What to Know in Washington: Pelosi’s Debt Timeline in Doubt

Speaker Nancy Pelosi (D-Calif.) said she wants a deal on raising the U.S. debt limit and setting spending levels before Congress leaves for its August recess, but a Trump administration official said there’s still a long way to go to reach an agreement on the budget.

Failure to agree on a package before the House leaves for recess next week could force Congress to settle for a short-term debt limit fix and delay the tougher discussion about spending levels.

Congress doesn’t have to attach a budget agreement to a bill raising the debt limit, but leaders of both parties want to use that must-pass bill to resolve some of their other fiscal deadlines. If they don’t bridge disagreements over extra funding for veterans’ health and how to pay for spending increases, Treasury Secretary Steve Mnuchin said Congress should pass the debt limit increase without the budget deal.

The other fallback option — a short-term increase for the Treasury’s borrowing authority — would push back by a few months the date at which the U.S. risks missing payments.

The impasse before House members leave Washington on July 26 for a six-week recess shows how major congressional decisions are regularly left to the last minute, risking collateral economic damage. Pelosi has been leading the negotiation in a series of phone calls with Mnuchin, seeking a deal she can sell to her divided caucus.

Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) yesterday spoke again with Mnuchin, who is in France for a Group of Seven meeting. Pelosi and Mnuchin have been speaking regularly, but so far President Donald Trump hasn’t weighed in publicly. He has, in the past, scuttled deals worked out by officials in his administration. Erik Wasson, Alexandra Harris and Justin Sink have more.

Photographer: Al Drago/Bloomberg
Pelosi holds her weekly news conference on Wednesday.

Also Happening on the Hill

House Holds Barr, Ross in Contempt: The House voted yesterday to hold Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt of Congress for withholding documents on now-canceled plans to add a citizenship status question to the 2020 census. The 230-198 vote was largely symbolic because there’s virtually no chance that the Justice Department would move in court against the two. Still, it’s part of the ongoing conflict between the Democratic-controlled chamber and Trump. Read more from Billy House.

The vote is a sign that the Census question, a proxy for the immigration debate, now rivals in importance the House investigation of the still-secret details of Special Counsel Robert Mueller’s probe of Russian election meddling. The House has already authorized a civil suit to compel Barr to produce the uncensored version of Mueller’s report and underlying evidence that Trump impeded the special counsel’s investigation into possible collusion between the Kremlin and the president’s 2016 campaign. The inclusion of criminal contempt citations against Barr and Ross is largely symbolic. But it intensifies the conflict between Democrats and Trump.

If it’s difficult to keep up with all the investigations by House Democrats, BGOV’s James Rowley navigates them here in the latest status report on probes into allegations of abuse of power, emoluments, foreign entanglements, and regulatory favoritism.

House Rebuffs Bid to Impeach Trump: The House blocked a lawmaker’s bid to impeach Trump amid resistance from Pelosi and other Democratic leaders. In a 332-95 vote yesterday, the House refused to advance Rep. Al Green’s (D-Texas) impeachment resolution that cited the president’s tweets criticizing four freshman House Democrats, all women of color, and other comments denounced as racist. All of those who voted to move forward with the measure were Democrats. Read more from Billy House and Erik Wasson.

Meanwhile, Trump declared he’s winning a political battle with Democrats after the House rebuked him for racism over his attacks on four liberal women lawmakers. “If people want to leave our country they can,” Trump told reporters before departing the White House for a campaign rally in North Carolina. He added: “I do think I’m winning the political fight. I think I’m winning it by a lot.” Read more from Justin Sink and Josh Wingrove.

Progress to $15 Wage Likely to Stall: House Democrats are likely to pass today a proposal to increase the federal minimum wage to $15 an hour over six years. The Raise the Wage Act has been a priority for Democrats, who were able to move past uncertainty from some members and pressure from the business community to get within reach of passage. Despite the effort to soften the proposal to get it passed the finish line in the House, it doesn’t appear to be gaining any traction in the Republican-controlled Senate. “It is dead on arrival, as it should be,” Sen. Tim Scott (R-S.C.), a member of the Senate Health, Education, Labor, and Pensions Committee, said. Read more from Jaclyn Diaz and Chris Opfer.

House Votes to Repeal Obamacare Tax: The House voted overwhelmingly to repeal a tax yesterday intended to fund the Affordable Care Act, preserving tax breaks for employer-sponsored insurance plans favored by large corporations. In a reversal of the usual partisan roles, Democrats rather than Republicans led the charge to kill a key part of Obamacare. The bill to repeal the levy commonly known as the “Cadillac tax” passed 419-6 with bipartisan support. The 40% excise tax on the most generous and expensive employer health-insurance plans was included in Obamacare as a measure that economists said would help curb health costs. Read more from Laura Davison.

House Blocks Saudi Arms Sales: The House joined the Senate in voting to halt arms sales to Saudi Arabia, a rebuke of Trump’s decision to break congressional holds on the sales, which sets up the third veto of his administration. The House passed three measures that are part of a package of 22 resolutions to end the emergency declaration that the Trump administration used to push through $8 billion in arms sales to Saudi Arabia, Jordan, the United Arab Emirates and other countries. All three of the resolutions received some Re publican support, but not enough to override a promised veto by Trump. Daniel Flatley has more.

Senate Privacy Working Group: A privacy working group will be joined today by large tech companies for its inaugural meeting as Senators attempt to develop a national privacy bill. The full Senate Judiciary Committee is invited to Sen. Marsha Blackburn‘s (R-Tenn.) tech task force meeting that will feature participation from Snap Inc., Mozilla, Salesforce and Match Group Inc. The group will work toward passing a federal privacy law to override various state efforts across the country. Lawmakers are facing a ticking clock to set one national standard, as California’s broad Consumer Privacy Act goes into effect in January 2020. Taking California’s lead, Nevada, Maine and other states have worked to pass their own privacy laws. Read more from Rebecca Kern.

Schumer Urges FBI FaceApp Review: Senate Minority Leader Chuck Schumer said the FBI and FTC need to look into the national security and privacy risks posed by FaceApp, a popular smartphone application owned by a Russian-based company. “Millions of Americans have used it,” Schumer tweeted. Schumer in a letter asked the FBI to determine if Americans’ personal information “may be finding its way into the hands of the Russian government.” He asked the FTC to examine if users, including federal officials and military service members, are at risk of their privacy being compromised. FaceApp uses artificial intelligence to alter a user’s photos to appear younger or older, or take on a different gender, Kim Chipman reports.

Elections & Politics

Lineup for the Second Debate: The Democratic National Committee and CNN have unveiled the list of candidates who will take part in the second presidential primary debates of the 2020 election. The debates will take place in Detroit on July 30 and 31 with 10 candidates on each stage. The group participating each night will be selected at random in a live draw on CNN today. Each night’s slate will be designed to feature a mix of high-polling and low-polling contenders. See the list here.

Trump Says Buttigieg Mayor of ‘Failed City’: Trump issued his most extensive criticism of presidential candidate Pete Buttigieg, the South Bend, Ind., mayor who’s at the top of the Democratic field in fundraising. Buttigieg “runs a failed city,” Trump said at a political rally in Greenville, N.C., yesterday. “His city is doing so badly.” The president said Vice President Mike Pence, the former Indiana governor, told him Buttigieg “never did a good job; I’m so shocked to see him running.” Read more from Josh Wingrove.

Health on the Campaign Trail: Sen. Bernie Sanders (I-Vt.) added fuel to a debate over health care consuming the Democratic race yesterday, calling on his presidential rivals to reject donations from the health care industry. In a sweeping defense of his “Medicare for All” proposal that would eventually end private insurance, Sanders said the party shouldn’t accept contributions of more than $200 from a list of pharmaceutical and health-insurance industry political action committees, executives and lobbyists.

“We have to confront a Washington culture that is corrupt, that puts profits ahead of people,” Sanders said in a speech at George Washington University in Washington. Sanders emphasized health-care policy as a key point of difference with his rivals, particularly front-runner Joe Biden, who said this week “Medicare for All” wasn’t realistic and that he’d instead update the Obama administration’s Affordable Care Act by adding a public option. Read more from Laura Litvan, Bill Allison and Mark Niquette.

Microsoft Says Hackers Still Targeting U.S.: Government-backed hackers have attempted to infiltrate targets related to U.S. elections over 700 times in the last year, adding to concerns about possible meddling in upcoming races, Microsoft said yesterday. During that time, Microsoft has notified nearly 10,000 customers that they’ve been targeted or compromised by nation-state attacks, it said in a blog post. Of those, 781 have been to democracy-focused organizations, such as campaigns, political parties and non-government organizations, and nearly all of those, 95 percent, are in the U.S. Read more from Alyza Sebenius and Kartikay Mehrotra.

Indicted Collins Being Outraised in GOP Primary: New York Republican Chris Jacobs is raising campaign funds more like a well-established incumbent than a challenger to a sitting officeholder. Jacobs, a state senator, has collected more than $773,000 for a 2020 House bid. He’s vying to unseat Rep. Chris Collins (R-N.Y.), who’s under indictment and in peril of losing an overwhelmingly Republican 27th District in the suburbs of Buffalo and Rochester. With $748,000 in his account as July began, Jacobs is the best-funded primary challenger so far to a sitting House member in the 2020 contest, Federal Election Commission filings analyzed by Bloomberg Government show. Read more from Greg Giroux.

What Else to Know

Trump Sending More Troops to Border: The Trump administration will deploy some 2,100 more troops to help “secure the southern land border of the United States,” the Defense Department said in a statement yesterday. Up to 1,000 of the troops will be members of the Texas National Guard. About 750 of them will aid the Homeland Security Department “with operational, logistical, and administrative support” at “temporary adult migrant holding facilities” in Donna and Tornillo, Texas, according to the Pentagon statement. “Migrants will be supervised by DHS law enforcement personnel,” it added. Read more from John Harney.

Meanwhile, acting Homeland Security Secretary Kevin McAleenan visited U.S. Border Patrol’s McAllen Station in Texas yesterday, the department said in a statement, marking his second visit in almost a week to a facility embroiled in controversy over living conditions of migrants detained there. McAleenan last visited the station July 12. Yesterday he sought to review the effects of emergency funding passed by Congress on July 1 to help address “the ongoing humanitarian and border security crisis, ” the department said in a statement, Kim Chipman reports.

McAleenan will be on Capitol Hill today to face questions from the House Oversight and Reform Committee.

U.S.-U.K. Trade Deal: Boris Johnson, the favorite to succeed Theresa May as U.K. prime minister, said a trade deal won’t be reached with the U.S. soon after Brexit, predicting discussions will be “tough” and “robust.” “A deal with the U.S. is not going to be done in a trice,” Johnson said late yesterday at a Tory hustings event in London. “It’s not going to be something that adds several percentage points to U.K. GDP, but it will substantially boost our GDP over time,” he said, adding: “it’s not something that’s going to be done instantly.” Read more from Alex Morales and Kitty Donaldson.

U.S.-China Trade Talks: Slow progress on key initial demands from Trump and Xi Jinping is raising doubts about whether the U.S. and China will actually return to the negotiating table to overcome their much deeper differences. Trump complained again this week that China wasn’t buying the large volumes of U.S. agricultural goods that he claims Xi promised to purchase. Meanwhile, there’s been no improvement in how the U.S. treats telecommunications giant Huawei Technologies Co., a key demand of China. Read more from Jenny Leonard.

China Denounces Trump Meeting With Exiles: China criticized a meeting between Trump and Chinese religious exiles as an unacceptable interference in its affairs, as Beijing faced new criticism over its mass detention of ethnic Muslim minorities. China’s foreign ministry made the remarks today after Trump hosted 27 representatives of what the White House said were persecuted religious groups in the Oval Office, including four Chinese. Among the invitees was Jewher Ilham, whose father, Uighur economist Ilham Tohti, is serving a life sentence in China on separatism charges.

“Each of you has suffered tremendously for your faith,” Trump said before asking Ilham to recount her father’s story. “That’s tough stuff,” Trump told the group, which included a Chinese Christian, a Tibetan Buddhist and a member of the banned Falun Gong sect, which Beijing considers a cult. Read more from Iain Marlow.

Trump Concerned by DOD Cloud Contract: Trump recently demanded more information on how the Pentagon crafted a massive cloud-computing contract it’s set to award to Amazon or Microsoft, in order to decide whether he should intervene. The Defense Department is set to offer the contract, worth as much as $10 billion over 10 years, to one of the two companies next month. Amazon, whose cloud-computing technology leads the market, is seen as the favorite.

But Trump recently was made aware of letters congressional Republicans have written to the White House and military leaders complaining that the contract’s terms froze some firms—including Oracle—out of the competition, according to two people familiar with the matter. Trump expressed frustration that he wasn’t aware of the concerns and asked aides to show him the correspondence, the people said. Trump said he’s interested in looking into the circumstances of the bid but didn’t indicate he’ll tr y to block the contract from being awarded to one of the two finalists, they said. Read more from Jennifer Jacobs, Naomi Nix and Steven T. Dennis.

New Postal Rates Help Level Global Commerce: New rates for the delivery of small packages from foreign postal operators will help U.S. manufacturers and retailers whose competitors now get unfair subsidies, a top White House trade adviser said. The Postal Regulatory Commission recently approved the new rate structure but excluded private carriers such as FedEx and UPS, which will have to negotiate separate agreements with the U.S. Postal Service. Read more from Cheryl Bolen.

U.S. Suspends Turkey’s Role in F-35: The U.S. has suspended Turkey’s ability to help build and buy the F-35 fighter jet over President Recep Tayyip Erdogan’s decision to begin receiving parts for the Russian-made S-400 missile defense system, the Pentagon said. But it’s an “orderly wind-down” that won’t be finished until March 2020, Ellen Lord, the Pentagon’s undersecretary for acquisition, said yesterday. The program “cannot coexist with a Russian intelligence collection platform that will be used to learn about its advanced capabilities,” according to a White House statement yesterday, reflecting the U.S.’s contention that the S-400 will provide Russia information about the fighter jet’s advanced technology. Read more from Tony Capaccio .

The chief of NATO said Turkey would remain a key member of the alliance despite its decision to purchase the Russian S-400 missile-defense system, while acknowledging that the move created a “difficult situation.” Read more from Nick Wadhams.

Saudi Arabia Troop Deployment: The Trump administration is said to be preparing to send 500 troops to the Prince Sultan Air Base in Saudi Arabia, CNN reports, citing unidentified defense officials. The U.S. has sought to base troops there because security assessments have shown Iranian missiles would have a hard time targeting the area. Congress hasn’t been officially notified of the deployment. One official says an announcement is expected next week.

Iran Can’t Bet on Trump 2020 Defeat: As Iran weighs the merits of talks with the U.S. and tensions remain high in the Persian Gulf, the Islamic Republic’s leadership is preparing for a second Trump term and mindful of how two key countries fared in high-stakes negotiations with him: Mexico and North Korea. “There is a better than 50 percent chance that he might still be in office, so we will need to deal with him for another six years,” Iran’s foreign minister Javad Zarif said yesterday in a television interview with Bloomberg Editor-in-Chief John Micklethwait.

Tehran and Washington remain at an impasse. While Trump administration officials say they’re open to talks without preconditions, Iran’s government wants some easing of sanctions that have crippled oil sales and undermined its economy. One example looming over Tehran’s thinking, Zarif said, is America’s neighbor, ally and key trading partner, Mexico. Read more from Margaret Talev and David Wainer.

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