What to Know in Washington: Debt Limit, USMCA Clocks Ticking

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 Speaker Nancy Pelosi to quickly wrangle a restive Democratic caucus that has an eye on the 2020 elections.

House lawmakers return today 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 (D-Calif.) 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 Rep. Dan Kildee (D-Mich.), 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. Erik Wasson and Billy House preview the pre-August agenda.

Photographer: Andrew Harrer/Bloomberg

U.S. Could Exceed Debt Limit in September: The Bipartisan Policy Center, an independent think tank, said yesterday there’s a “significant risk” that the U.S. will breach its debt limit in September unless Congress acts. The group revised its previous projection of an October to November date at which the U.S. could default on payment obligations in the face of declining corporate tax revenue projections this fiscal year, Erik Wasson reports.

Shelby Says No Markups Until Caps Deal: Senate Appropriations Chairman Richard Shelby (R-Ala.) said his panel won’t mark up any spending bills until there is a budget caps deal. Shelby said Republican leadership doesn’t want any committee markups without those final numbers. “If we get a number, we can move,” Shelby said. Shelby had previously said he’d like to start work on spending bills in early July even if there was no agreement on top-line spending levels. Read more from Elizabeth Elkin.

Happening on the Hill

Anti-ACA Ruling Would Cause Chaos, Wyden Says: A failure of Obamacare to be upheld as constitutional would “cause chaos throughout the health-care system,” a leading Senate Democrat said yesterday. Sen. Ron Wyden (D-Ore.), ranking Democrat on the Senate Finance Committee, said an upheaval would extend beyond people with Affordable Care Act insurance plans or those in states that expanded Medicaid.

He and other Democrats spoke to reporters as the Fifth Circuit Court of Appeals prepared to hear oral arguments today in the appeal of a case in which a judge in Texas struck down the entire law. Senate and House Democrats cast doubts on Republicans’ willingness to work with them to protect some ACA provisions. There’s no way for Republicans and the president to “pick back up the pieces” if the ACA is struck down, but Congress is “going to need an answer immediately,” Sen. Chris Murphy (D-Conn.) said. Read more from Shira Stein.

Sanders, AOC Team Up on Climate Bill: Sen. Bernie Sanders (I-Vt.) is teaming up with Rep. Alexandria Ocasio-Cortez (D-N.Y.) on a measure calling for “massive” federal action to reverse climate change. Sanders is seeking to shore up his progressive base as others like Sens. Elizabeth Warren (D-Mass.) and Kamala Harris (D-Calif.) make gains in opinion surveys. A draft of the resolution obtained by Bloomberg declares that global warming caused by humans has resulted in an “emergency” that “impacts the economic and social well-being, health and safety, and national security” of the U.S. Read more from Laura Litvan and Steven T. Dennis.

Legislation Sought to Protect Children: Speaker Pelosi said yesterday that new legislation is necessary to deal with the “horrible conditions children endure at the border.” Democrats must do something while Senate Majority Leader Mitch McConnell (R-Ky.) “refuses to help the children suffering in these deplorable conditions,” Pelosi said in a letter to her party colleagues.

Pelosi cites suggestions from lawmakers, including a ban on the separation of families; reporting deaths of children in custody within 24 hours and no advance notice required for lawmaker visits to facilities on the border, a 90-day limit for any unaccompanied minor to spend at an influx facility, and the replacement of contractors not meeting influx facility standards of care. Read more from Billy House and Erik Wasson.

9th Circuit Close to Another Trump Judge: The nation’s largest appeals court could as early as today have more judges appointed by Trump than any other federal circuit. Kirkland & Ellis partner Daniel Bress is set to become the seventh Trump selection to join the San Francisco-based U.S. Court of Appeals for the Ninth Circuit, which the chief executive has castigated for being liberal and for ruling against his immigration and other policies. The Senate approved, 50 to 42, a procedural motion yesterday to end debate on his nomination an d clear the way for a confirmation vote today. With each new appointment, Trump gets closer to flipping the court to a majority of judges appointed by Republican presidents. Read more from Jake Holland.

Hurdles for Defense Bill—BGOV Podcast: The House this week will take up its version of the annual National Defense Authorization Act amid opposition from Republicans and potential defections from progressives. The Senate passed its version of the bill, which will need to be reconciled with the House’s version. On this episode of “Suspending the Rules,” BGOV’s defense reporters Roxana Tiron and Travis Tritten break down the House bill, highlight key differences with the Senate’s bill, and preview the measure’s prospects. Listen and subscribe: Apple Podcasts | Overcast | Stitcher | Spotify

Elections & Politics

How the Bidens Made Millions: Joe Biden has long told voters he was just a regular guy who shared their struggles. But the expected release of his most recent financial disclosures today could paint a very different picture of “Middle Class Joe.” The filings will give some details of how much the former vice president has earned since leaving office after four decades of public service. Read more from Bill Allison.

Swalwell Withdraws From 2020 Race: Rep. Eric Swalwell (D-Calif.) announced yesterday he’s exiting the presidential contest and will be seeking re-election to his House seat, Sahil Kapur reports. Swalwell, who focused his campaign on tighter gun control, dropped out after just three months. “Today ends our presidential campaign,” he said in Dublin, Calif. Swalwell said his goal was to win and that his candidacy hadn’t been “a vanity project” or a means “to write a book.”

Swalwell said that while he moved the needle among Democrats on gun control and buying back assault weapons, he didn’t see a path to victory. “Being honest with ourselves, we had to look at how much money we were raising, where we were in the polls,” he said. “We have to be honest about our own candidacy’s viability.” He wouldn’t say whom he would endorse in the presidential race. “If Megan Rapinoe gets in the race I’m probably going to endorse her,” he quipped, referring to the captain of the U.S. women’s soccer team, which won the World Cup on Sunday.

Steyer Outspends in Iowa Amid Speculation: Billionaire hedge fund manager and impeachment maven Tom Steyer may be thinking yet again about getting into the presidential race. If he does run, Steyer could already have a leg up on Democrats in Iowa: He’s spent more on TV there than the rest of the field of 20-plus candidates combined. The Need to Impeach PAC, almost entirely financed by Steyer, has spent over $445,000 in the Des Moines market alone, according to a Bloomberg analysis of television station files. Gregory Korte has more.

Trump Says His July 4th Event to Be Annual: Trump liked his Fourth of July event in Washington so much, he says he’s going to do it again in 2020, when he’ll be facing re-election, and maybe “for the foreseeable future.” The Fourth was “a wonderful day for all Americans and based on its tremendous success we’re just making the decision—and I think I can say, we’ve made the decision to do it next year and maybe we can say for the foreseeable future,” Trump said. Read more from Justin Sink.

Presidential Scrutiny and Oversight

Sater to Testify Privately: Trump’s former business associate Felix Sater will testify privately before the House Intelligence Committee today, The Hill reports. Sater’s lawyer Robert Wolf confirmed his attendance to The Hill. The committee said it would subpoena Sater after he failed to appear in June for a voluntary interview in its Russia probe.

Nadler Issues Donaldson Replies: House Judiciary Chairman Jerrold Nadler (D-N.Y.) released written responses submitted by Annie Donaldson, the chief of staff to former White House Counsel Don McGahn, as part of his panel’s investigation into alleged obstruction of justice by Trump, his associates, and aides. White House lawyers have “refused to allow Ms. Donaldson to answer any questions about the presidential misconduct detailed in the Mueller report,” the panel said in a statement. Read more from Giovanna Bellotti Azevedo.

Trump Asks Court to Toss Emoluments Suit: Lawyers for Trump asked a U.S. appeals court to take up, and then throw out, a suit from Democrats trying to force him to come to them for permission before being enriched by foreign governments. Trump’s lawyers filed what’s called a “petition for a writ” to the appeals court after U.S. District Judge Emmet Sullivan not only refused to put the case on hold while they fight his rulings refusing to dismiss the Democrats’ case, but also refused to allow them to appeal his decision. Read more from Andrew Harris.

Russian Meddling Prosecution Order: A federal judge in Washington ordered the U.S. to limit the public statements it makes about a Russian consulting firm that was indicted for interfering in the 2016 general election, but stopped short of finding the government in contempt. U.S. District Judge Dabney Friedrich in an order warned the government and made public yesterday that “any future violations of that order will trigger a range of potential sanctions,” possibly from an admonition to disbarment. Read more from Joe Schneider.

ACLU Objects to Trump Moves on Census: The American Civil Liberties Union says the Trump administration shouldn’t be allowed to switch its lawyers in its effort to put a citizenship question on the 2020 census without an explanation. In court filings seeking permission for the withdrawal of civil service attorneys who have litigated the census case for months, the Justice Department didn’t say why the team is being replaced.

The latest flap comes after government officials worked through the July 4 holiday in search of a way to insert the citizenship question on the census following a Supreme Court ruling, which put the administration’s plan on hold because its rationale for the question was “contrived.” The forms for the once-a-decade headcount must be prepared soon to meet the deadline for 2020. Read more from Robert Burnson.

Fallout of Epstein Case

Acosta’s Standing in White House: Labor Secretary Alex Acosta’s standing in the Trump administration was in peril even before the indictment of Epstein cast a fresh spotlight on the former prosecutor’s role in a decade-old plea deal for the financier, people familiar with the matter said. Corporate lobbyists and some administration officials have grown frustrated that Acosta hasn’t moved fast enough on deregulation and other business-friendly initiatives, the people said. No decision has been made on Acosta’s future in the administration, they added, though two people said that his time is short.

As a U.S. attorney in South Florida in 2008, Acosta brokered a plea agreement in secret with Epstein that allowed him to escape serious punishment for earlier allegations of sexual misconduct. Acosta’s dealings with Epstein are under renewed scrutiny after federal prosecutors in Manhattan charged Epstein yesterday with sex trafficking and conspiracy.

Last night, Pelosi tweeted that he must step down. “As US Attorney, he engaged in an unconscionable agreement w/ Jeffrey Epstein kept secret from courageous, young victims preventing them from seeking justice,” Pelosi said. Read more from Jennifer Jacobs, Saleha Mohsin, Josh Wingrove and Benjamin Penn.

Barr Weighs Recusing Himself: Attorney General William Barr is determining whether he needs to recuse himself from the Epstein prosecution, according to a Justice Department official yesterday. Barr already has recused himself from matters related to Acosta, a fellow Cabinet member, according to the official. Read more from Chris Strohm.

More Coverage:

What Else to Know

Trump, Qatar Emir to Talk Defense: Trump said yesterday he will talk “about defense, purchases and trade” with Qatar’s Emir Sheikh Tamim Bin Hamad Al Thani when they hold a bilateral meeting at the White House today. Trump predicted they will have “very good talks” in comments to reporters at the Treasury Department, where he was having dinner with the emir, Treasury Secretary Steven Mnuchin and business leaders, Justin Sink reports.

New England Patriots owner Robert Kraft joined Trump at the dinner, less than five months after the billionaire businessman was charged as part of a South Florida prostitution investigation, Sink reports. Kraft was among a group of government and business leaders invited to the dinner. He sat one seat away from the president, with International Monetary Fund Chairwoman Christine Lagarde, who last week was nominated to lead the European Central Bank, seated between the two. Los Angeles Rams owner Stan Kroenke was also seated at the head table. In February, Trump said the episode involving Kraft was “very sad” but pointed out that the Patriots owner had “proclaimed his innocence, totally.”

U.K. Ambassador, Trump Row: U.K. Ambassador Kim Darroch was disinvited from the dinner, according to a U.S. official. The move to pull the invitation came after Trump tweeted his government “will no longer deal with” Darroch following the publication this weekend of leaked cables and memos in which the ambassador derided the U.S. president, Sink and Robert Hutton report.

The U.K. is trying to prevent a row with Trump from escalating. “A period of cooling tempers is now required,” former U.K. Foreign Secretary William Hague told BBC Radio today. The British government should be patient, not escalate things,” Hague said. Handling the fallout of a major diplomatic spat with Britain’s most important foreign ally will be an early headache for either Boris Johnson or Jeremy Hunt, who are vying to replace Theresa May as prime minister and will almost certainly face que stions on the matter at a televised debate later today. Read more from Joe Mayes, Robert Hutton and Justin Sink.

Esper Signs Ethics Deal: Acting Defense Secretary Mark Esper has proposed new exceptions from a pledge to recuse himself from decisions involving his former employer Raytheon, reflecting his move to the top of Pentagon decision-making. Esper, who was the defense contractor’s chief lobbyist before coming to the Defense Department, sold his Raytheon stock in early 2018 under an agreement reached with the Office of Government Ethics when he became Army secretary the previous year. He’s still entitled to at least $1 million in deferred compensation after 2022 under that agreement. Read more from Tony Capaccio and Bill Allison.

Iran Threatens More Enrichment: Iran said it’s already begun enriching uranium beyond the cap set in the landmark 2015 nuclear deal and threatened to boost enrichment to 20% purity, escalating tensions with European partners who are struggling to salvage the accord in the face of tightening U.S. sanctions. Iran announced it would abandon the 3.67% limit for uranium enrichment as it scales back commitments in response to U.S. penalties reimposed after Trump exited the deal last year. Ladane Nasseri and Gregory Viscusi have more.

Trump Touts Environmental Record: Trump yesterday boasted that the U.S. is ranked No. 1 for access to clean water as he emphasized U.S. environmental gains despite seeking to roll back rules meant to preserve them. “From day one, my administration has made it a top priority to ensure America has the cleanest air and water in the planet,” Trump said to conservative advocates assembled in the the East Room of the White House. He rattled off an array of achievements, including reductions in conventional air pollution, cleanups of toxic Superfund sites and efforts to combat algae blooms in Florida. Read more from Jennifer A. Dlouhy.

Governors Join California Emissions Push: Governors from more than 20 states — including some won by Trump in the 2016 election — joined California officials to urge his administration to implement automobile emissions rules that are consistent nationwide and require efficiency improvements each year. In a joint statement today, 23 governors including California Gov. Gavin Newsom (D), called for a “common-sense approach” to nationwide requirements that will cut tailpipe greenhouse gas emissions to combat climate change and avoid regul atory uncertainty sparked by a legal battle over the administration’s 2018 proposal to ease the rules. Read more from Ryan Beene.

NLRB’s Emanuel Should Sit Out McDonald’s Case, Leaked Records Say: Federal labor board officials concluded last year that member William Emanuel should sit out a major, ongoing case against McDonald’s that has sparked conflict-of-interest concerns, according to an internal agency document obtained by Bloomberg Law. It was filed by a group of workers who are arguing that McDonald’s LLC should be considered a joint employer of the workers in its franchisees’ restaurants and share liability along with the restaurant owners.

The workers allege that managers in franchised restaurants violated labor laws by interfering with their federally protected right to organize in the workplace during Fight for $15 rallies. Emanuel and NLRB Chairman John Ring, both appointees of Trump, have been asked to recuse themselves from the case by the workers’ attorneys because of alleged conflicts of interest. The workers’ attorneys submitted evidence showing that Emanuel and Ring came to the board from law firms that had set up a hotline McDonald’s franchisees could call for legal advice on how to deal with worker protests at their restaurants and created a training program on responding to employee organizing. Read more from Hassan A. Kanu.

Teachers Sue Navient Over Student Loans: A teacher’s union lawsuit against a student loan servicer will go forward after a federal judge deemed one of 15 counts in order on Monday, Emily Wilkins reports. The American Federation of Teachers argued that Navient gave borrowers in New York “inaccurate and misleading information,” violating state consumer protection laws. U.S. District Judge Denise Cote said Navient hadn’t violated consumer protection laws in other states because there were not enough details about the conversations betwee n students and loan servicer employees.

AFT president Randi Weingarten said she was “grateful” for the ruling in a statement Monday night. “We will move forward with the guidance provided by Judge Cote and secure justice for those teachers and others misled by Navient and unfairly trapped in crippling student loan debt,” she said.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com

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