Debt Limit, USMCA Clocks Ticking as Pelosi Wrangles Her Party
Debt Limit, USMCA Clocks Ticking as Pelosi Wrangles Her Party
(Bloomberg) -- Congress must decide soon on a path to raise the debt ceiling, fund the government and approve a massive North American trade deal -- putting pressure on House Speaker Nancy Pelosi to quickly wrangle a restive Democratic caucus that has an eye on the 2020 elections.
Lawmakers return Tuesday from their July 4 break, facing September deadlines on must-pass fiscal bills, with just three weeks before their next recess to come up with a plan. Bipartisan talks this month will aim to set up high-stakes votes in the fall, but first Pelosi has to know where her members stand and to what extent they’ll accept compromise.
Progressive Democrats are pushing her to use these negotiations to increase domestic spending and demand Senate action on some House-passed Democratic policies -- but lack of consensus within the party risks weakening her hand in negotiations with Republicans.
“One of the challenges we are facing is putting up 218 votes within our own caucus,” said Michigan Representative Dan Kildee, referring to the number of votes normally needed for a House majority.
Pelosi has navigated multidimensional negotiations before, but this month’s talks with Republicans will unfold as her party ramps up its effort to unseat President Donald Trump and regain control of the Senate in the 2020 election. At the same time, with former Special Counsel Robert Mueller set to testify next week before two House committees on his investigation into Russian interference with the 2016 election, some Democrats will likely intensify their calls to impeach Trump.
Debt Limit Deal
One of the most contentious negotiations will be on spending levels. Congress still has to appropriate funds to keep the government open in the fiscal year that begins Oct. 1, which requires a bipartisan deal on total spending levels for defense and non-defense domestic programs and agencies. Without an agreement, current law would slash federal outlays by $126 billion in December.
Pelosi says those negotiations should include a deal to raise the debt limit. While previous revenue projections estimated that the Treasury Department could stretch so-called extraordinary measures as long as November to still meet payment obligations, the Bipartisan Policy Center said Monday that the default risk could arrive by early September.
“We’ll see how conversations go,” Pelosi told reporters Tuesday. “We certainly don’t want any thought of default on the part of the full faith and credit of the United States of America.”
Lawmakers from both parties say Congress will raise this borrowing limit in time. It is this imperative that makes the measure an attractive vehicle for other deals.
A meeting last month among congressional leaders, Treasury Secretary Steven Mnuchin and other White House officials ended in acrimony when Republicans complained that Democrats were demanding more spending. While no further meetings are currently scheduled, Alabama Senator Richard Shelby, the Republican who chairs the Appropriations Committee, said Tuesday he’s urging leaders to work out a deal to fund the government and raise the debt limit as soon as possible.
“A partial government shutdown is not good, but a partial government default of our credit would send shock waves through the financial markets throughout the world,” Shelby said. “The secretary of the Treasury is right, we ought to deal with both of those items soon.“
Representative Raul Grijalva, an Arizona Democrat and chairman emeritus of the Congressional Progressive Caucus, said liberal Democrats should insist on more domestic spending in the debt ceiling deal.
“We need to take a stand and this is it,” Grijalva said. “It says we are prepared to help people in this country, including people in poverty.”
Grijalva said he understands there are differences among House Democrats but the party’s most moderate members should not be setting the tone in talks.
“I understand pragmatism,” he said. “But we need pragmatism with passion.”
Representative Derek Kilmer of Washington state, who chairs the moderate New Democrat Coalition, said the party is “far more unified” than it appears, especially when it comes to avoiding any risk of a default.
June Infighting
This week will be the first time House Democrats meet as a party since infighting burst into public last month over an emergency border spending measure. Pelosi was forced to accept a bipartisan Senate bill after her own moderates threatened to oppose a rival House version with greater protections for child migrants.
That decision, and Pelosi’s subsequent explanation of it, stoked a public war of words between the speaker and liberal firebrands like New York Representative Alexandria Ocasio-Cortez.
While progressives like Kildee complained that moderates gave up too early on border funding, Representative Stephanie Murphy of Florida said passing the bill that the Senate approved 84-8 was one of the most significant bipartisan achievements of this Congress.
“By focusing on the unprofessional behavior of a few members, people are missing the bigger picture, which is one of bipartisanship,” said Murphy, a leader of the moderate Blue Dog Democrats.
‘Concrete Actions’
House leaders are looking to unify the caucus this month around bills to raise the federal minimum wage to $15 per hour and to improve election security, even though these bills have no chance of becoming law with a Republican White House and Senate.
“The House has an aggressive July schedule focused on concrete actions to address the core concerns of the American people,” said Pelosi spokesman Drew Hammill on Monday.
Still, it’s the strategy on bipartisan negotiations and votes that risks alienating some factions of the House majority.
The annual defense policy bill coming to the House floor this week could provide the first signs of strains. Republicans largely oppose the $733 billion bill because they want to see $750 billion in defense funds, meaning Pelosi will likely have to rely on just Democratic votes to pass the measure. That could allow progressives who want less defense spending to try to block the legislation.
“My hope is that my colleagues would engage in a positive and productive manner,” Murphy said of the progressives.
Trade Deal
Pelosi is also stuck between reticent Democrats and an anxious White House when it comes to approving the new U.S.-Mexico-Canada free trade agreement, intended to replace the Nafta accord.
A key question this month is whether Democrats begin to accept compromises on labor rights, environmental protections, drug pricing and strengthened enforcement that House working groups are negotiating with the administration. The first test could be on the USMCA’s protections for drug patents, which Democrats say favors pharmaceutical companies at the expense of generic manufacturers.
Tiring of Democrats’ pleas for patience, some White House officials advocated for sending Congress the implementing bill as soon as this week, which would start mandatory timelines for a vote. Moderate and progressive Democrats warned that such a move would backfire.
Even if a deal is reached, some members say the speaker should demand Senate action on House-passed bills, allowing measures regarding health care and gun safety to actually become law.
“We need to use the momentum behind updating Nafta to pass a key domestic priority,” said New York Representative Gregory Meeks. “I think that we should be able to get bipartisan agreement on some of the domestic priorities.”
Impeachment
These policy initiatives and necessary deals risk getting overshadowed next week by Mueller’s made-for-TV testimony at a joint session of House committees.
Mueller himself has made clear that he is appearing under subpoena and has no intention of going beyond his April report on his 22-month investigation. How his testimony plays out could set the tone for what House members hear from constituents on the topic of impeachment, when they go home.
“There’s no guarantee Mueller’s testimony will jump-start anything,” says Samuel Everett Dewey, a former congressional lawyer who led investigations in key committees in both the House and Senate. “Maybe there will be some sort of dramatic testimony, but we’re not sure.”
Pelosi has deflected calls from roughly 80 Democrats for impeachment, and her leave-it-in-limbo strategy has left six committees dealing with witness defiance and relying on uncertain court outcomes. White House stonewalling has been met with little, if any, tangible consequences, and that has frustrated Democrats who believe a consolidated Trump investigation under the single tent of impeachment would be more effective.
With the Democrats’ discontents continuing to simmer, Representative Mark Meadows, the North Carolina Republican who leads the conservative Freedom Caucus, predicted they would squander July’s legislative days, leaving them little to talk to their constituents about in August.
“Democrats will continue to hold multiple hearings in an attempt to demonstrate some nefarious motives on behalf of the president,” Meadows said. “Most of the town halls will be lacking substance because of the failure to address jobs, pensions, trade, transportation and prescription drug prices.”
--With assistance from Laura Litvan.
To contact the reporters on this story: Erik Wasson in Washington at ewasson@bloomberg.net;Billy House in Washington at bhouse5@bloomberg.net
To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo, Anna Edgerton
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