What’s next on the debt ceiling
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What’s next on the debt ceiling
Kevin McCarthy has had a tough few months.
It took him four days and 15 ballots to be elected speaker of the House. His agenda has been slow to get off the ground: half of the bills he said would receive votes in his first two weeks have yet to make it the floor. The internal divisions of his conference have been depicted over and over again in the media, including reports of tension between him and his No. 2.
But McCarthy scored his most significant legislative win yet on Wednesday when his plan to raise the debt ceiling and cut federal spending narrowly passed the House. (Here’s my summary of the bill if you need a refresher.)
It was about as close as a House vote can be — 217-215 — but a win is a win. After making last-minute changes to mollify members from the Midwest (leaving in place ethanol tax credits) and right-wing members (toughening work requirements for Medicaid and food stamps), only four Republicans opposed the package: Reps. Andy Biggs (AZ), Ken Buck (CO), Tim Burchett (TN), and Matt Gaetz (FL).
Republicans have praised the bill as an act of fiscal responsibility: per the Congressional Budget Office, it would save the U.S. government about $4.8 trillion over the next decade. However, Democrats have harshly criticized the new work requirements and branded the package as a tax increase because it repeals clean energy tax credits.
So, what now?
Don’t be fooled: the path ahead for McCarthy — and for avoiding an unprecedented default on the U.S. debt — is littered with obstacles.
President Biden has so far refused to negotiate on the debt ceiling, a stance that has partially been predicated on the belief that McCarthy wouldn’t be able to get a debt ceiling/spending plan through his divided conference. That bet was obviously proven wrong on Wednesday, moving the ball over to Biden’s court to act next.
“The Republicans have raised the debt limit. You have not,” McCarthy said to Biden and congressional Democrats in remarks after the vote.
But the White House has signaled no plans to move from its strategy: “I’m happy to meet with McCarthy, but not on whether or not the debt limit gets extended,” Biden told reporters Wednesday. “That’s not negotiable.”
Senate Majority Leader Chuck Schumer has taken to referring to the McCarthy plan as the “DOA Act,” standing both for “Default on America” and “dead on arrival.”
In the short term, what happens next will likely depend on pressure from two corners:
- Wall Street: Up until now, investors have remained fairly sanguine about the possibility of default (despite the catastrophic economic consequences), confident that a deal will come together eventually. In the past, the markets growing nervous has been a crucial forcing mechanism for the two parties to sit down and get serious about the debt ceiling.
- Moderate lawmakers: Most big negotiations in the Biden era have been driven by rank-and-file lawmakers in each party’s center. Can a “gang” of dealmakers put something together this time? Alternatively, will Biden face pressure from moderate Democrats to strike a deal with McCarthy and will McCarthy face pressure from his center flank to move closer to a clean debt ceiling bill?
Already, some Dems are calling on Biden to negotiate, while centrist Republicans are beginning to eye a discharge petition that could send a watered-down debt ceiling bill to the floor. (As I’ve written before, that option requires a lengthy process we might not have time for.)
In the long term, it’s still difficult to see exactly how this logjam will be broken, although some sort of deal seems inevitable (even if it won’t be nearly as ambitious as the plan passed by the House yesterday).
Don’t forget the sword of Damocles hanging over McCarthy: during the days-long speaker balloting, he promised away a change to the “motion to vacate” rules, allowing one member to trigger a vote on his ouster.
Let’s say Biden and McCarthy do manage to strike a deal. If McCarthy’s starting offer (which was littered with conservative priorities) still received four GOP “nays,” how will the Freedom Caucus respond if the speaker tries to pass a more moderate version of the package?
Even putting such a bill on the floor — and trying to pass it with more Democratic votes than Republicans — could lead to a “motion to vacate” attempt to axe McCarthy.
The speaker may have practiced some impressive arm-twisting to get to this point, but his heavy lifting on the debt ceiling has only begun.
How much time is left? As you’ll recall, the debt ceiling has technically already been hit; the Treasury is currently using “extraordinary measures” to move money around and avoid default. Estimates vary as to how long those measures will last for (it partially depends on how much money in taxes the U.S. takes in this year).
According to the latest estimate from Goldman Sachs, the drop-dead date for raising the debt limit will likely arrive in late July. Get ready for a long summer.
Something to bond over
Before we move on to other news, a quick thought bubble on something that jumped out at me about McCarthy’s defiant comments to reporters yesterday after the vote. Here’s what McCarthy said:
“You raised the question whether I could even become speaker. We went 15 rounds, I became speaker. Then you raised the question could we even pass [a bill to defund] 87,000 IRS agents, to yank them out, and we did it. Then you said, could we stand up for the American public for what we said in the Commitment to America, that we would pass the Parents Bill of Rights? We passed that.”
“When we passed a bill to end the pandemic so we could get back to work again, you said why even do it, the Senate’s not going to take it up, the president said he’s going to veto it. It’s law today. So every question you continue to raise, you guys have been wrong. You’ve underestimated us.”
If that sounds familiar, it might be because President Biden often makes a similar point about his own media coverage.
“While the press and the pundits [were] predicting a giant red wave, it didn’t happen,” he said at a news conference after the midterms in November, clearly miffed that the press corps had underestimated him yet again.
And it’s true: Biden and McCarthy have both largely spent their careers counted out. Most pundits didn’t expect Biden to become the Democratic nominee or McCarthy to become speaker. It’s not uncommon for reporters to (somewhat subtly) unfavorably compare the intelligence of both men to their contemporaries, Biden for being gaffe-prone and McCarthy for having weak policy chops.
Both the president and speaker have chips on their shoulders as a result, and a well-earned pride in having ascended to the highest echelons of American politics from their working-class backgrounds. While Washington is stuffed with Ivy League graduates, Biden and McCarthy frequently note that they received their educations at the University of Delaware and Cal State Bakersfield, respectively.
Just listen to a little bit of McCarthy’s Wednesday press conference; you can hear the edge in his voice, the dogged frustration mixed with glee at having (at least briefly) proven the reporters wrong. It’s not all that unlike many of Biden’s press conference, to be honest.
Maybe that’s a feeling these two political survivors can bond over when they eventually sit down together to haggle over the debt ceiling. The Beltway set, after all, has little faith in their ability to strike a deal: wouldn’t they both love to stick it to the media elite one more time?
White House: President Biden will hold the first event of his re-election bid tonight, a virtual call with grassroots campaign donors. Vice President Harris, First Lady Biden, and Second Gentleman Emhoff will be dialed in as well. Earlier in the day, Biden will participate in an event for “Take Your Child to Work Day.”
Senate: The Equal Rights Amendment, which would enshrine gender equality in the Constitution, has technically been ratified by 38 states — the amount it needs to become law. The only problem? Three of those ratifications took place after the 1982 deadline set by Congress.
- The Senate will vote today on a resolution to eliminate that deadline. The vote is largely symbolic: even if the House were to approve the resolution (which is unlikely), it is unclear whether it’s legal for Congress to extend a ratification deadline after the fact. In addition: six of the 38 states have rescinded their ratifications in the years since, further complicating matters.
House: The lower chamber will vote on a resolution by Rep. Matt Gaetz (R-FL) to remove all U.S. military personnel in Somalia, except those protecting the U.S. embassy. About 450 American troops are currently stationed in the country to aid Somalian forces in combatting al-Shabab, an affiliate of al-Qaeda.
Supreme Court: The justices heard their final case of the term yesterday. Now, they have until the end of June to issue decisions in all 44 of the term’s pending cases.
A few more items to watch...
Also happening today: South Korean president Yoon Suk Yeol, who was feted at a White House state dinner last night, will address a Joint Meeting of Congress this morning. Later, Yoon will be honored at a state luncheon hosted by Vice President Harris and Secretary of State Antony Blinken.
For your radar: Hunter Biden’s lawyers met with Justice Department lawyers yesterday to discuss potential charges coming against the First Son... Prosecutors say Pentagon leaker Jack Teixira had a history of racist and violent remarks.
In the hopper: In yesterday’s newsletter, I noted two interesting bipartisan deals newly announced by lawmakers. Today, I want to highlight two more bipartisan pieces of legislation that were introduced on Wednesday:
- Sens. Lisa Murkowski (R-AK) and Angus King (I-ME), who caucuses with Democrats, introduced a bill requiring the Supreme Court to adopt an ethics code and appoint an official to enforce it.
- Sens. Steve Daines (R-MT) and Jeff Merkley (D-OR) re-introduced a bill that would allow banks to provide financial services to cannabis companies in states where marijuana is legal. Banks are currently largely prohibited from doing so due to federal marijuana restrictions.
Trump on trial: Magazine writer E. Jean Caroll testified Wednesday in the trial stemming from her rape and defamation lawsuit against Donald Trump. “I’m here because Donald Trump raped me,” she said, describing the alleged assault — which she says took place in the mid-1990s in a Manhattan dressing room — in graphic detail. Trump called the trial a “SCAM” on Truth Social earlier in the day, leading to a rebuke from the judge.
- More Trump investigative news: “Appeals court rejects Trump’s effort to block Pence from testifying in Jan. 6 probe” (NBC)... “Special counsel investigating January 6 interested in former Fox News producer’s audiotapes, her lawyer says” (CNN)
Disney vs. DeSantis: “Disney sued Florida Gov. Ron DeSantis on Wednesday over the Republican’s takeover of its theme park district, alleging the governor waged a ‘targeted campaign of government retaliation’ after the company opposed a law critics call ‘Don’t Say Gay.’” (AP)
- Meanwhile: DeSantis is reportedly preparing to launch a presidential exploratory committee next month. The Florida Senate approved a bill Wednesday that would ensure he can run for the White House without resigning the state’s governorship.
Race for the Senate: Gov. Jim Justice (R-WV) is expected to announce today that he will challenge Sen. Joe Manchin (D-WV) in 2024. Manchin is one of the most vulnerable Senate Democrats up for re-election; he has taken several recent steps to distance himself from the national party, including voting Wednesday to overturn an EPA truck emissions regulation and recently threatening to repeal the Inflation Reduction Act.
In the states: “The Montana House of Representatives took the extraordinary step on Wednesday of blocking a transgender lawmaker from the House floor for the remainder of the legislative session after an escalating standoff over her remarks on transgender issues in House debate.” (NYT)
Here’s something fun: The “I Can’t Believe It’s Not Butter!” spray is officially — legally — not butter.
That’s according to the U.S. Court of Appeals for the 9th Circuit, which ruled last week that the product is a spray and not a butter, in response to a lawsuit from a group of consumers. Per Courthouse News:
“The consumers claimed while the packaging advertised the product contains zero grams of fat and zero calories per serving, the entire bottle actually contains 1,160 calories and 124 grams of fat. They claimed that since they were using the product as a substitute for butter and using far more of the product then the suggested serving amount, the company intentionally misled consumers by making the serving size small.”
According to the consumers, 40 sprays of the product equal one tablespoon of butter; they argued that it should therefore be labeled as a a butter substitute.
The 9th circuit disagreed, writing: “There is no well-pleaded allegation in the complaint that consumers customarily drown their food in 40 sprays of I Can’t Believe It’s Not Butter! Spray.” A spray it is.
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