The Hill’s Morning Report — Default looms. Negotiations when?

by Alexis Simendinger and Kristina Karisch - 04/28/23 6:15 AM ET

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Speaker Kevin McCarthy’s (R-Calif.) chess moves paid off this week with the passage of a GOP spending bill that will never become law — but that paves the way for one that will.

The House’s Wednesday party-line approval of the Republican bill, which combines spending cuts with a debt ceiling increase, marked the next step forward in negotiations to avert a debt default this summer. The United States has already bumped up against its $31.4 trillion debt limit and — if Congress fails to act — could default on its debt as early as June, economists estimate (CBS News).

“You guys have been wrong,” McCarthy told reporters after the bill passed Wednesday. “You’ve underestimated us.”

House Majority Leader Steve Scalise (R-La.) said House Republicans “shocked the rest of Washington, D.C. — including the White House — because I think they were all betting and rooting against us passing a bill.”

“Well, now we’ve done it,” Scalise said of the debt limit bill.

While McCarthy succeeded in pulling his often-fractious conference together to get the measure across the finish line, now comes the tricky dance of negotiating with President Biden and Senate Democrats on spending and debt limit measures without alienating the rightmost wing of his conference. As The Hill’s Emily Brooks reports, some conservatives have signaled they will not accept any deal that strips away the bulk of their package. But business groups, fiscal hawks and some congressional Democrats are calling on the president to begin talks in earnest toward a deal that would avoid a default on the debt (The New York Times).

“I’ve encouraged the President to meet. I told him I’d get soft food, whatever it takes, we could sit down, we can meet together. He refuses.” McCarthy said during a Thursday NewsNation interview, repeating a prior jibe about Biden’s age. “So he’s putting our economy in jeopardy and I’m fearful that the American public will be very upset with him if he does it.”

With the X date looming, Congress and the White House must act fast to get negotiations rolling. But the House is out next week — and McCarthy is flying with colleagues to Israel, where he’s set to address the Knesset on Monday (The Times of Israel and The Hill).

▪ CNN: McCarthy’s victory on debt ceiling vote may be short-lived.

▪ Politico: White House regroups after McCarthy’s debt ceiling success.

▪ The Hill: Veterans sound alarm on McCarthy budget cuts.

▪ The New York Times analysis: The real debt limit fight is yet to come.

▪ Vox: The lessons of the 2011 debt ceiling crisis, explained by the negotiators who were there.

▪ The Associated Press: The House debt ceiling bill seeks to end the full suite of Biden’s student debt forgiveness and assistance plans.

Meanwhile, Democrats and some moderates in Congress, plus judicial watchdog groups, are viewing with scorn the Supreme Court’s recent defense of its ethics standards for justices and are urging the legislative branch to intervene, reports The Hill’s Zach Schonfeld. One Republican, Sen. Lisa Murkowski (Alaska), this week joined Democrats’ years-long call for legislation that would create a binding code of ethics for the justices such as the one in place for federal judges. Back in 2011, Chief Justice John Roberts questioned whether Congress had authority to step in, and this week, he declined an invitation from the Senate Judiciary Committee to testify before lawmakers, attaching to his letter a “Statement on Ethics and Principles” signed by all nine justices, which notes they consult the code for lower courts as one of multiple non-binding authorities in handling dilemmas.

“It meant absolutely nothing,” Gabe Roth, executive director of Fix the Court, told The Hill. “It was worse than nothing, because at least with nothing, you could potentially convince yourself that maybe the justices would do something. But this is, as I said, just a rehashing of things we already knew.”

▪ Roll Call: The Senate GOP on Thursday blocked a joint resolution nixing the Equal Rights Amendment ratification deadline.

▪ Yahoo News: Sen. Dianne Feinstein’s (D-Calif.) absence allowed a Republican emissions measure to pass the Senate by single vote.

To cap off his state visit to Washington, South Korean President Yoon Suk Yeol on Thursday addressed a joint session of Congress, where he appealed for lawmakers to stand united with Seoul in the face of North Korea’s aggression, underscoring the peninsula’s priority threat in an increasingly dangerous world for global democracies.

“Together with the U.S., Korea will play the role as a compass for freedom. It will safeguard and broaden the freedom of citizens of the world,” Yoon said. “But even as we walk in unison for freedom for 70 years, there is one regime determined to pursue a wrong path: that is North Korea.”

His remarks followed Biden’s signing on Wednesday of a significant commitment to deploy U.S.-nuclear-armed submarines to South Korea as a deterrent (The Hill).

Correction: Morning Report on Thursday should have referred to Rep. Dan Kildee (D-Mich.).

Related Articles

▪ The Hill’s Alexander Bolton reports on Senate Majority Leader Chuck Schumer’s Wednesday meeting in the Capitol with CEO Elon Musk, who said the two discussed the economy and the future of artificial intelligence regulation, while New York Democrat Schumer said they discussed a Tesla plant in Buffalo. Musk has been a prominent critic of the current fast pace of AI development.

▪ The Hill: An immigration measure backed by House Republicans combines bills Democrats say would severely limit asylum while attacking nonprofits that aid immigrants.

▪ The Hill: Lawmakers sparred over a House GOP proposal that would empower law enforcement officials to send unaccompanied migrant children back across the U.S. southern border.

▪ Politico: The administration will set up migrant processing centers in Latin America next month ahead of the conclusion of Title 42. The White House faces one of its most difficult policy and political challenges.

▪ Bloomberg News and Yahoo News: The Environmental Protection Agency will allow summer sales of higher-ethanol E15 gasoline.

LEADING THE DAY

➤ ECONOMY & FEDERAL RESERVE

The U.S. economy grew at a tepid 1.1 percent rate last quarter in a sign that the Federal Reserve’s continuing rate hikes have contributed to a slowdown, as intended to throttle inflation, according to a government report released Thursday (CNBC). Economists say they expect to see recessionary conditions late this year. The Fed is widely expected by analysts to raise rates by a quarter point at the conclusion of a two-day meeting on Wednesday.

The Wall Street Journal: GDP report shows economic growth slowed in the first quarter.

Stocks on Thursday had their best day since January, jumping 500 points or 1.5 percent Thursday on the Dow Jones Industrial Average in reaction to strong corporate earnings reports (CNBC).

Bloomberg News: U.S. in the “worst of both worlds” with high inflation and a GDP slowdown.

“If you look at a lot of the indicators coming out from the Federal Reserve, the New York Fed Recession Probability Model is showing the highest probability of recession since 1980. And not only that, the only time it’s been higher than it is today is when the U.S. has already been in recession,” Principal Asset Management Chief Global Strategist Seema Shah told Yahoo Finance. “But the bond market is typically very, very forward looking. … It’s telling you that there is a leading lag. It’s going to come through in a couple of months.”

Meanwhile, how did a pair of Russian pranksters get Federal Reserve Chairman Jerome Powell on the phone in January, fooling him into thinking he was speaking with President Volodymyr Zelensky of Ukraine? Bloomberg News reported it happened and the Fed confirmed it. The conversation, which Russian state TV says was about 15 minutes long, was circulated, perhaps in manipulated form. Powell is not the first prominent Western leader to be tricked. French President Emmanuel Macron was another (Reuters).

Reuters: U.S. officials are coordinating urgent talks to try to rescue First Republic Bank.

➤ POLITICS

For months it’s been clear that for Senate Democrats, next year’s election map spells trouble and holding the majority will be tough. Democratic incumbents in red states are targets and Thursday proved it when West Virginia Republican Gov. Jim Justice announced he wants to win the state’s GOP primary (he’s the third Republican to enter the race) to challenge Sen. Joe Manchin (D-W.Va.) in 2024 (The Hill).

Manchin, one of the chamber’s most conservative Democrats, has said he won’t decide whether to seek reelection until the end of the year. “I will win any race I enter,” he said on Thursday (CNBC). He has not discouraged speculation he could decide to challenge Biden for the presidency.

2024 watch: Five reasons Democrats are worrying about Biden’s reelection campaign (The Hill). … Seven things to know about the president’s news media diet (Politico magazine). … Will there be any presidential debates in 2024? (Vox). … Florida Gov. Ron DeSantis (R) vs. Disney: How did it come to this? (The Hill). … Sen. Marco Rubio (R-Fla.) told Fox News he has concerns about “politicians,” including DeSantis, who appear to take aim at companies for “political purposes”(The Hill). … “He raped me whether I screamed or not!” E. Jean Carroll, a former magazine columnist who has accused former President Trump of raping her in the 1990s, said during Thursday’s cross-examination at trial. Trump has denied any wrongdoing (The New York Times). … Former Vice President Mike Pence appeared Thursday before the grand jury hearing evidence about Trump’s actions after he lost the 2020 election (The New York Times). … Proposed abortion restrictions failed in South Carolina and Nebraska on Thursday as conservative lawmakers indicated worries about political backlash (The Washington Post).

IN FOCUS/SHARP TAKES

➤ INTERNATIONAL

Sudan’s army and the rival paramilitary group Rapid Support Forces (RSF) continued to battle in Khartoum on Thursday, testing U.S. and African efforts to pause a conflict that has turned residential areas into war zones and sent tens of thousands fleeing for their lives. In nearly two weeks of conflict, hundreds of people have been killed and thousands wounded, as two rival generals remain locked in a power struggle threatening to destabilize the wider region. Though the fighting has been focused in the capital, Khartoum, it has also spread to the western province of Darfur, where conflict has simmered ever since civil war erupted there two decades ago (Reuters).

Residents of Khartoum have learned to survive side by side with armed fighters over the past 12 days. RSF fighters have moved into homes and taken over stores and hospitals, alternatively terrifying civilians and giving them gifts. It has been hard to tell which side is winning in the battle between Sudan’s rival generals; the army on Thursday characterized the situation in the capital as “a bit complicated” (The New York Times).

“Apparently they don’t have anyone that gives them orders so they’re just doing their thing,” Dania Atabani, who lives in Khartoum, told the Times. “Very dangerous and chaotic.”

▪ Reuters: How Sudan’s military factions set a path to war as mediation stalled.

▪ Financial Times: Sudan’s generals and the challenge of democracy.

▪ BBC: Three ways the conflict in Sudan could play out.

▪ Al Jazeera: Why the U.S. evacuation from Sudan left some Americans behind.

Russia fired more than 20 cruise missiles and two drones at Ukraine early Friday, killing at least 12, officials said. The attacks included the first one against Kyiv in nearly two months, although there were no reports of any targets hit (The Associated Press).

Meanwhile, Russia has enacted a vast network of fortifications sweeping down from the western part of the country through eastern Ukraine and onto Crimea in anticipation of a major Ukrainian attack. Thousands of Ukrainian troops have been training in the West to use different military assets on the battlefield in a combined way ahead of a counteroffensive, but military experts said Moscow’s defenses, mostly built in the wake of Ukraine’s rapid autumn advances, could make it harder for Kyiv to attack (Reuters).

“It’s not the numbers for the Ukrainians. It’s ‘Can they do this kind of warfare, combined arms operations?’” said Neil Melvin, an analyst at the Royal United Services Institute. “The Russians have shown they can’t do it and they’ve gone back to their old Soviet method of attrition.”

▪ The New York Times: Fierce fighting has yielded heavy casualties but little movement. Ukrainian forces need heavy weapons to change that, but they say it is no guarantee.

▪ The Wall Street Journal: Chinese leader Xi Jinping seeks to regain initiative in Europe through Ukraine.

▪ The Washington Post: DeSantis declines to weigh in on judicial overhaul in Israel, which was panned by Biden.

▪ The Associated Press: What is the latest on Israeli Prime Minister Benjamin Netanyahu’s corruption trial?

OPINION

■ What the Trump rape trial has already revealed, by Ruth Marcus, associate opinion editor, The Washington Post. https://wapo.st/3Hlp9k5

■ How Texas is trying to rig the U.S. judicial system to control immigration policy, by Stephen I. Vladeck and Max Wolson, opinion contributors, The Hill. https://bit.ly/44dl0sC

WHERE AND WHEN

📲 Ask 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 9 a.m. to consider a resolution that would repeal a Commerce Department rule waiving tariffs on solar parts assembled in four Southeast Asian countries using parts from China. At 10 a.m., House Minority Leader Hakeem Jeffries (D-N.Y.) will hold a press conference.

The Senate meets Monday at 3 p.m. to resume consideration of the nomination of Anthony Johnstone to be a U.S. circuit judge for the 9th Circuit.

The president will receive the President’s Daily Brief in the Oval Office at 11:15 a.m., accompanied by Vice President Harris. Biden will present the Commander-in-Chief’s trophy to the Air Force Falcons in the East Room at 2:30 p.m. Biden, first lady Jill Biden, Harris and second gentleman Doug Emhoff will headline a Democratic National Committee reception at 6:45 pm. at the Salamander D.C. Hotel in Washington. The president will return to the White House by 7:30 p.m.

The vice president and Emhoff at 7:55 p.m. will join the president and first lady at a Washington political reception for the Democratic National Committee.

Secretary of State Antony Blinken is in Denver, Colo., where he will visit the Denver Police Crime Laboratory at 10:50 a.m. local time to meet with mayors from the Western Hemisphere to discuss efforts to combat fentanyl trafficking. He will meet female mayors from the Western Hemisphere at 1 p.m. local during the Cities Summit of the Americas, held in Denver. Blinken will visit the commercial expo set up at the Cities Summit at 2 p.m. local time. He will deliver the closing keynote address at the summit at 3:45 p.m.

Economic indicator: The Bureau of Economic Analysis will report at 8:30 a.m. on personal income and spending in March.

ELSEWHERE

➤ MICROBES & OUTER SPACE

🦠 Tiny organisms could help solve the massive pollution caused by mining, a new study found. Growing microbes on toxic mine waste could help companies capture pollutants while meeting rising demand for critical minerals, The Hill’s Saul Elbein reports. Researchers from University of Waterloo in Canada found that cyanobacteria — a kind of bacteria that gets energy from light, like plants — helped bind trace metals in mine waste into more easily retrievable minerals.

The process of using living organisms to pull minerals from rock, soil and waste is called “biomining” (or sometimes “bioleaching”) and could help increase efficiency and reduce ecological damage from surging production of the wide array of minerals expected to be essential in the move to electrify transportation and the grid.

🚀 Two International Space Station crew members will take a spacewalk today to continue hardware installation to bring online new solar arrays to supply the station with power. The extravehicular activity will mark the first ever spacewalk performed by an Arab astronaut, Sultan Al Neyadi of the United Arab Emirates, in conjunction with an American NASA astronaut, making UAE one of only 10 countries that have participated in an ISS-based spacewalk.

The two-person mission, International Space Station U.S. Spacewalk 86, will be led by NASA astronaut Steve Bowen and is scheduled to last six and a half hours starting at 9:15 a.m. ET (The Hill).

▪ Space.com: NASA updates schedule for astronaut flights to space station through 2024.

▪ Independent: NASA extracts oxygen from lunar soil in “big step” towards living on the Moon.

➤ STATE WATCH

🛤️ In Hammond, Ind., and other U.S. locations, halted freight trains block children’s and teachers’ routes to schools through what are supposed to be rail crossings. The students on foot contemplate their choices: Walk around the trains, perhaps a mile or more, or risk their lives or limbs to climb under and through spaces between train cars to clear the tracks. The stopped trains, sometimes blocking pass-throughs for days and weeks, also interfere with emergency and fire vehicles. ProPublica used video and photographs to show how youngsters try to navigate the risks, sometimes with parental supervision, to make their way to school: “As rail profits soar, blocked crossings force kids to crawl under trains to get to school.” “I feel awful about it,” Scott Miller, the Hammond school superintendent, told ProPublica. His district asked Norfolk Southern for its schedule so that the schools can plan for blockages and students can adjust their routines. The company disregarded the requests, school officials said. A spokesman for the company said train schedules vary so much that giving Hammond a schedule might not be helpful, adding the company is in “constant communication” with local officials.

🐻 In Orlando, an elusive juvenile black bear, which was tracked for days by the Florida Fish and Wildlife Conservation Commission in hopes of capturing it as it wandered through residential Florida, was hit by a car on Thursday and killed (WESH).

⚰️ In cities around the country, pedestrian deaths have soared by at least 70 percent since 2010, federal data show, an increase that safe-streets advocates attribute largely to the nation’s love affair with trucks and SUVs. Many more trucks than cars are sold to American drivers, an imbalance that appeared in the early 2010s. Trucks are heavier and higher off the ground, deadly physics when they strike a human. Cyclist fatalities are up, too (The Hill).

THE CLOSER

And finally … 👏👏👏 Bravo to this week’s Morning Report Quiz winners! Inspired by Harry Belafonte, we looked for trivia masters who knew (or guessed) about the activist and entertainer who died this week in New York at 96.

Here’s who went 4/4 in the celebrity category: Lori Benso, Robert Bradley, Randall S. Patrick, Stan Wasser, Paul Harris, Peter Sprofera, Patrick Kavanagh, Steve James and Ki Harvey.

They knew that Belafonte received many awards in his long life, but he never received the Presidential Medal of Freedom.

“Calypso” was the title of Belafonte’s hit album, which in 1956 stayed at the top of the Billboard chart for 31 weeks.

A state legislator in South Carolina introduced a bill to fine any theater showing the 1957 film “Island in the Sun” starring Belafonte, because of a chaste romance between his character and a white woman played by Joan Fontaine.

Belafonte, a noted political organizer and activist for civil rights and other causes, considered running for the Senate from New York in 1986 (info included in this week’s national obituaries). Thus, the correct answer was “false.”

👉 The New York Times: Harry Belafonte: A life in photos.

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