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MORNING REPORT

PRESENTED BY P&W MILITARY ENGINES

Monday, May 22

by Alexis Simendinger & Kristina Karisch

Biden, McCarthy upbeat ahead of meeting

President Biden, hours after his return from Japan late Sunday, will meet today with Speaker Kevin McCarthy (R-Calif.) to figure out if a debt deal can emerge this week from Washington's pressure cooker of partisan doubts. Both men expressed optimism even as talks appeared to bog down, then restart, as a June 1 potential deadline for default looms.

The two men spoke by phone on Sunday while Biden returned to the White House aboard Air Force One and their respective representatives met Sunday. McCarthy said he and the president agreed to work together later today toward achieving an accord that could avert default by clearing the House and Senate in time.

"My discussion with the president I think was productive," McCarthy told NBC News after their call. "I think we can solve some of these problems."

The president called some GOP fiscal proposals "extreme" in remarks to reporters before departing Japan, but said an accord was possible.

I think that we can reach an agreement," Biden said.

Negotiations appeared to center on a fiscal 2024 cap on spending that could be key to resolving the standoff and has been among Republicans' demands. Biden confirmed he could agree to cut $1 trillion dollars in reduced spending from the current budget baseline.

The Associated Press: Debt ceiling talks resume as Biden, McCarthy prepare to meet today to resolve the standoff.

McCarthy's take: "I've been very clear to him from the very beginning. We have to spend less money than we spent last year."

The New York Times: Biden, McCarthy are set to resume negotiations on the debt limit.

The difficulties, according to some lawmakers, are that even broad numerical compromises agreed to by Biden and McCarthy are certain to meet with resistance from the left and right flanks of the parties, potentially slowing passage of what could turn out to be carefully sequenced legislation to raise the borrowing limit and also set a slimmed-down budget framework ahead of a potential June 1 default.

Biden, speaking to reporters before leaving Japan, said he's willing to make a deal with Republicans, but he insisted that revenue raisers and not just slashed spending must be part of the package to reduce debt over a decade.

The president claimed some House Republicans want to see the United States default on its obligations.

"I got to be careful here," he said in response to a question. "I think there are some MAGA Republicans in the House who know the damage that it would do to the economy. And because I am president, and presidents are responsible for everything, Biden would take the blame. And that's the one way to make sure Biden is not reelected."

He told reporters he has the authority to rely on the Constitution's 14th Amendment to bypass Congress as an emergency strategy to avoid default but worries the courts could not resolve the debate quickly. Some Democrats have urged the work-around for weeks for fear that House conservatives won't vote for a compromise, even if it has McCarthy's blessing (The Hill).

"I think we have the authority," Biden said about relying on the Constitution. "The question is, could it be done and invoked in time?"

Treasury Secretary Janet Yellen, hours later, dampened expectations about the 14th Amendment's utility. "It doesn't seem like something that could be appropriately used in these circumstances given the legal uncertainty around it and given the tight time frame we're on," she told NBC's "Meet the Press."

The secretary, who will update Congress this week about her department's latest revised "X date" timetable, declined to publicly mull how the Treasury might choose among payments to prioritize if all available cash inflows are exhausted.

"Look, I would say we're focused on raising the debt ceiling and there will be hard choices if that doesn't occur. There can be no acceptable outcomes if the debt ceiling isn't raised, regardless of what decisions we make," she said firmly.

Yellen discouraged the idea that partisan haggling, if it continues toward mid-June without resolution, would be cost-free. "The odds of reaching June 15 while being able to pay all of our bills is quite low," she said.

The Wall Street Journal: Investors seek protection in case of debt-ceiling debacle.

The Hill: Sen. Chris Van Hollen (D-Md.) on Sunday told ABC's "This Week" that lawmakers should move to "Plan B," a discharge petition, as debt ceiling talks appeared to stall anew. "I'm extremely worried about where we are now. I think the markets are going to get shaky," he said.
The Hill: Moderate Republican Rep. Brian Fitzpatrick of Pennsylvania on Sunday told CBS's "Face the Nation" that there's "wiggle room" in the estimated June 1 debt default deadline. "I really do think that we should allow leeway and flexibility for the Speaker and the president, who both understand the gravity of this situation, to work this out," he said.
The Hill: Biden's Labor pick in limbo as confirmation comes down to the wire.

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Leading the Day

➤ POLITICS

The 2024 Republican presidential field is expected to gain another contender today, when Sen. Tim Scott (R-S.C.) makes his official campaign announcement. Despite hovering around 2 percent in Republican primary polls, Scott will enter the race with around $22 million in funds, making him one of the most serious competitors for the front-runner, former President Trump. As the most influential elected Black conservative in America, Scott is expected to build his campaign around his compelling life story — a rise from poverty to become the first Black senator from South Carolina, and the only Black Republican in the Senate (The New York Times and The Wall Street Journal).

But as The Hill's Cheyanne M. Daniels reports, Scott has spent much of his career skirting around his identity. Though he has acknowledged growing up in a poor, single-parent household and coming "from cotton to Congress," he has also pushed back against arguments around race and representation to focus instead on conservative policy. Some, like Felecia Killings, a Black conservative who's founder and CEO of the Felecia Killings Foundation and the Conscious Conservative Movement, say this strategy will not work if Scott wants to be successful in his journey to the White House.

"As more Black men are being attracted to conservative politics, conservative Black women who love our Black man, love our husbands, love our fathers, we're going to follow them," Killings told The Hill. "The more that conversation happens, the more those Black voters aren't even going to pay attention to Democrats because they're already disenchanted with them."

The Hill: Senate Republican Whip John Thune (S.D.) plans to endorse Scott for president.
Politico: 55 things you need to know about Scott.
The Washington Post: "Very uncomfortable": Scott-Nikki Haley 2024 divide sparks GOP tensions in South Carolina.

Another likely Republican contender, Florida Gov. Ron DeSantis, has been making stops in the Midwest and showing all the other signs of being a candidate-in-waiting. That's expected to change this week, as he prepares to officially launch his campaign ahead of a fundraising meeting with donors in Miami on Thursday (The Wall Street Journal). In The Memo, The Hill's Niall Stanage asks five key questions about the DeSantis campaign as the Florida governor prepares to take on his erstwhile ally turned rival, Trump.

The Hill: DeSantis stumbles while seeking to stick Trump with a loser label.
The Associated Press: DeSantis super PAC tackles the tricky task of organizing support for him in Iowa without the candidate.
Politico: The Casey DeSantis problem: "His greatest asset and his greatest liability."
The Hill: GOP senators are unsettled by DeSantis's escalating fight with Disney.

Meanwhile, DeSantis is using his perch as Florida's governor to take stands on national energy issues in preparation for his presidential run, writes The Hill's Rachel Frazin. DeSantis recently signed a bill that restricted environmentally and socially conscious investing, also known as ESG, in the Sunshine State, and as gas stove politics heated up in Washington D.C., the governor also floated tax breaks for the appliances in Florida, even though they are not widely used there.

Over the weekend: Republican worries are growing that historically purple Colorado is slipping further into the hands of Democrats after recent defeats and close-calls — like Rep. Lauren Boebert's (R-Colo.) razor-thin victory in November — in the most conservative parts of the state (The Hill). … Meanwhile, in Pennsylvania, Cherelle Parker's (D) victory over a progressive challenger in Philadelphia's mayoral primary has underscored the divisions within the Democratic Party over how to handle the issues of crime and safety within big cities (The Hill). … North Carolina Gov. Roy Cooper (D) lambasted Republicans in his state over their passage of a 12-week abortion ban that overrode his veto. "It's amazing how they've ignored the will of the people here," he told MSNBC's Jonathan Capehart.

EVENT INVITE:

The Economic Snapshot: CEO Summit, May 31, 2-3:00 p.m. ET

The post-pandemic economy has defied expectations repeatedly. The U.S. labor market and consumer spending are chugging along, while inflation is cooling, yet risks of a recession and a debt ceiling showdown loom. "The Economic Snapshot" will check the pulse of the U.S. economy. The Hill will gather chief executives to dissect just how companies are faring during this uncertain economic landscape, featuring speakers such as Scott Kirby, CEO of United Airlines; Michelle Korsmo, President & CEO of National Restaurant Association; Matthew Shay, President & CEO, National Retail Federation; and Evan Smith, Co-Founder & CEO of Altana AI.

Click Here to Register

In Focus / Sharp Takes

➤ G-7 & INTERNATIONAL

The U.S. will provide another $375 million in support to Ukraine, Biden announced Sunday at the conclusion of the G-7 summit in Japan. The president said the military aid package included ammunition, artillery, armored vehicles and training.

"Together with the entire G-7, we have Ukraine's back, and I promise we're not going anywhere," Biden told Ukrainian President Volodymyr Zelensky (Reuters).

Meanwhile, the billions of dollars in defense aid approved for Ukraine last year could be dried up by the late summer or early fall, but conversations on the next round of funding have hardly started, writes The Hill's Brad Dress. The Pentagon on Thursday revealed an accounting error that freed up an additional $3 billion, but the remaining funds amount to about $11 billion, according to a review of security aid specifically for Ukraine. The timing of the next package will largely depend on the success of Ukraine's incoming counteroffensive and it will be the first test of whether the Republican-controlled House will continue strong Ukraine support, despite a vocal minority of far-right lawmakers who are opposed to more security assistance.

Zelensky said on Sunday that Russian forces do not occupy Bakhmut, despite Moscow's assertions that the city had been taken. Russia's Defense Ministry said that its forces had captured the city, scene of the deadliest battle of the war, but Kyiv has insisted that the fighting there was ongoing — even though Ukrainian troops controlled just a few blocks. While full control of Bakhmut would be Moscow's most successful battlefield advance since last summer, Ukrainian troops in recent days have broken through Russian defensive lines on the outskirts of the city (The New York Times and The Hill).

Vox: How Ukraine is trying to woo the Global South — and why it's so hard.
The Washington Post: From start to finish, Biden's Japan trip was buffeted by U.S. politics.
Politico EU: Will the U.S. send F-16s directly to Ukraine? No final decision yet, White House national security adviser Jake Sullivan said.
The Hill: Biden said the U.S. wants to "thaw" relations with China and "de-risk" the relationship while making the U.S. less dependent on any one nation for its supply chain.
The Washington Post: As their hold on Bakhmut slips, Ukrainian forces push to encircle the city.

The two warring factions in Sudan agreed to a seven-day cease-fire beginning on Monday, Saudi Arabia and the U.S. announced late Saturday, marking the first truce signed by both parties in a conflict that has raged for over a month, leaving millions of people across the country in a dire humanitarian crisis. The talks in the port city of Jeddah had previously produced an agreement between the Sudanese Army and paramilitary Rapid Support Forces (RSF) to protect civilians and ease the flow of humanitarian assistance to those affected by the conflict (NPR).

"It is well known that the parties have previously announced ceasefires that have not been observed," the U.S.-Saudi statement said. "Unlike previous ceasefires, the Agreement reached in Jeddah was signed by the parties and will be supported by a U.S.-Saudi and international-supported ceasefire monitoring mechanism."

Reuters: After no outright victory, Greece's conservatives and prime minister get a mandate for a coalition.
Politico EU: Moldova ramps up EU membership push amid fears of Russia-backed coup.
The Washington Post: Death toll in Italy rises as floods devastate farmland, displace thousands.
The Associated Press: Three Palestinians killed in an Israeli raid in the occupied West Bank; the U.S. slams the latest settlement expansion.

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Opinion

Liberals are persuading themselves of a debt ceiling plan that won't work, by Ezra Klein, columnist, The New York Times. https://nyti.ms/3BNa1ck
What the 14th Amendment really says, by The Wall Street Journal editorial board. https://on.wsj.com/3Ow93IV

Where and When

📲 Ask The Hill: Share a news query tied to an expert journalist's insights: The Hill launched something new and (we hope) engaging via text with Editor-in-Chief Bob Cusack. Learn more and sign up HERE.

The House will meet at noon.

The Senate will convene at noon on Tuesday for a pro forma session.

The president will receive the President's Daily Brief at 10 a.m. in the Oval Office. Biden will meet this afternoon with Speaker McCarthy to discuss the debt debate in the Oval Office.

Vice President Harris will travel to Sunnyvale, Calif., to convene a roundtable at noon and speak with CEOs at Applied Materials headquarters about semiconductor research, development and manufacturing and the bipartisan CHIPS and Science Act, signed by the president last year. Harris will return to Washington tonight.

Secretary of State Antony Blinken is in Papua New Guinea where he already is well into his Monday itinerary. He toured a clinic in Port Moresby supported by PEPFAR funds. At midday, Blinken met with employees of the U.S. Embassy and their families. In the afternoon, the secretary visited a vendor fair with graduates of the Academy for Women Entrepreneurs in Port Moresby and also met with young alumni of U.S. exchange programs. He met with New Zealand Prime Minister Chris Hipkins and later with Prime Minister James Marape of Papua New Guinea. Blinken participated in a signing ceremony with Marape for a defense cooperation agreement. And he joined the U.S.-Pacific Islands Forum meeting in Port Moresby and participated in the signing ceremony for the Compacts Review Agreement. Blinken held a press conference in the evening with Marape and Mark Brown, the U.S.-Pacific Islands Forum chairman and Cook Islands prime minister. He ended the official evening with a working dinner among forum participants.

Elsewhere

➤ STATE WATCH

After a string of defeats at the ballot in red and purple states in the 2022 election, a growing number of GOP-controlled state legislatures and anti-abortion groups are pushing back, The Hill's Nathaniel Weixel reports. They are working to restrict or even ban citizen-led ballot initiatives, which have been used by progressive groups to bypass conservative lawmakers. Some of the proposals set new requirements for signature gathering, making it more difficult to put a question on the ballot. Others would raise the passage threshold to 60 percent or higher, rather than a simple majority.

"We started to notice this in 2017. After a wave of progressive ballot measures were passed, we started to see an uptick. And then it really started to escalate in 2020 and 2021," said Chris Melody Fields Figueredo, executive director of the Ballot Initiative Strategy Center, an organization that supports progressive ballot measures.

Colorado: Among the top five cities in the world with the worst air quality is Denver, according to a measurement on Friday (The Hill).

States and education: At least eight states have put new school choice policies on the books so far this year, with some expanding to all K-12 students. Other measures are still up in the air. The victories have been heavily celebrated by Republicans, but they may be running out of friendly territory, reports The Hill's Lexi Lonas.

The Closer

And finally … 🐕 Morning Report readers know we are pro-dog, pro-mutt, pro-adoption, and because National Rescue Dog Day happened over the weekend, we thought it's a great time to mention that many, many canines in shelters and foster homes are waiting for better luck and some TLC.

New York Post: A four-year-old "Houdini" Husky named Titan, who liberated pals and trashed the lobby of an Alabama shelter, found his forever home, thanks to viral fame about his nighttime breakout. His adoptive family, responding immediately to the publicity, already owned an identical husky and knew what they were in for. "Huskies are very clever and hard to contain," said the shelter director.
Newsweek: A TikTok video of a family finally adopting Fergie, a large mixed-breed dog that had been passed over for six months by visitors to a Missouri animal shelter, went viral earlier this month. "Fergie was both a staff and volunteer favorite. She was so excited," said a spokesperson from APA Adoption Center.
KSBW: Economic strains on families and a shortage of animal vets, which slowed spay and neutering services available for pet owners, are reasons some shelters in California's Central Coast are at more than 100 percent capacity for dogs and cats. "Whenever you see the economy struggle and other social factors struggle, like housing and employment and inflation, we all know that that's a big thing. It affects people's ability to take care of their pets," said Cindy Burnham of Hitchcock Road Animal Services in Salinas, Calif.