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Wall St. investors not panicking — yet
The Treasury secretary on Monday warned once again of “serious harm” if Congress does not give the department new authority to borrow by early June.
Anxiety is on the ascent among observers who understand the time-consuming mechanics of moving any legislative compromise through deeply divided chambers of Congress and toward President Biden’s pen in the short time frame presented by Treasury Secretary Janet Yellen. Why haven’t investors begun to reach for the panic button?
Although few predict a breakthrough today, Biden will resume discussions at the White House with Speaker Kevin McCarthy (R-Calif.). Joining them will be Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Republican Leader Mitch McConnell (Ky.), House Democratic Leader Hakeem Jeffries (N.Y.) and Vice President Harris.
Complicating the pace and path of talks: The president is scheduled to be out of the country for eight days beginning midweek. Also on the calendar: the Memorial Day break.
McCarthy laments they’ve made little headway; the White House says Biden won’t back a short-term fallback option, and Yellen turned up the heat with a refined “X-date” projection of “early June, and potentially as early as June 1.” The Treasury, which has for weeks been shuffling accounts to pay U.S. bills, will update its default timetable again next week.
▪ The Hill: Five things to know about where debt ceiling talks stand.
▪ The Washington Post: GOP rejected White House effort to close tax loopholes in debt ceiling talks.
▪ The New York Times: How Wall Street is preparing for the debt limit showdown.
▪ CNN: Predictions of Wall Street volatility haven’t materialized. Why?
Theories abound about why financial markets appear so sanguine: Investors may be shrugging off portents of economic catastrophe because they don’t believe actual default, which would be historic and self-inflicted, will occur. Investors may recognize the risks in the current political climate but don’t know how to react or how to price for default. Or they may be jittery but reluctant to panic until the last possible moment, perhaps the end of May.
“I think in the stock market in general there’s a feeling of the little boy who cried wolf: ‘This will get solved at the last minute,’ which we’ve seen in the past,” Greg Valliere, chief U.S. policy strategist for AGF Investments, told CNN last week. “But this is different,” he added.
Jamie Dimon, CEO of JPMorgan Chase, revealed his team created a debt ceiling war room. As the X-date nears and there’s no apparent solution, the team will confer multiple times a day, he told Bloomberg News last week.
“The closer you get to it, you will have panic” as measured by market volatility, he warned. And while “panic becomes something that’s not good,” Dimon added, “if it gets to that panic point, people have to react.”
The New York Times, Brookings Institution: As a debt limit emergency option, House Democrats can begin collecting signatures today for a discharge petition filed months ago. However, discharge petitions rarely succeed, according to U.S. legislative history.
Meanwhile, in Congress, lawmakers and congressional employees were shaken on Monday to learn that two staff members in a district office of Rep. Gerry Connolly (D-Va.) were hospitalized with non-life-threatening injuries after being beaten by a man wielding a metal baseball bat (The Hill). Authorities arrested Xuan Kha Tran Pham, 49, of Fairfax, Va., and the U.S. Capitol Police said the suspect faced charges of aggravated malicious wounding and one count of malicious wounding, adding his motive was unclear. Pham’s father told CNN his son is schizophrenic and had not taken his medication for three months.
Connolly said the assailant, a constituent he did not know, asked for him before attacking his aides and shattering glass and computers in his office in Fairfax, outside Washington. “The thought that someone would take advantage of my staff’s accessibility to commit an act of violence is unconscionable and devastating,” he said in a statement.
▪ The Associated Press: Ambitious agenda for Biden on upcoming three-nation Indo-Pacific trip as debt default looms at home.
▪ Politico: Republicans move to deflate Biden’s message that they’re cutting veterans funding.
▪ Roll Call: Permitting overhaul: Before or after debt ceiling talks?
▪ The Navy Times, NBC News: More than 1,200 Navy retirees must repay the government $7 million in overpayments stretching over four years due to a “software” error, the government says.
▪ The New York Times: The IRS acknowledges that Black Americans face more audit scrutiny.
LEADING THE DAY
In The Hill’s second dispatch about the Sunshine State, Julia Manchester details how Florida’s coronavirus pandemic policies have accelerated the state’s shift to conservatism by emboldening Gov. Ron DeSantis (R) and, during lockdowns, drew swaths of Americans seeking a return to the normalcy of a pre-coronavirus world.
Data suggest a good portion of the new arrivals helped contribute to the state’s rightward tilt. Data vendor L2 found that 46 percent of the almost 400,000 voters who moved to Florida during the pandemic registered with the GOP. Only about 23 percent registered as Democrats.
“Anyone who could relocate to a place that was open, like Florida, did,” said Sal Nuzzo, senior vice president at the Florida-based, free-market think tank The James Madison Institute. “What they found was a lifestyle and a political atmosphere and a culture that just agreed with them a lot more than where they came from.”
▪ The Hill: DeSantis signs bill defunding diversity, equity and inclusion programs at Florida universities.
▪ Politico: Former President Trump puts DeSantis in a bind on 2020: Can he bring himself to say Trump lost?
John Durham, a Trump-era special counsel assigned to review the investigation of the former president’s ties to Russia, after four years released a final report Monday that concluded authorities had insufficient information to open a case. While Durham does not recommend any new charges in his final 305-page report, he offers a scathing assessment of the FBI’s investigation, known as “Crossfire Hurricane.”
Former Attorney General Bill Barr tapped Durham in 2019 during the Trump administration to reexamine how government agents examined possible links between Trump’s 2016 campaign and Russian efforts to interfere in the presidential election. As an investigator tasked to reinvestigate the investigators, Durham and his team cast a broad net, interviewing top officials at the FBI, Justice Department and CIA in an investigation that ultimately cost taxpayers more than $6.5 million (The Associated Press).
His probe yielded multiple indictments but limited results in court. Two individuals were charged with lying to the FBI and found not guilty, and a third individual pleaded guilty to doctoring an email about a surveillance warrant. Much of the FBI conduct described in Durham’s report was previously denounced in a 2019 report by the Justice Department’s inspector general, which did not find “documentary or testimonial evidence of intentional misconduct” (The Hill and The Washington Post).
“This report took a long time because John Durham is a very thorough investigator,” Trump told Fox News on Monday. “But the result is unequivocal and an absolute disaster in terms of justice.”
▪ CBS News: Read the full Durham report HERE.
▪ Politico: Takeaways from the Durham report on the Trump-Russia probe.
It’s a big day for local elections, with races in Kentucky, Pennsylvania and Florida. The Hill’s Caroline Vakil breaks down the five races to watch today, including a Pennsylvania state House race that could determine control of the chamber.
▪ The Hill: The GOP faces a critical test on abortion in North Carolina.
▪ NBC News: Biden administration may halt plans to move Space Command to Alabama over state’s abortion law, officials say.
▪ Politico: Democrats’ great hope to hold the Senate: GOP primary implosions.
▪ The Hill: Rudy Giuliani sued for $10 million over sexual assault allegations.
2024 roundup: Former Vice President Mike Pence heads to New Hampshire this week as he inches closer to a decision on whether to run for president in 2024 (The Hill and The New York Times). … Former Energy Secretary Rick Perry — who unsuccessfully sought the GOP nomination in 2012 and 2016 — teased a possible 2024 presidential run Sunday, while declining to support Trump’s campaign (CNN). … In West Virginia, the Democratic Senatorial Campaign Committee is attempting to obtain documents detailing Gov. Jim Justice’s (R) official schedule and calendar as governor as he embarks on a run for Senate (NBC News). … Embattled and now indicted, Rep. George Santos (R-N.Y.) will have another challenger when he runs for reelection in 2024; Democratic nonprofit founder Zak Malamed entered the crowded race on Monday (Axios).
IN FOCUS/SHARP TAKES
Turkish voters on Sunday didn’t outright reject the leadership of longtime President Recep Tayyip Erdoğan, but failed to grant him the majority required to win the election outright. Now, heading toward a May 28 runoff against unified opposition candidate Kemal Kılıçdaroğlu, who has promised to return the country to a more democratic path after years of Erdoğan’s increasingly authoritarian rule. Still, as The New York Times reports, there are strong signs pointing to yet another Erdoğan victory in the upcoming vote.
“For Erdoğan, this is his greatest finale,” said Mehmet Ali Kulat, a prominent Turkish pollster who had foreseen a stronger showing by the opposition.
With a battered economy, tensions over its relationship with Russia and NATO, and fears of a possible slide toward authoritarianism, the election in the sharply divided country of 85 million people comes at a pivotal time. And the fact that Erdoğan could not win more than 50 percent of the vote — even after using many of his levers of power to tilt the playing field to his advantage — indicates that some voters have tired of his financial management and his drastic consolidation of power (CNBC).
▪ The Washington Post: What’s next after Turkey’s election, which is headed to a runoff?
▪ Politico EU: An unlikely nationalist kingmaker sees his moment in Turkey election runoff.
Ukrainian air defenses thwarted an intense Russian air attack on Kyiv early Tuesday, shooting down all 18 missiles aimed at the capital (The New York Times). Earlier, Ukraine reported its first substantial battlefield advances in six months on Monday as President Volodymyr Zelensky won pledges for new long-range drones in the United Kingdom to add to a haul of Western arms for a counteroffensive against Russia. European leaders promised Zelensky an arsenal of missiles, tanks and drones during a whirlwind three-day visit to Italy, the Vatican, Germany, France and the U.K. that sought to replenish Ukraine’s depleted weapons supplies (The Associated Press).
The Ukrainian military has started to push Russian forces back in and around the embattled city of Bakhmut, in its first significant offensive operations since troops recaptured the southern city of Kherson in November (Reuters).
▪ Politico EU: Zelensky, British Prime Minister Rishi Sunak push forward on “fighter jet coalition.”
▪ The Washington Post: Russia dismisses report that Wagner Group boss offered to reveal troop positions.
▪ Foreign Policy: Ukraine is knock, knock, knocking on NATO’s door.
Following a stunning election victory in which they together captured a majority of seats in the House of Representatives, Thailand’s top two opposition parties began planning Monday for the next stage in their bid to replace the military-dominated government. Pita Limjaroenrat, leader of the Move Forward Party, said Monday he has been talking to five other parties — including Pheu Thai, the other successful opposition party, about forming a coalition government, which would have a more stable 309 House seats in total. Parliament selects a new prime minister in July, so the group has about two months to seal a deal (The Associated Press).
“The overwhelming electoral victory by Move Forward and Pheu Thai is a decisive sign that voters want a polity where the people, not the military, decide their future,” Tyrell Haberkorn, a Thai studies scholar at the University of Wisconsin, told The AP. “Voters want a Thailand with free speech, without compulsory military conscription, and where the people’s voices are valued, not something to be silenced or bought.”
▪ The New York Times: In Paraguay, the Colorado Party has held power for seven decades. On Election Day, it rounds up Indigenous people and pays them for their votes.
▪ NPR: The United Nations is marking the 75th anniversary of Palestinians’ displacement.
■ Stock market anomaly is playing by its own rules, by John Authers, columnist and senior editor for markets, Bloomberg Opinion. https://bloom.bg/455dXSV
■ The conflict cannot end until Ukraine is part of the West, by Ivo Daalder, former U.S. ambassador to NATO and contributor, Politico EU. https://politi.co/42S6t3Q
WHERE AND WHEN
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The House will meet at 10 a.m.
The Senate will convene at 10 a.m.
The president will receive the President’s Daily Brief at 9:30 a.m. Biden’s debt ceiling discussion with congressional leaders is scheduled at 3 p.m. in the Oval Office and will include the vice president. The president, first lady Jill Biden and second gentleman Doug Emhoff will deliver remarks beginning at 4:30 p.m. at a celebration of Jewish American Heritage Month. The vice president will attend.
The vice president will convene a roundtable at 1:20 p.m. in the Indian Treaty Room with young men of color who are small business owners and entrepreneurs. Harris will participate in the White House celebration of Jewish American Heritage Month at 4:30 p.m. The vice president will address a national gala event at 6:45 p.m. hosted by EMILY’s List in Washington.
Secretary of State Antony Blinken will join Defense Secretary Lloyd Austin and Commerce Secretary Gina Raimondo at 2 p.m. to testify before the Senate Appropriations Committee about administration budget requests tied to U.S. security and China.
Treasury Secretary Janet Yellen at 9 a.m. will address the Independent Community Bankers of America 2023 Capital Summit.
The first lady also will speak at 1:30 a.m. at the Labor Department’s “ETA Vision 2030: Investing in America’s Workforce” convening. She will speak at 7:15 p.m. about the administration’s Cancer Moonshot at DC NewsBash, a charity event focused on breast cancer and held at a Washington hotel.
The White House daily press briefing is scheduled at 1:45 p.m.
Alex Kotran sounded the alarm on the need for artificial intelligence education before ChatGPT made it cool. After starting his career in the political space during the Obama administration, The Hill’s Lexi Lonas reports, Kotran transitioned into the education realm in 2019, when he created AI Education, or aiEDU, a group aimed at giving instruction on artificial intelligence to K-12 students. As his organization was working through the coronavirus pandemic to convince schools and investors of the utility of AI in classrooms, OpenAI was creating ChatGPT, the AI tool that would eventually propel the issue into the national spotlight.
“The challenge of preparing Americans for the age of artificial intelligence is not a technical problem,” Kotran told The Hill. “It’s a social, political, societal problem.”
▪ The Chronicle of Higher Education: I’m a student. You have no idea how much we’re using ChatGPT.
▪ CNBC: Europe takes aim at ChatGPT with what might soon be the West’s first AI law. Here’s what it means.
Education Secretary Miguel Cardona said that the current pause on student loan repayments will end “no later than June 30.” The current pause on student loan repayments, announced in November, is set to end 60 days after the Supreme Court issues its long-awaited ruling on debt relief.
The Biden administration’s student loan forgiveness plan currently remains in legal limbo, but the Supreme Court during oral arguments in February appeared inclined to kill the sweeping plan (Axios).
▪ The Hill: Student loan forgiveness: What to know as the Supreme Court mulls the case.
▪ Forbes: Student loan forgiveness update: Biden may have other ways to help borrowers.
➤ HEALTH & WELLBEING
Biden on Monday announced the nomination of National Cancer Institute Director Monica Bertagnolli, a cancer surgeon, to lead the National Institutes of Health. If confirmed, she would be only the second woman in the post. Biden has made cancer research a priority of his administration, launching a revamped cancer “moonshot” program with the goal of reducing the death rate from cancer by at least 50 percent over the next 25 years. In mid-December, Bertagnolli announced she had been diagnosed with breast cancer and was receiving treatment in Boston (The Hill).
▪ The Washington Post: He defied Alzheimer’s for two decades. Scientists want to know how.
▪ CNN: Don’t use sugar substitutes for weight loss, World Health Organization advises.
▪ NPR: Hospitals create police forces to stem growing violence against staff.
Vending machines that have long been stocked with snacks are getting repurposed to distribute life-saving supplies to help fight the opioid epidemic, as a growing number of cities and local governments are making so-called “harm reduction” items, including the overdose-reversal drug naloxone — commonly known as Narcan — available for free via machines (The Associated Press).
And finally … On this day in 1991, members of Congress warmly received Queen Elizabeth II as the first British monarch to address a joint meeting of the two chambers. At the time, she was on a 13-day U.S. tour, her first since 1976. Her final U.S. state visit during her 70-year reign took place in 2007.
Dressed in peach with a matching hat, the Queen reminded lawmakers in 1991 of 20th century instances when the U.S. and Great Britain fought for the same cause. She urged the two nations to continue to fight for democracy and common values through the “social instrument” of the United Nations.
During that visit, the Queen and Prince Philip watched their first baseball game (in Baltimore) and toured Florida and Texas (The New York Times). The Prince died in 2021; the Queen died a year and a half later.
The Washington Post: Tracing Queen Elizabeth’s steps through the U.S. (photo slideshow includes her visit to the Capitol in 1976).
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