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MORNING REPORT

Wednesday, June 7

by Alexis Simendinger & Kristina Karisch

Debt ceiling fight sets stage for appropriations battles

Congress's months-long debt ceiling battle may be over, but that doesn't mean the new spending limits are sitting well with lawmakers on either side of the aisle.

The new law is already fueling divisions across party lines — and among factions of the House GOP. Speaker Kevin McCarthy (R-Calif.) rejected pressure from some Senate Republicans who were upset about curbing defense funding through the bipartisan deal — dubbed the Fiscal Responsibility Act — reached with President Biden. It's likely that these grievances will continue to shape the discourse in Congress as both chambers work through the regular appropriations and budgeting process.

This is the beef I have," McCarthy said to reporters on Tuesday. "We just came to an agreement, and the first thing I hear over there, 'I don't want to vote for it. We need to [pass a] supplemental,'" the Speaker said, referring to a stand-alone bill to boost defense spending.

McCarthy's comments come on the heels of criticism from some Senate Republicans, who have balked at defense spending levels set as part of the bipartisan legislation which suspended the debt ceiling until 2025 to prevent a federal default in exchange for setting new limits on government funding and other measures to repeal previously allocated money.

The Washington Post analysis: A big GOP split on the debt ceiling: Pre-Trump vs. post-Trump.
Politico: McCarthy may have just torpedoed GOP hopes of boosting the defense budget.

While some Republicans lauded reforms in the law, writes The Hill's Aris Folley, GOP defense hawks have railed against the legislation for including a penalty of automatic across-the-board cuts if lawmakers don't finish their annual spending deals by the end of the calendar year. Lawmakers haven't met their annual funding deadline since 1997.

The measure passed the Senate late Thursday, but not until leaders from both sides of the Senate issued a joint statement into the Congressional Record clarifying the proposed caps would not block lawmakers from passing supplemental funding for defense in the event of an emergency. Senate Majority Leader Charles Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.) both said they were open to a future bill on the subject, placating those members who were upset with that aspect of the law, writes The Hill's Al Weaver, but it appears McCarthy was not consulted on the topic.

Nationally, a new Reuters/Ipsos poll showed neither Biden's Democrats or Republicans in Congress emerging as a clear winner in the battle to raise the $31.4 trillion debt ceiling. The survey, conducted after the bipartisan deal passed, found that 50 percent of Americans thought neither party emerged as a winner, while another 20 percent said both sides won.

Meanwhile, political and financial experts are fretting over the latest episode of fiscal brinkmanship that preceded the debt limit deal, arguing that the disruption threatened by default was simply not worth the moderate reduction in the deficit. As The Hill's Tobias Burns reports, credit agency Fitch warned last week that "there has been a steady deterioration in governance over the last 15 years, with increased political polarization and partisanship as witnessed by the contested 2020 election and repeated brinkmanship over the debt limit. Failure to tackle fiscal challenges from growing mandatory spending has led to rising fiscal deficits and debt burden."

Some experts say the doomsday contingency of the debt ceiling fight is more evidence of polarization within U.S. politics, citing the fact that cooperation and compromise between the parties can only happen when the stakes are almost preposterously high.

"What makes this extraordinary is that there is a space where the two parties can and should have sustained debate about the spending priorities of the country, and that's in the appropriations process," William Howell, a politics professor at the University of Chicago Harris School of Public Policy, told The Hill.

That process is about to come into starker view for many, as conservatives who were frustrated by the debt limit compromise that McCarthy struck with the White House are turning their attention to the annual budget bills.

A first taste of post-debt limit deal frustration came Tuesday, when 11 House Republicans used opposition to a rule to retaliate against GOP leaders over the debt limit deal, joining Democrats in voting against a rule to advance four pieces of legislation related to gas stoves and regulatory reform, enough opposition to tank the rule and block the legislation from advancing to the floor (The Hill, Politico and Roll Call).

CNN: Debt ceiling package does little to address America's major fiscal problems.
The New York Times: World Bank projects weak global growth amid rising interest rates. A new report projects that economic growth will slow this year and remain weak in 2024.

The Hill: Senate Finance Committee Chairman Ron Wyden (D-Ore.) on Tuesday threatened to subpoena the testimony of GOP billionaire donor and activist Harlan Crow, a friend of Justice Clarence Thomas. Separately, Crow's attorney offered to meet with staff of the Senate Judiciary Committee.
The Hill:Anti-environmental, social and governance (ESG) talk leads to partisan fireworks: "Stupidest hearing I've ever been to."
The Hill: Senate Minority Leader Mitch McConnell (R-Ky.), McCarthy finally in sync after a debt-limit drama.
The Washington Post analysis: The House Oversight and Accountability Committee on Thursday will consider whether to hold FBI Director Christopher Wray in contempt of Congress. Is it a wild goose chase?
The Wall Street Journal: Reviving business tax breaks is high on the House GOP agenda.

Leading the Day

➤ INTERNATIONAL

The Russia-installed administrators of Nova Kakhovka, the city where Ukraine's destroyed dam and an attached hydroelectric plant are located, said floodwaters were receding Wednesday morning. Seven people are reported missing, the first indication of the human toll (The New York Times). The destruction of the dam in southern Ukraine is making it harder for Ukrainian troops to advance into Russian-occupied areas and threatening drinking water for the region.

Experts said a deliberate explosion inside the Kakhovka dam, which has been under Russian control since early in the war, most likely caused the massive structure of steel-reinforced concrete to crumble. Moscow called the blast an act of Ukrainian sabotage, while Ukrainian President Volodymyr Zelensky said the only reasonable explanation was that Russian forces had blown up the dam to "use the flood as a weapon."

Officials from both countries used terms like "ecological disaster" and "terrorist act" to describe the torrent of water gushing through the broken dam and beginning to empty an upstream reservoir — one of the world's largest (The Washington Post and The Associated Press). Hundreds of people were evacuated from settlements along the southern stretch of the Dnipro river as flood waters submerged streets, town squares and homes (Reuters), as Ukraine's Deputy Foreign Minister Andrij Melnyk called the dam breach "the worst environmental disaster in Europe since Chernobyl" (Politico EU).

The Hill: Nova Kakhovka dam collapse: What to know about potential impacts on war, beyond.
The Washington Post: Maps show how the damaged Kakhovka dam hurts both Ukraine and Russia.
Reuters: Russia says U.S.-built F-16s could "accommodate" nuclear weapons if sent to Ukraine, and warned that supplying Kyiv with them will escalate the conflict further.
The Washington Post: The U.S. had intelligence of a detailed Ukrainian plan to attack the Nord Stream pipeline.
The Wall Street Journal: From drone strikes to ground incursions, the war comes to Russia.

Senior U.S. and Chinese diplomats held "candid and productive" talks in Beijing and agreed to keep open lines of communication to avoid tensions from spiraling into conflict, officials said Tuesday. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink was the most senior U.S. official confirmed to have visited China on Monday since tensions between Washington and Beijing soared over the shooting down of a Chinese spy balloon in early February (The Hill).

The visit comes as China is taking new and aggressive steps in the Taiwan Strait that experts warn is an escalation of Beijing's routine harassment in a waterway that the U.S. and allies declare as open sea territory, The Hill's Laura Kelly reports. U.S. officials and experts say confrontations between Chinese and American military planes and ships in the region are unavoidable, but the instance of a Chinese warship overtaking a U.S. destroyer earlier this week in the Strait is almost unprecedented.

The Associated Press: Pope Francis, 86, underwent intestinal surgery in Rome on Wednesday for a blockage, two years after doctors removed 13 inches of his colon. He is expected to remain hospitalized this week.
Al Jazeera: Iran unveils its first hypersonic missile.
The New York Times: Takeaways from Prince Harry's first day of testimony against U.K. tabloids.

In Focus / Sharp Takes

➤ POLITICS

Robert F. Kennedy Jr. has been a Democratic presidential candidate for a month and recently polled at 20 percent, well behind Biden, according to a CNN survey. But with his famous name and progressive family pedigree, voters open to alternatives to GOP candidates as well as to the 80-year-old Biden may be sizing Kennedy up.

That has not entirely reassured Democratic leaders and analysts who are eager to defeat the GOP nominee next year and think Biden is best suited to do that if he isn't seriously wounded by rivals in either party.

Democrats widely consider Kennedy, 69, to be a fringe and problematic candidate who openly spreads conspiracy theories about vaccines and public health. Nevertheless, his entrance has irked those who worry he could gain more prominence, reports The Hill's Hanna Trudo.

Kennedy — an environmental lawyer who is now best known as the head of a nonprofit group called Children's Health Defense, which was founded as the World Mercury Project in 2011 — says he differs "profoundly" from Biden.

If elected president, he has vowed during speeches to "end the chronic disease epidemic," calling it a root cause of poverty. In his quavering voice, impacted by spasmodic dysphonia, a form of an involuntary movement disorder that affects the voice box, Kennedy rails against what he sees as collusion between big government and big corporations, including drug companies. He's opposed to rising debt, laments partisan divides and warns about the erosion of transparency. He speaks of wanting to end mass "surveillance" of Americans and the unsavory influence of Big Tech in what he calls "censorship" (Fox News).

During a Monday Twitter Spaces event, Kennedy fawned over innovator and right-leaning disruptor Elon Musk (The New Republic). Former Twitter CEO Jack Dorsey over the weekend appeared to endorse Kennedy, or at least some of his views (The Hill). A columnist recently suggested that Kennedy's appeal will also be his undoing. "The unusual makeup of his ideology is exactly what's likely to doom him in the Democratic primaries," wrote MSNBC's Zeeshan Aleem.

More in politics: Former New Jersey Gov. Chris Christie (R) filed paperwork and used an evening speech in New Hampshire on Tuesday to announce his 2024 White House bid (The Hill). … Former Vice President Mike Pence, who will today, on his 64th birthday, officially begin his presidential barnstorming while in Iowa, will appear at 9 p.m. ET during a CNN town hall event in the first-in-the-nation caucus state. … The cage match between Florida Republican Gov. Ron DeSantis, now a presidential aspirant, and California Democratic Gov. Gavin Newsom got uglier this week when two flights deposited migrants in Sacramento after being flown from Texas accompanied by paperwork from Florida (The Hill). Florida officials on Tuesday confirmed their involvement (The Hill). ... Newsom called the presidential candidate who leads the Sunshine State a "small, pathetic man" (Associated Press, Sacramento Bee). … The Bexar County, Texas, Sheriff's Office says it has filed several counts of unlawful restraint related to flights DeSantis's administration chartered to fly migrants to Martha's Vineyard, Mass. (Texas Tribune). … The political world is bracing for the possible indictment at any minute of former President Trump (The Hill). … A taped interview with Trump by Fox News anchor Brett Baier will be broadcast on June 19 (The Hill). … North Dakota Republican Gov. Doug Burgum is fighting for recognition in the 2024 GOP primary as a newly announced presidential contender (The Hill).

The Hill Event Invite

Cancer Care Access & Equity: Breaking Barriers to Innovation, June 8, 2-3 p.m. ET

We live in a groundbreaking era of innovation in oncology, yet cancer continues to be the second leading cause of death in the United States. What obstacles stand in the way of optimal cancer care?

The Hill will bring together policymakers, health experts and patient advocates to discuss the changes to the cancer care delivery system, with the following speakers: Rep. Brian Higgins (D-N.Y.), Co-Chair of the Cancer Caucus and member of the House Ways & Means Committee; Rep. Mike Kelly (R-Pa.), Co-Chair of the Cancer Caucus and Senior Member of the House Ways & Means Committee; and Dr. Karen Knudsen, CEO of the American Cancer Society; Dr. Danielle Carnival, coordinator for White House Cancer Moonshot; Ysabel Duron, president and executive director of The Latino Cancer Institute; and Dr. Daniel Derman, SVP of administration at Northwestern Memorial Hospital.

RSVP Now

Opinion

Crypto bros find there's a new sheriff in town: the SEC, by Jessica Karl, columnist, Bloomberg Opinion.
America's health care paradox: We need smarter spending, not more, by Elena Marks and Elizabeth Bradley, opinion contributors, The Hill.

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 10 a.m.

The Senate will meet at 10 a.m.

The president will receive the President's Daily Brief at 10 a.m. Biden will have lunch with Vice President Harris at 12:15 p.m.

The vice president will have lunch with the president. She has no public events.

Secretary of State Antony Blinken is in Saudi Arabia where he will participate in a U.S.-Gulf Cooperation Council (GCC) ministerial meeting. His official schedule, Jeddah time, began at 12:20 a.m. (Tuesday night in Washington) with a meeting with Mohammed bin Salman, the crown prince and prime minister. Blinken later participated in a Sudan evacuation thank-you event with the consulate general and Khartoum embassy staff at 10:30 a.m. local time. The secretary in the afternoon met with Saudi women leaders in Riyadh. He will meet Saudi Foreign Minister Faisal bin Farhan in the evening before meeting with foreign ministers of the Gulf Cooperation Council, followed by a working dinner in Riyadh of participants at the "Global Coalition to Defeat ISIS" ministerial meeting.

U.S. ambassadors and officials are speaking today beginning at 9:30 a.m. ET during a U.S. Global Leadership Coalition event in Washington focused on international development. Among those participating: U.S. Ambassador to China R. Nicholas Burns; Under Secretary of State for Political Affairs Victoria Nuland; Treasury Under Secretary for International Affairs Jay Shambaugh; State's U.S. Global AIDS Coordinator John Nkengasong; Ukrainian Ambassador to the United States Oksana Markarova; U.N. Deputy High Commissioner for Refugees Kelly Clements; Millennium Challenge Corporation CEO Alice Albright; and Reps. Barbara Lee (D-Calif.) and Mike Gallagher (R-Wis.).

The White House daily press briefing is scheduled at 1 p.m.

Elsewhere

➤ ADMINISTRATION

Blinken today is in Saudi Arabia where he raised human rights with Crown Prince Mohammed bin Salman and wants to secure Saudi cooperation for other American priorities, such as advancing efforts to broker a Saudi diplomatic deal with Israel, ending the war in Yemen and securing funding to counter Islamic State, according to U.S. officials (The Wall Street Journal).

He met on Tuesday with the prince and other Saudi officials and is attending a meeting of an anti-Islamic State summit in Riyadh, as well as a meeting of foreign ministers from the Gulf Cooperation Council (The Hill). The six-nation GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The secretary and MBS "affirmed their shared commitment to advance stability, security, and prosperity across the Middle East and beyond, including through a comprehensive political agreement to achieve peace, prosperity, and security in Yemen," the State Department said in a Tuesday statement.

Saudi Arabia's leader has been willing to disregard the U.S. with his decisions and Riyadh has clashed repeatedly with Biden over crude oil supplied to global markets, the country's partnership with Russia in OPEC+ and its détente with Iran, mediated by China. Biden previously pledged to make Saudi Arabia a "pariah" over the horrific 2018 killing of Washington Post columnist Jamal Khashoggi (The Associated Press).

Bloomberg News: New U.S. spy satellites to track Chinese, Russian threats in orbit.

👉 International sports business: The PGA Tour, DP World Tour and the LIV Golf League (almost entirely bankrolled by the bottomless Saudi Arabia Public Investment Fund) stunned nearly everyone Tuesday with news they forged a commercial business alliance. The tours, which have been embroiled in a bitter legal battle for more than a year, called the development "a landmark agreement ... on a global basis" (ESPN).

The merger weds Saudi money with the PGA name (The Wall Street Journal), a version of what critics have called "sportswashing." The deal effectively makes the Saudis investors in U.S. golf's legacy powerhouse — a move that carries risk for the PGA Tour, which has spent the past year lashing out at its rival as LIV paid hundreds of millions of dollars to big-name golf stars to persuade them to defect. The parties said that the agreement combines the golf-related business from Saudi Arabia's sovereign wealth fund with the commercial and business rights of the PGA Tour and a third circuit, the DP World Tour, into a new, collectively owned for-profit entity. The PGA Tour, a non-profit, will continue to exist but essentially as a governance body while it contributes its money-making arms to the new, unnamed venture.

Drug prices: Pharmaceutical giant Merck filed a lawsuit on Tuesday to block the administration's efforts to curb drug prices paid by Medicare (The Washington Post). More states are following the federal lead to use government pressure to try to curb health care costs. In the case of states, the focus is on drug price boards (Axios).

Crypto: The Securities and Exchange Commission, seeking to protect investors, on Tuesday sued Coinbase, accusing the cryptocurrency platform of operating as an unregistered securities broker, acting a day after taking aim at crypto exchange Binance and its billionaire founder, Changpeng Zhao (The Washington Post).

The Closer

And finally … 🏃 Your workout is all in your mind. Motivation, that is.

With plenty of summer daylight, leisure time on vacay, and lovely weather and temperatures, it's easier to shirk sedentary predilections. Imagine tennis, swimming, jogging, pickleball, hiking and walking, softball and baseball, biking, gardening, skateboarding, soccer, martial arts, outdoor yoga, golf (without the cart), dancing — even SCUBA diving.

Experts offer some tips to kickstart brains to get bodies to activate: Variety and games, customization, hard-wired habits, and the tug of commitments to others (group training, charity competitions, etc.). The New York Times explains what scientists suggest can go a long way to motivate our brains to get up and out and exercise with more regularity.

If guilt touches a nerve, here's a factoid of note: Three quarters of Americans do not meet the recommended guidelines for aerobic and strengthening exercise, according to the National Center for Health Statistics.