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Stephen Boyd: THE MONDAY BRIEF | May 15, 2023

Stephen Boyd’s weekly Capitol Hill briefing for Alabama’s business, financial, defense and government affairs executives.


Debt Drama Means Delays… NDAA on hold… Spending Committees reshuffle timelines…. Everything impacts Everything… Sen. Feinstein returns… 

The Schedule…

Both the House of Representatives and the Senate convene this week for legislative activity. 

The Senate returns today to consider the nomination of Bradley N. Garcia, of Maryland, to be United States Circuit Judge for the District of Columbia Circuit—a powerful court often referred to as a stepping stone to the U.S. Supreme Court. Expect a vote at 5:30 pm ET. 

In the House, the Rules Committee is preparing two bills for consideration: H.R. 2494, the “POLICE Act of 2023”; and H.R. 3091, the “Federal Law Enforcement Officer Service Weapon Purchase Act.” 


Speaking of which…

It’s “Police Week” in Washington, an annual remembrance of fallen law enforcement officers first proclaimed by President John F. Kennedy in 1962. With that in mind, find a man or woman in blue this week and thank them for keeping our communities safe. 


Second high-level debt limit meeting delayed… 

For better or worse, a planned second meeting on the debt limit last week between President Joe Biden and House Speaker Kevin McCarthy was postponed.

A brief recap… The U.S. government is $31.4 trillion in debt. The maximum amount of debt that the U.S. Treasury can issue is set by law, and we’ve hit the limit but haven’t paid all the bills. Congress must act. Most Democrats want a “clean” increase, while most Republicans want to attach future spending cuts to any increase in the debt limit. Debt ceiling increases have happened many times before, often without much fanfare. The difference this time? Among other factors, the President’s relative political weakness and the complex internal politics within the narrow Republican House majority complicate matters.

Optimistically, the postponement of the meeting may signal that progress is being made behind the scenes. Often in high profile negotiations, top White House and Congressional negotiators work through the hard issues behind closed doors, setting up the principals to settle only a few points and finalize a deal. The more robust the staff-level conversations, the more likely a solution is within reach. So, if those conversations are ongoing and productive, it would make sense to let the staff work through the weekend. 

On the other hand, every day counts and even small delays at this point tighten an already short timeline. Treasury Secretary Janet Yellen has circled June 1 as the deadline for raising the debt limit. (The non-partisan Congressional Budget Office “projects that if the debt limit remains unchanged, there is a significant risk that
at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations.”) A framework of a deal is only the start, as provisions of the compromise must then be drafted into legislative language, passed by the House, passed by the Senate, and signed by the President. Representatives and Senators will be in Washington at the same time for only four days between today and June 1. That doesn’t necessarily impact negotiations with the White House, but it does limit the ability to “ping pong” legislation back and forth between the Senate and the House in the critical days leading up to the deadline. 

Insight… Don’t confuse a “default” with a “government shutdown,” which are two very different events—though anyone predicting the ramifications of a default is speculating because it’s never happened before. That said, the anticipated consequences are thought to include: (1) a delay in social security payments, (2) a huge hit to financial markets and retirements account—perhaps a one-third decrease in value, according to some estimates, (3) a spike in borrowing cost, making it harder to buy a home or a car, and (4) a downturn in the economy, making a recession more likely. 

In his CNN Townhall last week, former President Donald Trump—who continues to have great influence over a swath of the Republican party—said: “I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re going to have to do a default.”

Republican leaders in the Senate reject that approach. Per “The Hill:” Senate Republican Whip John Thune (S.D.) said “most people recognize we need to strike a deal here” and predicted that Trump’s impacts won’t get much traction among GOP lawmakers. . . . “I don’t think we want to go there with the potential consequences,” he said of a potential default. … Asked about Trump’s comments, Sen. John Cornyn (R-Texas), an adviser to the Senate GOP leadership team, said: “Nobody thinks default is a good idea. Nobody.” 

What’s next? Look for another White House meeting tomorrow. The clock is ticking. 


Committee consideration of the National Defense Authorization Act delayed… 

The House has postponed early consideration of the much-watched annual defense bill, which legally authorizes the Pentagon’s operations, maintenance, acquisition and research programs. 

The committee had planned for subcommittee “markups” late last week, with consideration of the legislation by the full committee slated for May 23. That schedule has now been shelved pending resolution of the debt limit issue. (The Senate committee, which often acts after the House committee completes its work, is now targeting June 20 and 21 for committee action, according to Congressional Quarterly.)

Insight… Defense spending represents about half of the discretionary budget, so it makes sense that congressional leaders would want to settle big picture spending and debt issues before moving forward. Ideally, those determinations are made in a congressional budget resolution, but clearly top line spending is on the table in the current debt talks…. Ultimately, the defense bill will get done, but a delay of a few weeks in May makes it less likely that the authorization process is completed prior to the August break, which in turn could further delay a defense appropriations bill. 

The big question: Will the defense budget be protected in debt talks—and if not, how much is it cut, and from where? 


“Mark up” of some appropriations bills delayed… 

Scheduled markups of some Fiscal Year 2024 appropriations bills have also been postponed pending a resolution to the debt drama. Under the regular order, 12 appropriations bills would be considered, approved, and sent to the President for enactment before October. It almost certainly won’t end that way, but appropriators at least wanted to get off to a fast start. 

The debt problem intervened. Specifically, the House has put three spending bills on the back burner: defense; energy and water, and financial services. The committee will go ahead with three of the smaller spending bills: legislative branch appropriations—which is where Congress allocates money for its own operations; Homeland Security appropriations, and Military Construction/Veterans Affairs appropriations. 

Insight… postponing work on the big spending bills demonstrates that, ahead of a debt limit deal, every major leverage point is in play for congressional negotiators in the next three weeks. In Washington policymaking, everything has the potential to impact everything. 


Feinstein Returns… 

Sen. Dianne Feinstein returned to the Senate last week from a lengthy absence resulting from a bout of shingles. 

In the narrowly divided Senate, Feinstein’s absence on the Judiciary Committee was creating a logjam of President Biden’s judicial nominees. Installing as many federal judges as possible is a top administration priority in the wake of Trump’s focus on installing conservative judges on the bench. That said, Sen. Mitch McConnell, not Trump, is the primary reason the Senate confirmed so many judicial nominees during 2017—2020. 


EP’s Daylight Savings Reform Weekly Update… Nothing new. 

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