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MORNING REPORT

Tuesday, May 2

by Alexis Simendinger & Kristina Karisch

Biden asks GOP to meet ahead of possible June 1 default

It's crunch time for debt ceiling talks.

President Biden on Monday called Speaker Kevin McCarthy (R-Calif.) and other congressional leaders to invite them to a May 9 White House meeting to discuss the debt limit as Treasury Secretary Janet Yellen announced a looming June 1 deadline for potential default.

The president reached out to McCarthy, who was traveling in Israel and has been goading Biden to negotiate, as well as Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-N.Y.) (The Hill).

Biden's ask comes after the White House for months maintained that Congress has an obligation to raise the debt ceiling without conditions, pointing to decades of precedent and noting that the debt has been accrued over hundreds of years and reflects spending the government has already approved. Republicans, meanwhile, are using the debt ceiling as leverage as they seek significant cuts to government spending programs.

For over 200 years, America has never, ever, ever failed to pay its debt," Biden said at an event Monday at the White House (The Washington Post). "To put in… colloquial terms, America is not a deadbeat nation. We have never, ever failed to meet the debt… We pay our bills, and we should do so without reckless hostage-taking from some of the MAGA Republicans in Congress."

McCarthy and Biden have not spoken at length about the debt ceiling or government spending since the Speaker visited the White House on Feb. 1. But after Yellen told lawmakers and the White House they have one month before the drop-dead date for defaulting on the nation's available resources to pay bills — now estimated "as early as June 1" — Biden is changing his tune, but only so far as to meet with congressional leaders. Administration officials on Monday insisted that Biden has no plans to drop his demand for a clean debt ceiling increase (Politico and The Hill). In a high-pressure letter delivered on Monday while the House is not in session, Yellen said her department estimates that the U.S. will be unable to pay its outstanding obligations beyond that date unless Congress approves new Treasury borrowing authority.

Citing revenues tallied after the tax filing season concluded in April, Yellen said the "X date" is expected to arrive more rapidly than earlier projections. Just last week, Goldman Sachs, anticipating the Treasury's updated timeline, said the X date was not expected before the end of July (Politico).

"House Republicans did their job and passed a responsible bill that raises the debt ceiling, avoids default, and tackles reckless spending," McCarthy said in a statement responding to Yellen's letter. "After three months of the Biden administration's inaction, the House acted, and there is a bill sitting in the Senate as we speak that would put the risk of default to rest. The Senate and the President need to get to work — and soon."

Roll Call: New debt limit forecast crashes into Capitol Hill.
Politico: Fast-approaching debt deadline jolts a flat-footed Congress.

McCarthy pulled out all the stops last week to move a debt ceiling bill through the House, twisting arms, modifying language and cutting last-minute deals with leery Republicans to send the package to the Senate by the narrowest of margins. But, as The Hill's Mike Lillis reports, that might have been the easy part. The next step — finding a bill that can win support from House Republicans and Biden — will be a much heavier lift.

"It will be more difficult, and therein lies the problem. Because both sides created this problem," said Rep. Nancy Mace (R-S.C.), who opposed the initial House bill until McCarthy promised to work with her on longer-term efforts to cut away at the nation's $31.4 trillion debt.

McCarthy must also keep in mind one of the key concessions he made to get the Speakership in the first place — a new, one-member threshold to bring a vote that would oust him. No Republican has threatened to "vacate the chair" if McCarthy were to allow an unpopular debt ceiling hike to pass on a floor he controls, the prospect is a factor and some lawmakers suggest a scenario in which he could face a thankless choice: saving the economy or his job.

"What I'm confident about from the conversations that I've had is that there are enough — let me pick my words carefully here — but 'serious Republicans' who would vote for a package that was agreed upon by [Senate Minority Leader] Mitch McConnell [R-Ky.]," Rep. Annie Kuster (D-N.H.), head of the New Democrat Coalition, told reporters Friday. "And I think, then, Kevin McCarthy may have the biggest decision in his tenure."

On Monday, Schumer placed both a clean two-year debt ceiling suspension and the GOP bill — neither of which currently has enough votes to pass — on the Senate calendar to "ensure that once a clean debt ceiling is passed the House bill is available for a bipartisan agreement on spending and revenue as part of the regular budget process" (Reuters).

Bloomberg News: Democrats look to McConnell, the man they called "grim reaper," for debt help.
Vox: What comes next in the debt ceiling showdown.
CBS News: Poll on debt ceiling shows large majority support raising limit to avoid default.
Bloomberg News: Biden has been under increasing pressure from business groups such as the U.S. Chamber and the Business Roundtable to negotiate with McCarthy on the debt limit. Some White House officials wanted business groups — which have traditionally held sway over Republican lawmakers — to pressure McCarthy to take the possibility of a catastrophic debt default off the table.

The Hill: Knesset speaker plays "Hotel California" for McCarthy.
The Washington Post: McCarthy invites Israeli Prime Minister Benjamin Netanyahu to visit Congress, skip the White House.
The Hill: Congressional parental consent proposal throws a wrench into kids' online safety talks.
Politico: Supreme Court move could spell doom for power of federal regulators.

Leading the Day

➤ POLITICS

It's no mystery that Republicans see advanced age, vitality and mental acuity as useful weapons against some Democrats, including the president, competing in next year's elections. The Hill's Julia Manchester and Alex Gangitano explore why the GOP feels comfortable emphasizing age when the de facto leaders of the Republican Party are former President Trump, 76, and McConnell, 81.

Biden has focused his reelection bid on themes of freedom and rights, even as he acknowledges voters' concerns about his age, The Hill's Brett Samuels reports. Freedom as a theme of contrast may resonate with the base of Biden's party, but Trump, former Vice President Pence and Florida Gov. Ron DeSantis (R), also highlight concepts of freedom, as viewed through conservative eyes.

In deep red West Virginia, will Democratic Sen. Joe Manchin run for president in 2024, possibly as a third-party candidate? As The Hill's Alexander Bolton reports, the centrist senator who is also a former West Virginia governor argues that voters want "something more" than the two likely major party nominees next year, Biden and Trump.

The Hill: Florida Republican Sens. Marco Rubio and Rick Scott are hanging back as the Trump-DeSantis rivalry heats up.

Say what?: In Texas, Gov. Greg Abbott (R) has been politically pummeled after referring to victims of a grisly mass shooting in a town north of Houston (by a suspect still on the lam) as "five illegal immigrants" — a phrase condemned as dehumanizing and perhaps inaccurate, The Hill's Niall Stanage writes in his latest Memo. … In Florida, DeSantis's hand-picked board tasked to oversee Disney announced it will sue the company, escalating a feud that involves free speech, the governor and the state's major on-site employer (The Hill). … Montana state Rep. Zooey Zephyr (D) is suing her state and its House speaker after punishment she says was retaliatory and unlawful following her use of speech she says is protected under federal law (The Hill).

2024 exits: Maryland Sen. Ben Cardin (D), 79, told The Baltimore Sun on Monday he won't seek reelection next year, opening a coveted vacancy for contenders in a blue state during a presidential election cycle. Names to watch: Rep. Jamie Raskin (D-Md.) and former Maryland Republican Gov. Larry Hogan. Cardin, who was first elected to the House in 1987 before ascending to the Senate, is not alone among Democratic senators who plan to exit after long tenures. Sens. Dianne Feinstein (Calif.) and Debbie Stabenow (Mich.) previously announced their retirements next year and Democrats are gearing up (The Hill). … Washington Gov. Jay Inslee (D), 72, announced Monday he will not seek a fourth term in 2024. Given the blue state's leanings, the governor's mansion is likely to remain in Democratic control (The Hill).

2024 watch: Trump will participate in a CNN town hall program in New Hampshire on May 10 (The Hill). … Rep. Colin Allred (D-Texas), a former NFL player-turned-civil rights attorney, as soon as this week will announce a campaign to try to unseat Sen. Ted Cruz (R-Texas) in 2024 (Politico). Compared with Cruz's 2018 campaign, when the star power and fundraising prowess of Beto O'Rourke helped Democrats come within three percentage points of capturing that coveted statewide office, the 2024 contest had been viewed as smoother for Cruz (Texas Tribune).

The Hill: Hitting 50, the Heritage Foundation think tank looks to move past "Conservatism Inc."

➤ ADMINISTRATION

Biden welcomed Philippine President Ferdinand Marcos Jr. to the White House on Monday as part of administration efforts to strengthen security and economic relations in the region as concerns mount over an increasingly assertive China. In the Oval Office, Biden said the U.S. "remains ironclad in our commitment to the defense of the Philippines, including the South China Sea."

"We're going to continue to support the Philippines military's modernization goals," Biden told Marcos, pledging the two countries "not only share a strong partnership — we share a deep friendship, one that has been enriched by millions of Filipino Americans in the communities all across the United States."

Monday's meeting was a show of solidarity to demonstrate to China that the U.S. remains committed to its allies in the neighborhood; a mutual defense treaty between the U.S. and the Philippines dating to 1951 stipulates both sides would help defend each other if either were attacked by a third party (CNN).

The New York Times: U.S.-Philippines alliance grows with Biden and Marcos meeting.

The White House is investigating how artificial intelligence can be used by companies to surveil and manage workers, practices the administration says are prevalent and can inflict significant harm. "While these technologies can benefit both workers and employers in some cases, they can also create serious risks to workers," deputies from the White House Domestic Policy Council and White House Office of Science and Technology Policy wrote in a blog post Monday, announcing a formal request for information from the public about how automated tools are being deployed in the workplace (Bloomberg News).

In Focus / Sharp Takes

➤ INTERNATIONAL

Thousands of people have descended on Port Sudan in eastern Sudan in recent days, fleeing the violence in the capital and trying to secure their escape aboard ships heading over the Red Sea to Saudi Arabia. The country's biggest seaport has been transformed into a hub for displaced people in the wake of conflict that erupted on April 15 between the Sudanese Army and the Rapid Support Forces (RSF), a paramilitary group. The World Health Organization estimates more than 500 civilians have been killed, with many people displaced but unsure of how to escape the violence, but the true number of casualties is likely much higher.

A three-day extension to the latest cease-fire was also announced on Sunday, but heavy fighting was still reported in the capital, Khartoum (The New York Times).

The Hill: More than 800,000 could flee Sudan amid fighting, U.N. warns.
CNBC: Sudan conflict shows no sign of easing, U.N. warns of breaking point.
CBS News: Sudan fighting and evacuations continue as a U.S. Navy ship brings more than 100 Americans to Saudi Arabia.

The U.S. estimates Russia has suffered 100,000 casualties in the Ukrainian city of Bakhmut since December, including more than 20,000 killed in action, National Security Council spokesman John Kirby told reporters Monday. He declined to discuss Ukrainian casualties. "That's up to them to speak to," he said. Moscow, meanwhile, targeted Kyiv and other cities with a "massive" wave of missiles overnight, Ukrainian officials said. The assault lasted several hours, but no casualties were reported, as local authorities said air defenses worked to intercept most of the missiles (The Washington Post).

The New York Times: Both sides are reporting attacks before an expected Ukrainian counteroffensive.
Reuters: Homes, buildings smashed in latest Russian strikes on Ukraine.
Politico EU: Russia hunts for spies and traitors — at home.
The Atlantic: The future of the democratic world will be determined by whether the Ukrainian military can break a stalemate with Russia and drive the country backward — perhaps even out of Crimea for good.

French police fired teargas and clashed with demonstrators in Paris and other cities on Monday after trade unions transformed their traditional Labour Day marches into anti-government demonstrations against the rise in the retirement age. The increase, pushed through parliament by President Emmanuel Macron, led to weeks of protests and strikes across the country. Monday's trade union-led demonstration began peacefully in Paris with many families joining in, holding banners calling for social justice. But on the edges of the march, police fired teargas and clashed with groups of young men dressed in black (The Guardian).

Foreign Policy: How Macron can fix France's democracy after outrage over pension reform.
The Washington Post: King Charles III's coronation guest list: Who is coming and who isn't.

➤ ECONOMY

The Federal Reserve is still expected to hike rates by one-quarter of a percentage point following its two-day meeting that ends on Wednesday. The anticipated hike would mark the 10th time the Fed has raised its benchmark interest rate over the past year or so, the fastest pace of tightening since the early 1980s. Consumers are now paying more to borrow while still grappling with a high cost of living — causing them to feel increasingly worse off financially (CNBC).

Even though the Fed's rate-hiking cycle has started to cool inflation, higher prices are causing real wages to decline. Real average hourly earnings are down 0.7 percent from a year earlier, according to the latest reading from the U.S. Bureau of Labor Statistics. Because incomes have not kept pace with inflation, household budgets are squeezed, causing more people to lean on credit just when interest rates have been rising at the fastest pace in decades, CNBC reports. The average rate on credit cards now tops 20 percent. Mortgage rates now average 6.5 percent. "People are racking up debt, and that's troublesome," said Tomas Philipson, University of Chicago economist and the former chair of the White House Council of Economic Advisers. Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5 percent, according to Bankrate. However, if this is the Fed's last increase for a while, then deposit rate hikes are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.

The demise of First Republic Bank raises questions about the strength of the U.S. banking system and the broader economy that relies on it, reports The Hill's Karl Evers-Hillstrom. Meanwhile, Biden on Monday said taxpayers are not on the hook for the failure of the bank, which on Monday became part of JPMorgan Chase (The Hill).

The New York Times: A timeline of how the banking crisis has unfolded.

Economists who examine current rising housing foreclosure rates say market conditions are different than during the financial crisis of 2008-2009, in part because of today's healthy levels of homeowner equity and higher credit scores (The Hill). Foreclosure notices ticked up nationwide in the first quarter of the year with more than 65,000 properties beginning to go through the process. There were 36,617 new filings in March, which marks the 23rd consecutive month with a year-over-year increase in foreclosure activity.

EVENT INVITE:

Expanding Access to Alzheimer's Care & Treatment, May 11, 2 p.m. ET

About 1 in 9 Americans over 65 suffers from Alzheimer's disease. Unfortunately, treatment options are still limited. Why is CMS declining coverage, and where are we in terms of new treatments on the horizon? The Hill brings together Sens. Ed Markey (D-Mass.), Shelley Moore Capito (R-W.Va.); Reps. Anna Eshoo (D-Calif.), Darin LaHood (R-Ill.) and Nanette Barragan (D-Calif.); along with researchers, doctors, caregivers and patients to explore the latest treatments and roadblocks and discuss what more needs to be done.

Click Here to Register

Opinion

This debt-ceiling standoff could be really disastrous, by Bill Dudley, columnist, Bloomberg Opinion. https://bloom.bg/3LLIkGs
Biden's plan to address migrant surge may make it worse, by Nolan Rappaport, opinion contributor, The Hill. https://bit.ly/41U5Czs

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 convene at 11 a.m. Members are scheduled to return from a district work period on May 9.

The Senate meets at 10 a.m. The Senate Judiciary Committee will hold a 10 a.m. hearing about proposed Supreme Court ethics reforms.

The president will receive the President's Daily Brief at noon in the Oval Office.

Vice President Harris will host a brunch for Philippines President Ferdinand Marcos Jr. and Mrs. Louise Araneta-Marcos at 9:50 a.m. at the vice president's residence, joined by second gentleman Doug Emhoff.

Secretary of State Antony Blinken meets at 9:30 a.m. with Foreign Minister Jan Lipavský of Czechoslovakia at the State Department.

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

Elsewhere

➤ NEWS MEDIA

Dozens of news websites generated by AI chatbots are proliferating online, according to a report published Monday by the news-rating group NewsGuard, raising questions about how the technology may supercharge established fraud techniques. The 49 websites, Bloomberg News reports, run the gamut. Some are meant to look like breaking news sites with generic-sounding names like News Live 79 and Daily Business Post, while others share lifestyle tips, celebrity news or publish sponsored content. But none disclose they're populated using AI chatbots.

The majority of the websites appear to be content farms — low-quality sites run anonymously that publish huge quantities of content to bring in advertising. NewsGuard co-CEO Gordon Crovitz said the report showed that companies such as OpenAI and Google should take care to train their models not to fabricate news.

"Using AI models known for making up facts to produce what only look like news websites is fraud masquerading as journalism," Crovitz said.

NBC News: Artificial intelligence pioneer leaves Google and warns about technology's future.
The Hill: Here are four personalities to watch as Fox News searches for a replacement for its formerly top-rated and most controversial host, Tucker Carlson.
The New Republic: Carlson, in a hot mic misadventure captured on behind-the-scenes video, commented that the Fox Nation subscription site "sucks."
The New York Times: Digital media site Vice is said to be headed for bankruptcy.

Leaders of the Writers Guild of America called on their members to stage Hollywood's first strike in 15 years as a festering dispute over how writers are compensated in the streaming era came to a head Monday night. The boards of directors for the East and West Coast divisions of the WGA voted unanimously to call a strike effective 12:01 a.m. today. First to go dark will be late night programming, as TV shows have mostly wrapped production and movies are produced up to a year in advance.

The last writers strike lasted 100 days, starting in the fall of 2007 (Los Angeles Times and Variety).

The New York Times: How will the strike affect your favorite show?

➤ HEALTH & WELLBEING

The administration next week will lift the U.S. COVID-19 vaccine requirements for international travelers and various workplaces, the White House announced Monday, a move that will coincide with the planned May 11 end of the public health emergency tied to the pandemic (The Hill).

There has been a boom in mental health apps designed to help with everything from mild anxiety to PTSD. But are these apps helpful or harmful? As The Hill's Alejandra O'Connell-Domenech writes, experts say that while some apps can provide temporary relief, they run the risk of making some mental health conditions worse. A lack of oversight over these apps means they have the potential to harm users in another way — by sharing and selling their personal information.

Forbes: The worst states for mental health care, ranked.
The New York Times: Emergency room visits have risen sharply for young people in mental distress, study finds.
The Hill: More than 30 percent of LGBTQ youth attribute poor mental health to anti-LGBTQ laws.

Two hospitals, one in Missouri and one in Kansas, refused to provide an emergency abortion to a pregnant woman who was experiencing premature labor and are now accused of putting her life in jeopardy and violating federal law, according to a first-of-its-kind federal investigation. As The Associated Press reports, the documents are a warning to hospitals around the country as they struggle to reconcile dozens of new state laws that ban or severely restrict abortion with a federal mandate for doctors to provide abortions when a woman's health is at risk. That federal law, which requires doctors to treat patients in emergency situations, trumps state laws restricting abortion access, Health and Human Services Secretary Xavier Becerra said in a statement.

"Fortunately, this patient survived. But she never should have gone through the terrifying ordeal she experienced in the first place," Becerra said. "We want her, and every patient out there like her, to know that we will do everything we can to protect their lives and health, and to investigate and enforce the law to the fullest extent of our legal authority, in accordance with orders from the courts."

The Washington Post: Masks come off in the last refuge for COVID-19 mandates: the doctor's office.
The Atlantic: Will COVID-19's spring lull last?

The Closer

And finally … 🏇 Ahead of Saturday's Kentucky Derby, we revisit Secretariat's historic 1973 win HERE.

It's been 50 years since the famous racehorse and Triple Crown winner wowed those who knew the sport and millions who did not. Secretariat still holds the fastest times for all three legendary races — the Kentucky Derby, Preakness Stakes and Belmont Stakes.

His historic run began at Churchill Downs on May 5, 1973, when he became the first horse to finish the 1-1/4 mile race in less than two minutes (Louisville Courier-Journal). Every year, about 12,000 people visit Claiborne Farm near Paris, Ky., where he spent 16 of his last 19 years and was buried following his 1989 death (The Washington Post).

Spectrum News1: Meet Trusted Company, likely Secretariat's last living daughter.
WHAS 11: The Kentucky Derby Museum in Louisville, Ky., commemorates Secretariat's Triple Crown 50th anniversary with a new exhibit.