The Hill’s Morning Report — Debt ceiling battle highlights 2023 uncertainty

by Alexis Simendinger and Kristina Karisch - 01/23/23 6:20 AM ET

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The House and Senate are back to work this week, armed with retread scripts in a year of consequential uncertainty.

The 2024 presidential contest will shape many of the year’s political arguments but it’s unclear if that jockeying will help untie near-term legislative knots on everything from funding the government to navigating a potential recession to assisting Ukraine.

Take the debt ceiling: Washington’s history suggests bipartisan negotiations will be necessary by spring. House Republicans want to force significant spending cuts, which the White House and Democrats oppose. Most lawmakers believe even flirting with a U.S. default, as several ultraconservative House Republicans have suggested, wanders too close to seppuku, or to put it another way, ritualistic economic suicide.

Speaker Kevin McCarthy (Calif.) wants to sit down with President Biden, who has agreed to meet with the Republican leader, without saying when. McCarthy said giving the Treasury Department authority to hike borrowing without add-on GOP conditions is “off the table.” Among House conservative demands: curbing federal spending for seniors.

“When it comes to the debt ceiling, the president has been clear. It should not be used as a political football, but again, he’s looking forward to meeting with the Speaker and continue to build on that relationship,” White House press secretary Karine Jean-Pierre repeated on Friday.

McCarthy could conceivably lose the Speakership if he disappoints the firebrands in his caucus. “We cannot raise the debt ceiling,” Rep. Andy Biggs (R-Ariz.) tweeted last week. “Democrats have carelessly spent our taxpayer money and devalued our currency. They’ve made their bed, so they must lie in it.”

Over the weekend, Sen. Dick Durbin (Ill.), the No. 2 Democrat, said Biden should not negotiate with Republicans over raising the cap on borrowing (The Hill), while centrist Sen. Joe Manchin (D-W.Va.), who has said he wants to discuss Social Security and Medicare spending with the GOP, told CNN that it was a “mistake” for the president to refuse to negotiate (The Hill).

“Those who are posing for holy pictures as budget balancers… should note one important fact: Almost 25 percent of all of the national debt accumulated over the history of the United States… was accumulated during the four years of Donald Trump,” Durbin told CNN.

While Senate Democratic leaders appear splintered over strategy, The Hill’s Al Weaver reports that Senate Minority Leader Mitch McConnell (R-Ky.) is expected to play a pivotal role in cracking the code in the emerging debt ceiling fight — and Democrats may have to bend.

Meanwhile, Biden is poised to deliver a State of the Union address on Feb. 7, lean into a reelection bid and announce some White House personnel changes, including a new chief of staff, Jeff Zients, who will succeed outgoing Ron Klain next month.

Zients will bring some fresh eyes and expertise to the second half of Biden’s term during a period of divided government and the president’s high-stakes bid for reelection. He is a workhorse with a low-key manner and a track record both in private business and in the Obama and Biden administrations as a manager who tackles aspirations with teams of people who can look around corners, execute and deliver results. He also knows the ins and outs of federal budgeting and the economy, which will be valuable during Biden’s clashes with the GOP over spending and revenues.

Zients, 56, twice served as acting director of the Office of Management and Budget and was director of the White House National Economic Council under former President Obama. He returned to government to manage Biden’s federal pandemic response (Politico), including vaccine distribution, before departing that role last year (The Washington Post).

Some Democrats told the Post that Biden’s closest political advisers in and around the West Wing, including Anita Dunn, Jen O’Malley Dillon, Mike Donilon, Steve Ricchetti and Bruce Reed, will likely steer political and communications decisions shaping Biden’s agenda heading toward what the president has signaled will be a bid for a second term. Some White House watchers expect related West Wing personnel changes ahead.

Biden’s team continues to muscle up for House Republican investigations, including oversight of the president’s classified documents controversy, now under investigation by a Justice Department special counsel. Additional classified documents were discovered at the president’s Wilmington, Del., residence on Friday during a 13-hour FBI search conducted without a subpoena (CNN).

The New York Times reported that initially, Biden’s lawyers mistakenly believed boxes of files retained as part of Biden’s transition out of the vice presidency had only been shipped to a Washington think tank in which he had an office.

Biden told reporters on Thursday, referring to his handling of the November, December and January recovery of pages and slow public disclosures, “I have no regrets. I’m following what the lawyers have told me they want me to do. It’s exactly what we’re doing. There’s no ‘there’ there,” (The New York Times).

The materials recovered with classification markings are described as dating to Biden’s years as vice president and senator.

The Hill: The discovery of classified documents at the president’s private residence and former think tank office harms Biden’s reputation, Durbin said. “When that information is found, it diminishes the stature of any person who is in possession of it, because it’s not supposed to happen,” the senator told CNN on Sunday.

Related Articles

▪ The Hill: Troubles surrounding Rep. George Santos (R-N.Y.) have shifted from résumé lies to possible campaign finance law violations, which, if proved, could result in civil penalties, criminal prosecution or expulsion from Congress.

▪ Fox News: Santos admitted on Saturday, after initial “categorical” denials, that he dressed as a woman “for fun” at a party while living in Brazil. Santos on Saturday was the target of a “Saturday Night Live” roast (Insider). Video is here and here.

▪ The Washington Post: Early rift over immigration exposes House GOP’s tough path to consensus.

▪ Politico: Storied Senate Judiciary panel eyes a new era of quieter productivity.

LEADING THE DAY

➤ POLITICS

Biden is entering the new year with low approval ratings, giving some Democrats consternation about the president’s political prospects, writes The Hill’s Amie Parnes. The numbers come at a critical time for the president, as Biden is preparing to launch his reelection bid. Democrats privately wonder if the controversy surrounding classified documents found at the president’s former office and at his Wilmington home could damage his brand, hurting his chances of a second term. A Reuters-Ipsos poll out on Thursday showed that 40 percent of Americans 18 and older approved of Biden’s job performance — a point higher than last month’s survey but too low for some Democrats at this point in his presidency. The survey, which was conducted on the heels of the revelations that Biden had classified documents in his possession, has blunted some of Biden’s momentum entering the new year.

“I don’t know if anyone wants to be hovering around 40 percent when they’re launching a reelection bid,” one strategist said. “You, at the very least, want to be 5 or 6 points higher.”

FiveThirtyEight: Will Biden’s misplaced classified documents bring his approval rating down?

Biden is also facing several serious obstacles this year that could derail the strong economy that has been central to pitch to American voters, write The Hill’s Sylvan Lane and Alex Gangitano. While the White House has sought to highlight the resilience of the U.S. economy in the face of high inflation, rising interest rates, and mounting layoffs across the technology, real estate and media sectors, Biden will face challenges preserving a sturdy economy amid an escalating fight over the debt ceiling with House Republicans and a Federal Reserve dead set on conquering inflation.

▪ The Hill: Manchin doesn’t rule out running for president or Senate reelection under a different party.

▪ The Hill: Manchin says he would support Sen. Kyrsten Sinema (I) for reelection in Arizona.

Democrats in Mississippi are feeling optimistic that their party will be able to oust Gov. Tate Reeves (R) from the governor’s mansion this fall with Democrat Brandon Presley’s recent entry in the race, The Hill’s Caroline Vakil reports. Reeves has suffered from low approval ratings and has been implicated at times in the state’s long-running welfare scandal, but the governorship has proved elusive for Democrats in the red state for decades. But some believe this time will be different, saying Presley, the state’s northern district public service commissioner and a distant relative of Elvis Presley, has an ability to connect with rural voters and that’s proved he can win elections in one of the reddest parts of the state.

Politico: When politicians climb down the ladder.

Wisconsin LGBTQ advocates and lawmakers are recalibrating after state GOP legislators last week voted for a second time to block a ban on conversion therapy from taking effect, putting more than 200,000 LGBTQ youth at risk of undergoing harmful and dangerous procedures meant to change their sexual orientation or gender identity.

“I’m very concerned about young people in Wisconsin who live in communities where it is once again allowed, being subjected to this really cruel and unscientific form of therapy,” state Rep. Greta Neubauer (D), one of six openly LGBTQ members of Wisconsin’s Republican-controlled legislature, told The Hill.

Lobbying giants expect a historic earnings boom to continue, even as a divided Congress threatens to slow legislation to a crawl, writes The Hill’s Karl Evers-Hillstrom. Capping off a record-breaking year for K Street, the top Washington, D.C., lobbying firms on Friday reported massive earnings for the final three months of 2022.

“People making the assumption nothing is going to happen over the next two years might be making a mistake,” said former Speaker John Boehner (R-Ohio), a senior adviser at Squire Patton Boggs, pointing to House Republicans’ investigations and proposals impacting the energy and tech industries.

➤ ADMINISTRATION

Biden and Vice President Harris over the weekend expressed their condolences and support for those impacted by a mass shooting in Monterey Bay, Calif., near Los Angeles, where a gunman opened fire and killed 10 on Saturday. The community is predominantly Asian American and many were celebrating Lunar New Year in a dance hall when the shooting occurred.

Authorities described the suspect, found dead on Sunday from a self-inflicted gunshot wound, as Huu Can Tran, 72. The suspected mass shooting weapon was described as a “magazine-fed semi-automatic pistol,” which the Los Angeles sheriff said was likely illegal to possess in California. Events at two locations are under investigation as potential hate crimes while authorities search for a motive. Tran, the driver of a white van suspected to have carried out the shooting, was found dead in a van in nearby Torrance, Calif. (The Hill and CNN).

“Even as we continue searching for answers about this attack, we know how deeply this attack has impacted the AAPI community,” Biden said in a statement.

Harris, a former senator and former attorney general from California, told an audience in Florida that during “a time of a cultural celebration … yet another community has been torn apart by senseless gun violence.”

▪ NPR: Monterey Park has a special significance for the Asian community in LA.

▪ The Washington Post: A safe haven for Asian immigrants now shares in the tragedy of gun violence.

▪ Los Angeles Times: Mass shooting in Monterey Park shatters the hope and joy of Lunar New Year.

On Sunday, Harris spoke in Tallahassee, Fla., on the 50th anniversary of Roe v. Wade, the landmark ruling that was overturned by the Supreme Court last year.

“There’s a collection of words that mean everything to us as Americans. The heartfelt words of our great national anthem, that America is the land of the free and the home of the brave. But let us ask, can we truly be free if a woman cannot make decisions about her own body?” Harris said as the crowd responded with a loud “no.” Harris’s office said earlier that the choice of Florida for the vice president’s speech Sunday spoke to the reality that the Sunshine State, which enacted a 15-week abortion ban last year, is now at the forefront of the abortion debate (CNN).

The Biden administration on Sunday issued a memorandum to further protect access to medication abortion by ensuring doctors can prescribe and dispense it across the United States (The Hill).

▪ The New York Times: “We are on the right side of history,” Harris says on Roe’s 50th anniversary.

▪ The Denver Post: Women’s marches draw thousands on the 50th anniversary of Roe.

▪ The 19th: The first post-Roe March for Life showed anti-abortion activists are far from done.

▪ Vox: The coming legal showdown over abortion pills.

The Hill’s Cheyanne Daniels writes that despite placing racial justice at the top of his agenda two years ago, the president has been rebuffed by conservatives in Congress and the courts when it comes to strides sought by Democrats to expand voting rights and police reforms. At the two-year mark, Biden’s “incomplete” agenda during a period in which he had Democratic majorities in the House and Senate is unlikely to change while Republicans control the House and other issues take center stage.

IN FOCUS/SHARP TAKES

➤ INTERNATIONAL

Despite the ever-present danger of war, life in Ukraine proceeds almost normally at times, The New York Times reports. It was what passes for an ordinary Saturday for ordinary Ukrainian people these days, in Dnipro, far from the front lines of the war with Russia, but never fully at peace. All day, air-raid warnings were sounding, forcing people to make calculations that have become habitual: Go to a shelter or stay home? Take the elevator or the stairs? Then, suddenly, it all changed when a Russian missile struck an apartment complex.

“There are not that many bomb shelters,” Oleh Valovyi said, “and you get tired of running there because the air-raid alarms sound practically every day, several times a day.”

The Washington Post: Western Ukraine, distant from the front lines, feels the burdens of war.

Nearly a year into its war with Ukraine, Russia has had little success on the cyber battlefield — and that doesn’t look like it will change moving forward, The Hill’s Ines Kagubare reports. In the coming months, Moscow is expected to escalate its cyber operations as it continues to face major military setbacks in the conflict. However, that increase in cyber activity is likely to have a minor impact in the war as the Kremlin is met with stronger cyber counterattacks from Ukraine and its allies.

There may in fact be no benefits for Russian forces in ramping up their cyber activity against Ukraine, says James Turgal, vice president of cyber consultancy Optiv, other than “to make the point that they can cause chaos.”

Meanwhile, German Chancellor Olaf Scholz — who is under pressure to supply Ukraine with German-made Leopard tanks — said at a Paris news conference on Sunday that all decisions on weapons deliveries would be made in coordination with allies including the United States. Speaking at the same news conference, French President Emmanuel Macron said he did not rule out the possibility of sending Leclerc tanks to Ukraine (Reuters). But Germany would not “stand in the way” of Poland sending Leopard tanks to Ukraine, Foreign Minister Annalena Baerbock said Sunday in what appeared to be the clearest signal yet from Berlin that European allies could deliver the German-made hardware (The Guardian).

▪ The Wall Street Journal: Ukraine war lands Europe’s leaders in a battle of wills.

▪ Vox: Ukraine has a new cache of weapons on the way — but not German tanks.

▪ The New York Times: Germany’s reluctance on tanks stems from its history and its politics.

▪ Politico EU: Scholz upbeat about trade truce with U.S. in “first quarter of this year.”

Brazilian President Luiz Inácio Lula da Silva ousted the head of the country’s army on Saturday, moving against the most senior military officer to be held accountable after the Jan. 8 insurrection. Gen. Júlio Cesar de Arruda’s removal came six days after The Washington Post reported that he had sought to protect rioters and supporters of defeated former President Jair Bolsonaro who were sheltering at a camp in front of army headquarters after storming and ransacking the presidential palace, the supreme court and congress.

▪ The Wall Street Journal: China’s reopening complicates the global fight against inflation.

▪ Der Spiegel: Inside the European Parliament corruption scandal. Hundreds of documents provide deep insight into widespread influence peddling of a handful of members of the European Parliament and show that there may be much more to come.

▪ Reuters: It’s “now or never” to stop Japan’s shrinking population, prime minister says.

OPINION

■ Monterey Park shooting is horrific, but all too familiar, by the Los Angeles Times Editorial Board. https://lat.ms/3R0fvHx

■ Democracies shouldn’t gloat about China’s stumbles, by Pankaj Mishra, columnist, Bloomberg Opinion. https://bloom.bg/3XN1Lll

WHERE AND WHEN

👉 The Hill: Share a news query tied to an expert journalist’s insights: The Hill launched something new and (we hope) engaging via text with Editor-in-Chief Bob Cusack. Learn more and sign up HERE.

The House will convene at noon on Tuesday.

The Senate meets at 3 p.m. and is expected to vote on the nomination of Brendan Owens to be an assistant secretary of defense for energy, installations and environment.

The president will return to the White House from Delaware at 10:40 a.m.

The vice president will administer the oath of office to Sen. Pete Ricketts (R-Neb.), appointed to fill the vacancy of former Sen. Ben Sasse, on the Senate floor at 3 p.m.

Treasury Secretary Janet Yellen is in Zambia where today she will tour a community health location and visit U.S. firm Mylan Lab’s Lusaka distribution center for antimalarial and antiretroviral treatments. Yellen will join business leaders from the American Chamber of Commerce in Zambia for lunch. Later, the secretary meets individually with President Hakainde Hichilema of Zambia, Minister of Finance Situmbeko Musokotwane and the governor of the Bank of Zambia, Denny Kalyalya.

The Supreme Court today will issue its first opinion of the term (The Hill).

The White House daily press briefing is scheduled at 2 p.m.

ELSEWHERE

➤ CONSUMERS & ECONOMY

📬 On Sunday, the U.S. Postal Service began charging 63 cents for a first-class stamp, up from 60 cents. The price for 1-ounce metered mail rose to 60 cents, and the price to send a domestic postcard jumped to 48 cents. A 1-ounce letter mailed to another country now costs $1.45. The Postal Service, on a tear to reduce its red ink, announced the changes in October. This week’s higher postal prices mark the third jump for Forever stamps in the past 17 months and the agency says price hikes will continue with regularity. It’s part of a “Delivering for America” plan, focused on averting $160 billion in financial losses by 2030 (CBS News).

💸 Reminder: The 2022 tax filing season begins today and the IRS deadline is April 18 (The Dallas Morning News).

💳 Many Americans are falling prey to credit card debt just as card interest rates soar to historic highs (The Hill). Multiple industry surveys show a sharp rise in card debt that consumers carry from month to month, in part because they’re not as focused as they should be on how the interest is adding up. Average interest rates this winter on various cards hover around 20 percent, the highest figure in at least 28 years, according to Federal Reserve data. The Hill’s Daniel de Visé describes six ways consumers can chisel away their credit card debt.

🥚 Egg prices jumped 50 percent during the 12 months that ended in November, forcing professional chefs and home cooks to get creative. Substitutes in a cake recipe, for instance, can be more milk to provide the moisture. Applesauce or yogurt are favored stand-ins for eggs and fat. The Washington Post and WSYR-TV are among the news outlets that asked professional bakers and chefs for some workarounds for high-priced eggs.

While most sectors of the economy have recovered from the sharp downturn caused by the arrival of the coronavirus, the tech sector has fallen into a kind of recession characterized by mass layoffs, pervasive hiring freezes, a bear market for stocks and a sharp drop in venture-capital funding. In recent weeks, there have been 12,000 layoffs announced at Google, 11,000 at Facebook, 10,000 at Microsoft, 18,000 at Amazon, 8,000 at Salesforce, 4,000 at Cisco and 3,000-plus at Twitter. Why has tech suffered so much more than its corporate peers?

That question has two answers, The Atlantic reports: Federal Reserve Chair Jerome Powell’s effort to stamp out inflation and the waning of a pandemic during which many of these companies thrived.

▪ CNN: Here are the companies that have laid off employees this year — so far.

▪ The New York Times: Tech layoffs shock young workers. The older people? Not so much.

▪ The Wall Street Journal: Tech layoffs unwind recent head-count growth, torpedo long-shot projects.

▪ CNN: How Big Tech’s pandemic bubble burst.

▪ Bloomberg News: Nearly 20 percent of U.S. firms expect to reduce their headcounts, survey shows.

▪ MSNBC: With layoffs, tech companies are quickening the robot revolution.

➤ HEALTH & PANDEMIC

As COVID-19’s omicron subvariant known as XBB.1.5 becomes more prevalent in some parts of the country, health experts say it likely escapes immune protection better than previous mutations, though it is still unclear whether it causes more severe illness (The Hill). More than 80 percent of coronavirus cases in the Northeast are now from XBB.1.5, and physicians in the region say they have so far not noticed a more severe illness among their patients.

“The presentation is for the most part the same. Maybe they’re not presenting as ill, but we are still seeing plenty of ill patients and we are still certainly seeing patients that die,” Ulysses Wu, chief epidemiologist for Hartford Healthcare in Connecticut, told The Hill.

Wu said XBB.1.5 does not appear to be more lethal and noted that any time more cases of COVID-19 are seen, morbidity and mortality will increase in turn.

▪ Nexstar Media: The Centers for Disease Control and Prevention says that XBB.1.5 is spreading in the United States. Earlier this month, XBB.1.5 began sweeping through the Northeast. As of Thursday, the CDC reports the variant makes up roughly 82 percent of cases in New England, New York and New Jersey. It’s now spreading along the East Coast.

▪ The Hill: What we know about how COVID-19 vaccines may affect menstrual cycles.

Information about the availability of COVID-19 vaccine and booster shots can be found at Vaccines.gov.

Total U.S. coronavirus deaths reported as of this morning, according to Johns Hopkins University (trackers all vary slightly): 1,104,118. Current U.S. COVID-19 deaths are 3,953 for the week, according to the Centers for Disease Control and Prevention. (The CDC shifted its tally of available data from daily to weekly, now reported on Fridays.)

THE CLOSER

And finally … 🏮 Sunday marked the Lunar New Year, ushering in the Year of the Rabbit. Those around the world celebrating with parades, floats, costumes, food and wishes for good luck sought to kick off the year with fun — and some great photos.

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