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Biden and McCarthy meet as White House aides envision a debt ceiling off-ramp

Politico -

When President Joe Biden meets with House Speaker Kevin McCarthy on Wednesday to discuss the lifting of the nation's debt ceiling, it will kick off what’s likely to be a drawn-out fight over the nation’s fiscal path — one that could lead to an economic catastrophe.

The White House has insisted that it will not negotiate over the debt ceiling, warning that an extended stalemate could spark a financial crisis and push the U.S. to the brink of default. Republicans, meanwhile, view the debt ceiling as an opportunity to extract concessions from an administration dealing with a divided Congress for the first time in Biden’s presidency.

McCarthy signaled in the lead-up to the White House meeting that he would seek steep spending cuts.Yet it remains unclear what programs he proposes targeting, and the White House has shown little willingness to enter formal negotiations until he does so.

Instead, Biden officials have privately discussed the potential for a compromise that heads off a debt ceiling crisis while separately granting McCarthy small concessions that would allow him to save face with his party — such as creating a commission to study and propose future spending reforms.

But the White House is unwilling to touch entitlement spending or gut programs central to Biden's agenda. And while McCarthy has tamped down early talk of cuts to Medicare and Social Security, he is still likely to pursue major funding reductions across much of the government.

That means that any agreement the White House might consider supporting at this early stage, officials have concluded, is unlikely to appeal to the GOP.

“Every indication is that absent radical budget cuts and slashing some of the programs that Biden championed, the right wing of the House Republican caucus is not going to go along,” said one Biden economic adviser. “McCarthy has not yet demonstrated that he can get the maximalists in his party to agree to anything other than the maximal position."

Key to the discussions, the White House believes, is establishing some sort of baseline about what type of bill McCarthy could actually get through the House. The GOP has yet to consolidate behind a set of demands, and the White House is reluctant to lend McCarthy any preemptive help as he tries to wrangle his fractious caucus.

Biden officials have gleefully seized on signs of discord among House Republicans, highlighting GOP lawmakers' own frustration","link":{"target":"NEW","attributes":[],"url":"https://twitter.com/mkikukawa46/status/1620831968765280256","_id":"00000186-0edc-d0d5-aba6-ffddf7280000","_type":"33ac701a-72c1-316a-a3a5-13918cf384df"},"_id":"00000186-0edc-d0d5-aba6-ffddf7280001","_type":"02ec1f82-5e56-3b8c-af6e-6fc7c8772266"}">highlighting GOP lawmakers' own frustration with the party's lack of a concrete plan.

The White House also views this initial meeting as the first of many over the next several months; an opportunity for both sides to size each other up and establish a starting point for talks that could drag well into the spring and summer.

Though Biden and McCarthy talked occasionally during the Obama era, the two men are not close. The early sitdown, some aides suggested, is part of an effort by Biden to build a relationship with a House speaker he'll need to work with on an array of priorities over the next two years.

"What you're not going to see is either party move their position," the Biden adviser said. "This is the meeting where folks scope things out and get a sense of where everybody is."

Senior White House officials sought to reinforce their position ahead of time, writing in a memo Tuesday that Biden would press McCarthy to commit to avoiding a debt default and to releasing a budget showing where the GOP wants to rein in funding.

“Any serious conversation about economic and fiscal policy needs to start with a clear understanding of the participants’ goals and proposals,” top economic adviser Brian Deese and Office of Management and Budget Director Shalanda Young wrote.

The White House plans to release its budget proposal on March 9, offering what officials hope will provide a clear contrast with Republicans’ demands and sharpen the public debate over lifting the debt ceiling.

The government hit its borrowing limit in January and estimates it may only be able to pay its bills into June without an increase. The U.S. has never intentionally defaulted, and Congress in recent years routinely voted to increase its borrowing limit under both the Trump and Biden administrations. Pointing to that track record, Democrats have insisted on passing a clean increase yet again, arguing the need to avoid economic catastrophe is too great to haggle over the debt ceiling.

The last time the U.S. came close to default, in 2011, the standoff rattled global financial markets and prompted a downgrade of the country’s credit rating. Should the government breach the debt ceiling this time, economists predict it would trigger an immediate recession and tank the stock market.

Still, House Republicans have relished a fight over the debt ceiling, fueled by a conservative faction that blocked McCarthy’s path to the speakership until he made a series of commitments that included using the debt ceiling to force spending cuts.

That stance has unnerved Democrats, who question McCarthy’s ability to negotiate on behalf of a GOP majority that includes lawmakers who have already indicated they won’t agree to raise the debt limit no matter what deal the two sides strike.

“I have a pretty strong suspicion that once the American people see what the Republican MAGA fringe is up to here, and what their hostage-taking demands are, there will be a sudden collapse [in support],” said Sen. Sheldon Whitehouse (D-R.I.), who chairs the chamber’s budget committee.

U.S. announces new sanctions against Russian sanctions evasion network

Politico -

The Treasury announced sanctions on Wednesday against 22 people it says have helped Russia obtain weapons and evade sanctions imposed on the Kremlin and its allies since its full-scale invasion of Ukraine almost a year ago.

The sanctions target the network’s leader, Russian arms dealer Igor Zimenkov, as well as his son and several members of their network, for supplying Russia with “high-technology devices.” Zimenkov and his associates have “been involved in multiple deals for Russian cybersecurity and helicopter sales” and maintain close relationships with the Russian arms exporter Rosoboronexport, according to the Treasury.

“Russia’s desperate attempts to utilize proxies to circumvent U.S. sanctions demonstrate that sanctions have made it much harder and costlier for Russia’s military-industrial complex to re-supply Putin’s war machine,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “Targeting proxies is one of many steps that Treasury and our coalition of partners have taken, and continue to take, to tighten sanctions enforcement against Russia’s defense sector, its benefactors, and its supporters.”

The latest sanctions against Russia come a week after the U.S. announced it will send 31 highly sought after Abrams tanks to Ukraine to help bolster the country’s defense against Russia.

Mark Zuckerberg beats back FTC antitrust challenge

Politico -

Meta notched early court approval of its bid to purchase Within Unlimited, maker of the virtual reality fitness app Supernatural, a critical blow to the Federal Trade Commission’s efforts to fight against consolidation in the tech sector.

In a pair of sealed rulings, U.S. District Judge Edward Davila declined to issue a preliminary injunction against the deal while the FTC pursues a separate case in its in-house administrative court, according to a person with knowledge of the matter. Davila did put the deal on hold for another week while the agency decides whether to appeal, said the person, who was granted anonymity to discuss the sealed rulings.

"Out of respect for the court’s orders, the FTC is not in a position to comment at this time," an agency spokesperson said. A Meta spokesperson did not respond for comment.

Bloomberg earlier reported the outcome of Davila’s rulings.

The case was the first to challenge a consumer tech deal from the FTC under Chair Lina Khan — the influential antitrust thinker whom Biden nominated to one of the most powerful corporate watchdog jobs in the federal government. The hearing was closely watched in tech and legal circles as a key test of the FTC’s authority under Khan to pursue alleged anticompetitive conduct using aggressive, largely untested legal theories.

The sealed rulings late Tuesday night from Davila came more than a month after a seven-day hearing, which culminated in Meta CEO Mark Zuckerberg taking the stand in a San Jose, California, federal courtroom to defend the deal.

An administrative trial is currently set to start Feb. 13 and the FTC will also need to decide whether to move forward with that case as well.

Meta originally announced the $440 million deal in late 2021 to purchase Within. The announcement came a day after the company changed its name from Facebook as part of its pivot toward the metaverse. The FTC sued to block the deal in July, arguing that Meta is trying to dominate the nascent virtual reality market through acquisitions rather than boosting competition by attempting to build its own product.

Meta is by far the dominant player in the consumer virtual reality market, with a roughly 85 percent market share for the first three quarters of 2022 according to data from research firm International Data Corporation. ByteDance’s Pico headset was a distant second with about 7.5 percent, and at the hearing the FTC used Meta’s current dominance as evidence of its ability to lock up the market. Meta countered that the industry is still in its early stages, pointing to companies including Apple and Google that are still developing competing products, and the coming rollout of Sony’s new headset this year.

Tuesday’s ruling isn’t the final word on the deal, however. The FTC went to court only to pause the deal while its challenge to the case in its own in-house administrative court plays out. Only a federal judge has the authority to block or pause a merger, but the FTC could choose to continue its case.

If it does, it will be fighting an uphill battle. Any ongoing efforts by the FTC will likely center on unwinding it at a later date, a much more difficult proposition than blocking it in advance. And while Davila’s ruling isn’t binding on the FTC’s in-house judge, Michael Chappell, it will likely weigh heavily in any decision he would make.

The agency typically abandons a merger challenge if it loses the initial preliminary injunction in federal court. If the FTC does continue its case and wins, Meta can then appeal to the FTC commissioners, followed by a federal appeals court of its choice.

Meta also has a pending petition seeking to recuse Khan from the administrative case. In Khan’s role as chair she will act as both prosecutor and judge, and Meta argues that her past statements and work on a Congressional antitrust investigation of the company should disqualify her from participating.

Meta had said throughout the hearing that if the FTC won this first round, the companies would abandon the deal.

FBI searches ​​Biden's Rehoboth, Delaware, home

Politico -

Federal investigators conducted a search Wednesday of President Joe Biden’s vacation home in Rehoboth, Del., as part of their ongoing probe into his handling of classified documents, officials said.

Bob Bauer, Biden’s personal lawyer, said in a statement that the president’s team did not seek to provide advance notice of the operation. But he confirmed the search by the Department of Justice was taking place after it was reported by CBS News.

“The search today is a further step in a thorough and timely DOJ process we will continue to fully support and facilitate,” he said. “We will have further information at the conclusion of today’s search.”

The search is part of a special counsel investigation into Biden’s handling of the classified materials found in November at his office in Washington and in December and January at his home in Wilmington. In late January, a 13-hour search of Biden’s home recovered additional classified items.

Biden to remake economic team with Brainard, Bernstein poised for top roles

Politico -

President Joe Biden is poised to shake up his leadership team with two veteran economic minds likely to assume new roles just as he faces his best chance yet to avoid a recession that could derail his reelection effort.

Biden aides expect a rapid succession of appointments, including Federal Reserve Vice Chair Lael Brainard as the next National Economic Council director and long-time Biden confidant Jared Bernstein as chair of the Council of Economic Advisers. Biden has already named businessman and former Covid-response czar Jeff Zients as his next chief of staff.

The shakeup would give the president three well-known players from across the Obama-Biden presidential years at a key moment for the economy. The Federal Reserve is slowing the pace of its sharp and brutal rate hikes aimed at crushing 40-year-high inflation, the job market is holding up, and big overseas economies including the Eurozone are narrowly avoiding recessions.

But it remains highly uncertain whether the Fed can navigate a so-called soft-landing for the economy, in which growth slows but the country averts a recession. And other big headaches loom, including a GOP-controlled House potentially forcing a market-shaking showdown over raising the government's debt limit.

Multiple senior Biden aides and others close to the process described the selection of Brainard and Bernstein, who is currently a member of the Council of Economic Advisers, as close to assured, but no formal announcement is set yet. It's still possible that either job could wind up slipping to one of several other candidates or that new names could emerge, they said.

Brainard, who is meeting with other Fed officials this week in Washington to decide on the central bank's next interest rate hike, could not be reached for comment.

“It’s not totally done yet,” one top White House official said, while not disputing that Brainard and Bernstein are the leading candidates. Another senior official agreed, while a third said the two appointments seemed definite but that Biden had not given a final sign-off.

White House Deputy Press Secretary Emilie Simons said in a statement, "There is no decision on either of these positions and any reporting to the contrary is inaccurate."

The White House officials said installing Brainard at NEC to succeed Brian Deese would offer gender diversity to the economic leadership, It would also make it easier for Biden to pick his friend Bernstein, who is among a group of older, white male advisers, to head the CEA, the White House's in-house economic research office. Current CEA Chair Cecilia Rouse is returning to Princeton. Deese is leaving the NEC — which is housed inside the West Wing and is the more powerful of the two offices — to be closer to his family,

A Brainard and Bernstein combination would at least partially satisfy left-leaning Democrats who pushed for a younger and more aggressive candidate for the NEC job such as Bharat Ramamurti, the current NEC deputy and a former top staffer for Sen. Elizabeth Warren (D-Mass.).

Progressives had questioned Brainard’s commitment on some of their key issues since she served as President Barack Obama’s Treasury undersecretary for international affairs under then-Secretary Timothy Geithner. At the time, Brainard was viewed by many progressives as insufficiently aggressive on using executive tools to fight climate change and economic inequality and as too pro-free trade and friendly with elite global bankers.

But Brainard has nudged left on some of those issues and been a progressive at the Fed on monetary policy — mostly preferring a gentler path of rate hikes to fight high inflation.

Bernstein is widely admired in progressive circles while also holding credibility with more centrist-leaning Democrats and even some Capitol Hill Republicans. He has long been a vocal critic of trade agreements so could limit any fallout among organized labor groups over the Brainard pick.

The selection of Brainard and Bernstein would come after weeks of feverish jockeying, often through strategic press leaks, for the top economic jobs, with a variety of names being floated as front-runners by Democratic insiders eager to see their preferred candidates get the jobs.

The White House has also flirted with various Wall Street veterans for top positions, including investment bankers Blair Effron and Antonio Weiss. Putting any such candidate into a policy-influencing spot would likely have enraged progressives, and the idea appears to have been mostly dropped.

Other candidates mentioned as candidates for NEC have included Deputy Treasury Secretary Wally Adeyemo, American University President and former Obama cabinet member Sylvia Mathews Burwell, Commerce Secretary Gina Raimondo and senior Biden economic adviser Gene Sperling.

Friends say that Sperling, who served as NEC director under both Presidents Bill Clinton and Obama, coveted doing the job for what would be a record third time. Sperling, who splits his time between Washington and Los Angeles, has repeatedly denied wanting or campaigning for the job.

Zients is viewed as a masterful manager and problem solver but less well-versed or interested in the kind of backroom political horse-trading required to push things like a debt limit deal through on Capitol Hill. Brainard has extensive Hill relationships as does Bernstein.

Bernstein and Brainard are both considered centrist enough to offer some comfort to Wall Street investors and not averse to cutting deals with Republicans if that's what it takes.

Brainard’s departure from the Fed would leave a significant hole at the central bank, where she is a trusted No. 2 to Chair Jerome Powell.

Brainard, a Ph.D. economist, also chairs four of the central bank's internal committees, leading policy in key areas like whether the Fed should issue a central bank digital currency.

Victoria Guida contributed to this report. 

Newly released African American studies course side-steps DeSantis’ criticism

Politico -

The College Board’s newly-released official framework for its Advanced Placement course on African American Studies appears to forgo several topics that caused Republican Gov. Ron DeSantis to support rejecting it from Florida.

The nonprofit that oversees the Advanced Placement program unveiled its new course framework Wednesday to coincide with the first day of Black History Month. The release caps about a decade of developing a college-level course that spans the early kingdoms of Africa to today’s climate for Black Americans.

It also comes as the course has drawn political backlash in Florida, where top education officials rejected a pilot version of the course after raising objections to lessons on queer studies, reparations and abolishing prisons, all of which seem to be gone from the requirements in the new curriculum.

The nonprofit on Wednesday reiterated that no state nor district had seen the new framework before its unveiling and denied that any feedback from state officials was taken into consideration. At least two governors, DeSantis and Democratic Illinois Gov. JB Pritzker, have sent letters to the College Board about the course, with Pritzker warning that Illinois schools wouldn’t accept the “watering down of history.”

“... [T]his refining process, which is a part of all AP courses, has operated independently from political pressure,” said Robert J. Patterson, a Georgetown University professor who co-chaired the committee of educators who developed the course, in a statement.

A 234-page overview for the African American Studies course shows that the program covers a range of topics from the origins of the African diaspora to the slave trade and Civil Rights movement. Students who take the course would learn about the Black Panther Party and the growth of the Black middle class, abolitionists and the role Black women play in society. The new requirements will take effect when the course launches for the 2024-2025 school year.

The updated syllabus also excludes mandatory lessons on intersectionality, which is a part of critical race theory, as well as other topics Florida's Depart of Education had called "concerning."

Lessons on Black queer studies and movements for Black lives that were taught in the pilot didn’t make the final cut. However, those topics were listed as potential ideas for students to pursue in their 1,500-word mandatory project. Students can pick such "contemporary topics or debates" for their projects, including the Black Lives Matter movement, reparations debates, intersectionality and dimensions of the Black experience and queer life and expression in Black communities.

While the coursework has curricular and resource requirements, the AP program said it supports each school having its own curriculum that enables students to build the skills and understandings in the framework.

“This course is an unflinching encounter with the facts and evidence of African American history and culture,” said College Board CEO David Coleman in a statement. ”No one is excluded from this course. … Everyone is seen.”

More than 300 African American Studies professors from more than 200 colleges across the country consulted the AP program in developing the course framework over the past year, the College Board said, and the course refining process ended in December.

DeSantis, who said the original coursework “pushed an agenda,” claimed victory when the College Board announced that the program would be updated ahead of its release. But it’s still ultimately up to the Florida Department of Education to review the course before it can become available to students in the state.

Florida’s decision to reject the course scored national attention and sparked a beef between the state and Illinois, where Pritzker called DeSantis' actions “political grandstanding.” Civil rights attorney Ben Crump also pledged to sue DeSantis if Florida again blocks schools from teaching the course. Vice President Kamala Harris also denounced the rejection of the course, saying recently that “every student in our nation should be able to learn about the culture, contributions, and experiences of all Americans.”

DeSantis has stood by denying the course on the heels of the state’s “Stop WOKE” law, which forbids instruction that would make someone “feel guilt, anguish, or any other form of psychological distress” due to their race, color, sex or national origin."

About 18 states have similar “divisive concepts” laws that restrict how educators can discuss racism, sexism or systemic inequality in the classroom. The majority of the bills were efforts to rebuke critical race theory, the study of how racism has been weaved into American laws and institutions throughout history. Most public school officials across the country say they do not teach the theory. But these states could move to follow the DeSantis administration when deciding if they'll adopt the new interdisciplinary course.

“Our core curriculum … requires the teaching of Black history, but real Black history — I mean things that really matter,” DeSantis said on an episode of the Charlie Kirk Show podcast that aired Jan. 26. “This course had things like queer theory, it had things like abolishing prisons, intersectionality, it advocated for reparations and things.”

He continued: “That’s political activism. If that’s what you want to do on your own time, it’s a free country. But we’re not going to use tax dollars in the state of Florida to put that into our schools because it’s not trying to educate kids, it’s trying to impose an agenda on kids.”

As Others Wait, Nikki Haley Readies 2024 Bid

Real Clear Politics -

Republicans with Oval Office dreams have learned to think twice about challenging Donald Trump, hoping for a magical moment when the former president has his guard down and their candidacy can be launched without making themselves a punching bag. But Nikki Haley is not waiting anymore.


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