What to Know in Washington: Pelosi Weighs Spending Cut Options

The White House late yesterday sent Speaker Nancy Pelosi a proposed list of spending cuts to give her options for a budget agreement that she wants to include in a deal to raise the debt ceiling, according to two people familiar with the proposal.

The Trump administration is giving Democrats a menu of savings equaling at least $574 billion to offset the costs of a two-year budget cap agreement. The White House is seeking to pay for at least $150 billion of the cost for raising the caps and the next step would be for Pelosi to accept or reject items on the list of of proposed cuts.

Roughly half of the proposals are cuts and the others come from reforms, both people said. One of the suggested reforms is the drug pricing plan from the White House’s 2020 budget, which would save $115 billion, one of the people said.

There are no revenue or tax increases on the list.

The offer also includes a proposal to extend budget caps for two extra years after they expire in 2021 in order to save $516 billion. Under current law, $126 billion in automatic cuts would take effect by the end of the calendar year if the caps are not raised.

Pelosi and Treasury Secretary Steven Mnuchin said yesterday they are close to an agreement, continuing their conversations even as Mnuchin is in France for a meeting of the Group of Seven. Congressional leaders have been pushing the White House to agree to spending levels for next year, which would allow a budget caps bill to move with the debt limit fix.

Pelosi yesterday said she wants to file a bill this week to set up House votes next week on the package. The House departs for a six week recess next Friday. Read more from Jennifer Jacobs and Erik Wasson.

Photographer: Andrew Harrer/Bloomberg
Pelosi at the Capitol yesterday.

Happening on the Hill

Military Service Hinders Filling FAA Posts: The acting administrator of the Federal Aviation Administration, who’s been leading probes into the Boeing 737 Max crashes, may be out of a job unless Congress waives a federal law. That’s because of a statute that bars two ex-military officers from taking the helm of the civilian aviation regulator. Dan Elwell, the FAA’s deputy administrator and current acting administrator, and Steve Dickson, the president’s nominee to lead the agency, are both former armed forces officers.

If the head of the FAA is a former regular officer of an armed force, the deputy administrator may not be an armed force officer either on active duty, retired as a regular officer, or a former regular officer. Elwell would be forced out of the agency upon Dickson’s swearing-in, barring a congressional waiver. The House and Senate will have to pass legislation to allow both Dickson and Elwell to lead the aviation agency. The Senate has queued up Dickson’s nomination for next week. Read more from Shaun Courtney.

Trump Emboldens Lawmaker Threats: President Donald Trump’s “inflammatory rhetoric” against four progressive congresswomen has “emboldened” people to “pursue acts of violence” against public officials, House Homeland Security Chairman Bennie Thompson (D-Miss.) said in a letter to Capitol Police yesterday. Thompson requested that the Capitol Police Board holds an emergency meeting to address the heightened threat environment. Threats against congresspeople are increasing, Thompson said, citing Capitol Police chief testimony. Read more from Giovanna Bellotti Azevedo.

McAleenan Says Under 1,000 Children Separated: Trump’s acting Homeland Security secretary defended the department’s response to the influx of migrants at the U.S.-Mexico border and said fewer children are being separated from their parents. House Oversight Committee Democrats yesterday questioned Kevin McAleenan, the acting Homeland Security secretary, about the separation of children and inhumane conditions reported in detention facilities. Chairman Elijah Cummings (D-Md.) asked why DHS didn’t maintain records to track children who had been separated from their parents. “The damage the Trump administration has inflicted and is continuing to inflict will impact these children for the rest of their lives,” Cummings said. Jarrell Dillard has more.

Meanwhile, a bipartisan Senate group proposed a pilot program yesterday they say is designed to quickly determine if migrant families have legitimate asylum claims—and to remove those who don’t. Senate Homeland Security Chairman Ron Johnson (R-Wis.) and fellow panel member Kyrsten Sinema (D-Ariz.) wrote a letter to the departments of Justice and Homeland Security, which they say worked with them to develop the plan, Michaela Ross reports.

The senators want the departments to launch “Operation Safe Return” in part to gather information on what points of the U.S. immigration system need more resources, and to more quickly and humanely manage the overflows of record numbers of families and child migrants coming to the southwest border. The letter outlines a roughly 15-day process in which asylum seekers at a set location along the border are medically screened and given access to non-governmental legal counsel and translation services while awaiting processing and judicial review of their claims. The program would include real-time oversight from Congress and three government watchdog groups, the letter said.

Republicans Say They Back Pentagon Jedi Contract: House Armed Services ranking member Mac Thornberry (R-Texas) and three colleagues on the House Armed Services Committee wrote to Trump to express support for the Pentagon’s $10 billion dollar cloud-computing contract. “It is essential for our national security to move forward as quickly as possible with the award and implementation of this contract,” the lawmakers wrote in their letter to Trump yesterday, referring to the Defense Department cloud project, known as Joint Enterprise Defense Infrastructure. Read more from Jennifer Jacobs.

Medicare Drug-Pricing Negotiation: Legislation that would empower Medicare to negotiate lower prescription-drug prices, a top priority for Democrats, might fall short of reaching either the House or Senate floor this summer. Committee leaders in the House say staff are designing legislation that would end what’s known as Medicare’s non-interference clause, which prohibits the government from using its buying power to demand discounts from drugmakers. Senate Democrats agree with that goal, but want to tuck it into a broader, bipartisan drug-pricing measure. Read more from Alex Ruoff.

Democrats Blast Trump Economy Report: Congressional Democrats slammed the Trump administration’s assessment of the economy in a report yesterday, saying the White House’s view is overly rosy and based on theories far different from those used by mainstream scholars. The response from Joint Economic Committee Democrats to the White House’s Economic Report of the President, which was issued in March, questioned Trump’s 3% growth forecast, saying it’s based on “extremely optimistic” and “extremely unrealistic” assumptions. Read more from Reade Pickert.

Privacy Group Talks Data Security: The Senate Judiciary Committee’s first privacy working group met with large tech companies to discuss data security and increasing the Federal Trade Commission’s authority as lawmakers work to develop federal privacy legislation before the end of the year. Lawmakers want to look at data security issues, competition and how to define harm within the context of consumer privacy being violated by internet companies, said Sen. Marsha Blackburn (R-Tenn.), who’s leading the group. Read more from Rebecca Kern.

Politics & Elections

Trump’s ‘Squad’ Attack Strategy: Trump’s attacks on four minority congresswomen have stoked a backlash in the media and condemnation in Congress. But he’s betting the political benefits are worth it – and that the comments fire up his base more than they drive away independents. One reason: Trump’s insults raise the profile of the most liberal members of the Democratic Party, playing into his hopes of making the 2020 campaign in key battleground states like Wisconsin into a referendum on socialist policies. Polls show that th e term “socialism” is a big loser for Democrats. Gregory Korte has more.

Poll Shows Biden Leading Field With 25% Support: Former Vice President Joe Biden has a solid lead in the Democratic presidential primary race, followed by Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.) and Kamala Harris (D-Calif.), according to an NBC News/SurveyMonkey national online poll released today. Biden had 25% support among Democrats and Democratic-leaning independents, the survey showed. Sanders and Warren were tied at 16% and Harris at 14%, Max Berley reports.

Meanwhile, Biden will face off against Harris on the second night of the two-part presidential primary debate in Detroit at the end of the month. Sanders will be matched up against Warren in another group of 10 candidates on the first night, July 30, Emma Kinery reports.

Biden, Sanders Health Care Feud: Biden and Sanders are engaged in open warfare over health care that could harden party divisions and play into the hands of Trump. The tension points to a broader power struggle in Washington and on the campaign trail that pits long-dominant moderates like Biden against an insurgent wing led by Sanders and Warren.

But a prolonged battle risks entrenching bitterness between the factions that threatens party unity heading into the general election. Many prominent Democrats fear that backing an end to private health insurance means defeat in the presidential race and the competitive districts that won the party a House majority in 2018. They prefer more modest legislation to expand government-run insurance options. Read more from Sahil Kapur.

Countering Election Hacking: The Senate is taking baby steps to tackle election security problems, passing small pieces of legislation after GOP leaders rejected broader efforts advanced by the House. The Senate on Wednesday passed by unanimous consent a bill (S. 1321) that would prohibit several common forms of hacking not currently covered by federal law. In June, senators passed another bill (S. 1328) that would authorize deportations of foreign agents engaging in election interference. They represent a breakthrough in the Senate, where Majority Leader Mitch McConnell (R-Ky.) has opposed bringing up election security bills., and Sen. Richard Blumenthal (D-Conn.), who sponsored the hacking bill, said yesterday more needs to be done. Read more from Emily Wilkins.

Gerrymandering Case: Justice Elena Kagan said she didn’t pull any punches in her dissent to the Supreme Court’s decision to not police partisan gerrymandering, and hopes a future court might revisit the issue. “There is no part of me that is ever going to be accepting” of last month’s ruling, she told students during a talk at Georgetown law school yesterday.

The 5-4 decision split the court along ideological lines in upholding contested congressional voting maps drawn by Maryland Democrats and North Carolina Republicans. It said policing partisanship in the redistricting process is for the political branches to do, not the judiciary. Read more from Kimberly Strawbridge Robinson.

What Else to Know

Trump to Tap Scalia for Labor Secretary Post: Trump plans to nominate business attorney Eugene Scalia to fill the recently opened labor secretary role, the president announced yesterday. “Gene has led a life of great success in the legal and labor field and is highly respected not only as a lawyer, but as a lawyer with great experience,” Trump said in two tweets. The announcement came with current Labor Secretary Alexander Acosta set to leave the DOL today.

The nomination of Scalia, the son of former Supreme Court Justice Antonin Scalia, is likely to draw sharp criticism from Democrats, labor unions, and worker advocates. He was a recess appointment for labor solicitor in the George W. Bush administration because of concerns that he would not be able to get the votes necessary to confirm him in the Senate. Several Democrats, who controlled the chamber at the time, opposed Scalia’s nomination. Read more from Chris Opfer and Ben Penn.

OSHA Panel Pick: James J. Sullivan will be the next chairman of the Occupational Safety and Health Review Commission, a panel that hears employers’ appeals of OSHA citations, Trump said in a statement yesterday. Sullivan already sits as one of the commission’s three members, having assumed the post in August 2017. Since March, he has been the commission’s lone member, following the departures of then-Chairman Heather MacDougall for a position with Amazon and the end of Commissioner Cynthia Attwood’s term. Trump hasn’t nominated anyone yet to fill the open seats. Read more from Bruce Rolfsen.

‘No Commitment’ on Possible Capital Gains Tax Break: The White House has yet to commit whether to index capital gains to inflation, according to Treasury Secretary Steven Mnuchin, even as White House officials continue to pursue the plan for a tax break that would largely benefit the wealthy. “Right now there’s no commitment to getting it done or not getting it done,” Mnuchin said yesterday in France, where he was meeting with G-7 counterparts. “It’s a policy that has been under consideration and remains under consideration.” Mnuchin’s ambivalence may suggest a divide between Treasury and the White House where officials are working rapidly to deliver the tax cut ahead of the 2020 election, possibly while bypassing Congress, according to a person familiar with the matter. Read more from Saleha Mohsin and Laura Davison.

Trump Says U.S. Ship Downed Iran Drone: Trump said the U.S. “immediately destroyed” an Iranian drone that approached the USS Boxer near the Strait of Hormuz, but officials in Tehran denied losing one. The drone was a threat to the amphibious assault ship and its crew, Trump said at the White House on Thursday, in the the latest sign of escalating military tensions around the critical oil chokepoint. The president said he’s calling “on other nations to protect their ships as they go through the Strait.”

In a tweet today, Iran’s Deputy Foreign Minister Seyed Abbas Araghchi denied his country lost a drone and poked fun at the U.S. A spokesman for Iran’s armed forces said Trump’s remarks were “delusional and imaginary.” Read more from Jennifer Jacobs and Josh Wingrove.

Stevens to Lie in Repose: Late former Justice John Paul Stevens will lie in repose at the U.S. Supreme Court on Monday. The Supreme Court said that Stevens’ casket will rest on the Lincoln Catafalque in the Great Hall. There will be a private ceremony and public viewing, and court police will serve as pallbearers. Former Stevens clerks will serve as honorary pallbearers. A portrait of Stevens by James Ingwersen will be on display.

Stevens, a liberal champion who served on the court for more than three decades, died on Tuesday in Florida. He was 99. Read more from Jordan S. Rubin.

To contact the reporter 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