T MISS THE POLITICO ENERGY SUMMIT: A new world energy order is emerging and America’s place in it is at a critical juncture. Join POLITICO on Thursday, May 18 for our first-ever energy summit to explore how the U.S. is positioning itself in a complicated energy future. We’ll explore progress on infrastructure and climate funding dedicated to building a renewable energy economy, Biden’s environmental justice proposals, and so much more. REGISTER HERE.     Nightly Number Less than 70 percent The share of ridership numbers compared to the time period directly before the pandemic in most major U.S. transit systems. The soft numbers, largely due to fewer daily commuters, have led to budget shortfalls and CEOs pressing city and state governments for extra cash and new streams of funding. RADAR SWEEP WATER WARS — Across the American West, as droughts increase and water becomes increasingly precious, some companies are taking advantage. In Grist, Jake Bittle looks into one of these entities: Vidler Water Resources, which has become a powerful Nevada power broker. After decades of profiting from access to water, Vidler is now helping to make it possible for new housing developments to be built, even through a long drought. Read the complex saga about the relationship between water and growth — and the people profiting — here. Parting Image On this date in 1992: Anthony Sandoval, a National Guardsman from Torrance, Calif. uses a public phone while on duty at the intersection of Pico Boulevard and Berendo Street in Los Angeles. He was one of many Guardsmen called to duty after rioting broke out in the city leaving more than 40 people dead after the police officers who beat Rodney King were acquitted of all charges. | Nick Ut/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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