Washington Weekly - May 4

This Week:

The Senate is in session and the House is in recess.   

Federal:

Breakthrough: After House Republicans passed legislation addressing their priorities for a debt limit solution as well as spending cuts last week, the White House announced that President Biden would meet with the four top legislative leaders – Speaker Kevin McCarthy (R-CA), House Minority Leader Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY) – on May 9^th to discuss the debt limit increase.  This is major shift from several, recent indications that President Biden would not negotiate on the debt limit without it being decoupled from the budget.

What Changed:  On Monday, Treasury Secretary Janet Yellin announced that the federal government could default as soon as June 1.  This forecast is much earlier than other financial analysts had predicted – and adding tension to an already tense situation.  Should the federal government default on its debt, it would send massive reverberations throughout the financial world.  In addition, First Republic bank was seized by the FDIC and promptly sold to JPMorgan Chase, after what represented the second major bank failure in the last few weeks.  As the Administration has taken steps to reassure the world the American banking system is secure, a debt default would clearly undo this work and likely cause damage to the economy. 

What’s Next:  The House and Senate only have two weeks of legislative work in May, before taking a break for the annual Memorial Day recess.  Those session days will be critical in getting a deal done.  While there has been speculation that Speaker McCarthy will have a heavy lift in getting his caucus to agree on any deal with Democrats, he has proven since his election as Speaker that Republicans can unify on key votes.  At the same time, the Senate will be introducing its vision of what the FY2024 budget should look like in the coming days.  Sen. Joe Manchin (D-WV) is also expected to introduce legislation that would strip provisions of last year’s Inflation Reduction Act (IRA) that ‘contribute to the national debt’ – reopening debate on a bill that Republicans may be able to take advantage of in the Senate, with both the support of Sen. Manchin and the continued absence of Sen. Dianne Feinstein (D-CA). 

Politics:

Senate Watch:  Delaware: Sen. Tom Carper (D) could be contemplating retirement and Delaware’s sole House member, Rep. Blunt Rochester (D), could be his most likely successor; Maryland: This week, longtime Democratic Maryland Sen. Ben Cardin announced that he would not see re-election, setting off a contentious Democratic primary to succeed him;  West Virginia:  Former Democratic, now Republican Gov. Jim Justice announced his campaign for the United States Senate, touching off a contest against former Gov. and current Sen. Joe Manchin.  There has been continued speculation that Sen. Manchin could caucus in the Senate and/or run as an independent.  Democrats best chance to hold the seat still lies in Sen. Manchin, although West Virginia is a state that former President Trump won 69%-30% in 2020.  Rep. Alex Mooney (R) already announced his Senate campaign earlier this year. 

President Biden Job Approval (RCP Average): 43% Approve – 54% Disapprove. The House currently has a composition of 222 Republicans to 213 Democrats. The Senate is comprised of 51 Democrats and 49 Republicans.