Debt-Ceiling Fight Takes Center Stage

WASHINGTON, DC - JANUARY 30: U.S. Treasury Secretary Jacob Lew (L) leaves the U.S. Captiol after meeting with Senate Democrats January 30, 2014 in Washington, DC. Lew talked to senators about the pending debt ceiling.
National Journal
Michael Catalini and Billy House
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Michael Catalini Billy House
Feb. 2, 2014, 8:14 a.m.

Con­gress enters this week without a bi­par­tis­an agree­ment on how to ad­dress the debt ceil­ing, with the Obama ad­min­is­tra­tion telling law­makers they should take steps to raise the na­tion’s bor­row­ing cap be­fore Fri­day.

Treas­ury Sec­ret­ary Jac­ob Lew says “ex­traordin­ary meas­ures” can be taken by the de­part­ment to pre­vent de­fault, but he also ex­pects these meas­ures to be ex­hausted later in the month. In an ap­pear­ance at the Bi­par­tis­an Policy Cen­ter on Monday, Lew will again urge law­makers to raise the debt ceil­ing as soon as pos­sible .

Yet House Re­pub­lic­ans, who gathered at their an­nu­al private re­treat late last week, con­tin­ued to hedge on what, if any, con­ces­sions they might ask in re­turn for their sup­port on an in­crease in the $17 tril­lion bor­row­ing lim­it.

How much lever­age the GOP holds with Demo­crats and Pres­id­ent Obama, who will not ne­go­ti­ate over pay­ing the coun­try’s debts, re­mains to be seen. Speak­er John Boehner says House Re­pub­lic­ans won’t ap­prove a debt-ceil­ing in­crease without con­ces­sions, but Boehner has also said de­fault­ing on the na­tion’s debt is “the wrong thing,” in­dic­at­ing a show­down is un­likely.

In the Sen­ate, Budget Com­mit­tee Chair­wo­man Patty Mur­ray is lead­ing the no-ne­go­ti­ation chor­us for Demo­crats, and no de­cision about wheth­er the Sen­ate will take up the debt-ceil­ing is­sue be­fore the House has been made, Demo­crat­ic aides said.

The ques­tion is likely to come up at a closed-door re­treat for Sen­ate Demo­crats at Na­tion­als Park on Wed­nes­day, where law­makers will hear from Obama and Bill Clin­ton.

Sen­ate Re­pub­lic­ans are also re­treat­ing Wed­nes­day, head­ing to the Lib­rary of Con­gress to chart their own course over the debt lim­it. Sen­at­ors are in close con­tact with their House col­leagues and are aim­ing to mount a united front against Ma­jor­ity Lead­er Harry Re­id and the White House, law­makers say.

Also on the agenda this week:

  • The Sen­ate is ex­pec­ted to vote on the farm bill, start­ing with a pro­ced­ur­al meas­ure Monday and mov­ing to fi­nal pas­sage later this week. The House passed the bill last week.
  • Janet Yel­len will be of­fi­cially sworn in as Fed­er­al Re­serve chief on Monday morn­ing.
  • The Sen­ate Health Edu­ca­tion, Labor, and Pen­sions Com­mit­tee will hold a hear­ing Tues­day on the nom­in­a­tion of Vivek Murthy to be the next sur­geon gen­er­al.
  • The House Armed Ser­vices Com­mit­tee will hold a hear­ing Tues­day on the state of al-Qaida. The House For­eign Af­fairs Com­mit­tee will con­duct a hear­ing Wed­nes­day on al-Qaida’s re­sur­gence in Ir­aq.
  • The House Ways and Means Over­sight Sub­com­mit­tee will hold a hear­ing Wed­nes­day fea­tur­ing IRS Com­mis­sion­er John Koskin­en. The hear­ing will ad­dress a num­ber of is­sues re­lated to the IRS, in­clud­ing the agency’s re­spons­ib­il­it­ies un­der the Af­ford­able Care Act.
  • The House Rules Com­mit­tee will hold a hear­ing Monday to set floor rules for a vote this week on the “Sports­men’s Her­it­age and Re­cre­ation­al En­hance­ment Act of 2013,” which also would al­low for im­port­a­tion of po­lar-bear trophies from Canada, if proven that the kill oc­curred be­fore May 15, 2008.
  • The Rules Com­mit­tee will hold a hear­ing Wed­nes­day to set pro­ced­ures on the Sac­ra­mento-San Joa­quin Val­ley Emer­gency Wa­ter De­liv­ery Act.

BUDGET AND FIN­ANCE

Debt-Lim­it Drama

Lew last week met be­hind closed doors with Sen­ate Demo­crats to dis­cuss the debt-ceil­ing dead­line. Just days earli­er, he had writ­ten to law­makers say­ing ac­tion to raise the na­tion’s bor­row­ing lim­it should be taken “be­fore Feb­ru­ary 7 to en­sure the or­derly fin­an­cing of the gov­ern­ment,” or at the latest by the end of Feb­ru­ary.

Sen­ate aides said Lew was main­tain­ing that pos­ture last week.

Demo­crats have been warn­ing Re­pub­lic­ans that they will not ne­go­ti­ate spend­ing cuts in ex­change for in­creas­ing the lim­it — and Re­pub­lic­ans have been com­plain­ing about the no-bar­gain­ing po­s­i­tion taken by con­gres­sion­al Demo­crats and Pres­id­ent Obama.

Still, House Re­pub­lic­an lead­ers ap­pear to be abandon­ing any no­tion of a tense elec­tion-year stan­doff, or the pos­sib­il­ity of let­ting the coun­try go in­to de­fault.

But ex­actly what they might de­mand in ex­change had not been de­cided by Re­pub­lic­ans late last week, as some con­ser­vat­ives com­plain they’re work­ing now with scant lever­age.

Some op­tions dis­cussed in­clude try­ing to again at­tach meas­ures tied to the Af­ford­able Care Act, or some in­struc­tions re­gard­ing tax re­form, or even ty­ing it to the Key­stone XL pipeline. But no defin­it­ive strategy ap­peared de­cided as of late last week.

“I think the debt-lim­it dis­cus­sions are pre­lim­in­ary at this point,” said House Ways and Means Com­mit­tee Chair­man Dave Camp, R-Mich., at the GOP re­treat.

DE­FENSE

Fight­ing for Vet­er­ans

The Sen­ate is look­ing to take steps to un­wind the $6 bil­lion re­duc­tion in vet­er­ans’ cost-of-liv­ing be­ne­fits that was in­cluded in last year’s budget deal.

Sen­ate Armed Ser­vices Com­mit­tee Chair­man Carl Lev­in is hop­ing to mark up a bill in his pan­el from Sens. Mark Pry­or and Kay Hagan as soon as this week that would undo the cuts without off­set­ting them, with an eye to­ward fig­ur­ing out a pay-for on the Sen­ate floor. Mean­while, a bill is pending in the Sen­ate from Vet­er­ans Af­fairs’ Com­mit­tee Chair­man Bernie Sanders that would re­store the COLA re­duc­tion and ex­pand health care and edu­ca­tion be­ne­fits to vet­er­ans, which the Sen­ate could move to at any time. The Sen­ate For­eign Re­la­tions Com­mit­tee will hold a hear­ing Tues­day on ne­go­ti­ations with Ir­an, fea­tur­ing the State De­part­ment’s Wendy Sher­man and Treas­ury De­part­ment’s Dav­id Co­hen.

ECO­NOMY

Fed Frenzy

First up on Yel­len’s plate? Over­see­ing the Fed’s exit from its bond-buy­ing pro­gram; bring­ing down the un­em­ploy­ment rate; keep­ing an eye out for de­fla­tion as well as bubbles; and com­mu­nic­at­ing as clearly as pos­sible to jit­tery mar­kets. No big deal.

The Con­gres­sion­al Budget Of­fice will re­lease its latest budget and eco­nom­ic out­look, span­ning 2014 to 2024, on Tues­day. CBO Dir­ect­or Douglas El­men­d­orf will testi­fy on the new fore­cast be­fore the House Budget Com­mit­tee on Wed­nes­day morn­ing.

There will be back-to-back hear­ings on safe­guard­ing con­sumers’ fin­an­cial data, an is­sue that has been in the head­lines since a ma­jor breach of cred­it cards used by Tar­get cus­tom­ers dur­ing the hol­i­day sea­son was made pub­lic. The first hear­ing will be held Monday by a Sen­ate Bank­ing sub­com­mit­tee; the second on Tues­day by the Sen­ate Ju­di­ciary Com­mit­tee. John Mul­ligan, the chief fin­an­cial of­ficer of the Tar­get Corp., is sched­uled to testi­fy at the lat­ter.

Over at the House Fin­an­cial Ser­vices Com­mit­tee, mem­bers will dis­cuss how to mod­ern­ize in­sur­ance reg­u­la­tion on Tues­day. On Wed­nes­day, they will turn to the an­nu­al re­port from the Of­fice of Fin­an­cial Re­search, which was cre­ated by the 2010 Dodd-Frank Act to bet­ter mon­it­or fin­an­cial threats to the United States. They’ll also hold a sep­ar­ate hear­ing Wed­nes­day on the im­pact of the Vol­ck­er Rule — a Dodd-Frank ban on banks mak­ing spec­u­lat­ive bets with their own money — on job cre­at­ors.

On Thursday, the Sen­ate Bank­ing Com­mit­tee will con­vene bank­ing reg­u­lat­ors for a hear­ing on over­sight of fin­an­cial sta­bil­ity and data se­cur­ity. Par­ti­cipants will in­clude of­fi­cials and agency heads from the Fed, the Fed­er­al De­pos­it In­sur­ance Corp., the Of­fice of the Comp­troller of the Cur­rency, the Se­cur­it­ies and Ex­change Com­mis­sion, and the Com­mod­ity Fu­tures Trad­ing Com­mis­sion, as well as the Treas­ury De­part­ment.

Cap­ping off the week will be the jobs re­port for Janu­ary, re­leased by the Bur­eau of Labor Stat­ist­ics at 8:30 a.m. Fri­day. The last read­ing — a dis­mal 74,000 jobs ad­ded in Decem­ber — sur­prised eco­nom­ists. This week, look for re­vi­sions to that num­ber. Eco­nom­ists are ex­pect­ing a stronger re­port this month, with con­sensus ex­pect­a­tions for payroll growth at 180,000, ac­cord­ing to a re­search note  by Cap­it­al Eco­nom­ics.

HEALTH

Obama­care Over­sight

IRS Com­mis­sion­er Koskin­en’s hear­ing be­fore the Over­sight Sub­com­mit­tee — in ad­dress­ing the agency’s re­spons­ib­il­it­ies un­der the Af­ford­able Care Act — will in­clude in­come and data cer­ti­fic­a­tion re­lated to the tax cred­its avail­able to low-in­come in­di­vidu­als on the in­sur­ance ex­changes.

Mean­while, Murthy would be the first In­di­an-Amer­ic­an sur­geon gen­er­al if he is ap­proved. He is the cofounder and pres­id­ent of Doc­tors for Amer­ica, a Wash­ing­ton-based group of 16,000 med­ic­al stu­dents and phys­i­cians that ad­voc­ates for the Af­ford­able Care Act and its prin­ciples of giv­ing Amer­ic­ans ac­cess to more af­ford­able qual­ity health care. Murthy is also a phys­i­cian and in­struct­or at Brigham and Wo­men’s Hos­pit­al at the Har­vard Med­ic­al School.

EN­ERGY AND EN­VIR­ON­MENT

West Vir­gin­ia Wa­ter

The Sen­ate En­vir­on­ment and Pub­lic Works’ Sub­com­mit­tee on Wa­ter and Wild­life is sched­uled to hold an over­sight hear­ing with West Vir­gin­ia state of­fi­cials and en­vir­on­ment­al ad­voc­ates on Tues­day to look at the ef­fect­ive­ness of health and en­vir­on­ment­al safe­guards that pro­tect drink­ing-wa­ter sup­plies.

The hear­ing will fo­cus on an event that un­fol­ded earli­er this month in West Vir­gin­ia when a chem­ic­al spill led to a ban on drink­ing wa­ter in cer­tain parts of the state. The is­sue re­mains in the spot­light fol­low­ing re­ports that the leaked chem­ic­al may now be break­ing down in­to form­al­de­hyde, a known car­ci­no­gen.

The House Rules Com­mit­tee is set to hold a hear­ing Wed­nes­day to set floor-vote pro­ced­ures on a bill that would en­able Es­cam­bia County, Fla., to con­vey some prop­erty that was part of Santa Rosa Is­land Na­tion­al Monu­ment to the county.

WHITE HOUSE

Close to Home

Obama will spend the first four days of the week in town, where he’ll meet with Demo­crat­ic law­makers and push themes from his State of the Uni­on ad­dress.

On Tues­day, he will talk about his pro­gram to con­nect more schools to high-speed In­ter­net and will host the House Demo­crat­ic Caucus for a roundtable and dis­cus­sion of is­sues in the even­ing. On Wed­nes­day, he will speak at the Sen­ate Demo­crat­ic Is­sues Con­fer­ence. On Thursday, he will speak at the Na­tion­al Pray­er break­fast and meet with the pres­id­ent of Haiti.

George E. Condon Jr., Clare Foran, Catherine Hollander, Stacy Kaper, Sophie Novack, Clara Ritger and Ben Geman contributed to this article.
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