The Morning Dispatch: The Debt Ceiling Fight Continues

Happy Wednesday! The Fenway Park crowd last night reminded us just how electric the atmosphere of playoff baseball is.

Quick Hits: Today’s Top Stories

• A former Facebook project manager testified before Congress on Tuesday, calling on the government to strengthen regulations on the social media and advertising company and alleging its products “harm children, stoke division, and weaken our democracy.” Facebook founder Mark Zuckerberg responded with a lengthy statement denying that “we prioritize profit over safety and well-being” and saying most employees “don’t recognize the false picture of the company that is being painted” by the whistleblower. 

• President Joe Biden said Tuesday night there is a “real possibility” that Democrats will try to amend the legislative filibuster to allow the Senate majority to increase the debt ceiling without relying on Republican votes or resorting to the reconciliation process. Such a move would require all 50 Democratic votes in the Senate—plus Vice President Kamala Harris as a tiebreaker—and it’s unclear if every Democrat is onboard.

• Johnson & Johnson announced Tuesday it had formally submitted data to the Food and Drug Administration asking the regulatory body to approve a booster dose of its COVID-19 vaccine. A recent Phase III clinical trial found a booster shot given 56 days after the original dose provided 94 percent protection against symptomatic COVID-19 and 100 percent protection against severe illness.

• Dr. Francis Collins  said Tuesday that he will retire as director of the National Institutes of Health by the end of 2021. Collins was appointed to the post by then-President Barack Obama in 2009, and both former President Donald Trump and President Biden asked him to continue in the role.

• Catholic priests, church employees, and volunteers sexually abused more than 300,000 children in France between 1950 and 2020, according to the results of a years-long investigation published Tuesday. “In the face of so many broken and destroyed lives, we are ashamed and outraged,” the French Bishops Conference and the National Conference of Religious Orders said in a joint statement. “We know there is still a long road before we can hope to deserve the forgiveness of the victims.”

• Evan McMullin—a former CIA operative who mounted a third-party presidential bid in 2016—announced Tuesday he is running as an independent to unseat Republican Sen. Mike Lee of Utah in 2022.

Biden and McConnell Duke It Out Over the Debt Ceiling

House Speaker Nancy Pelosi may have given congressional Democrats some breathing room when she reneged on a promise to vote on the bipartisan infrastructure package last week and bumped the deadline to the end of the month, but another key congressional deadline is rapidly approaching. 

“I do regard October 18 as a deadline,” Treasury Secretary Janet Yellen told CNBC yesterday regarding Congress’ need to raise or suspend the debt limit. “It would be catastrophic to not pay the government’s bills. … I fully expect it would cause a recession as well.”

With October 18 now less than two weeks away, Democratic and Republican leaders find themselves locked in a high-stakes game of political chicken. 

The House narrowly passed a bill last week that would have suspended the debt limit until December 2022and funded the government until December 2021, but it failed to clear the Senate’s 60-vote threshold after Republicans withheld their support. A “clean” government funding bill without the debt ceiling provision later passed the Senate easily and helped avert a partial federal government shutdown.

Yesterday, Senate Democrats sought unanimous consent to change Senate rules and pass a debt limit increase with a simple majority rather than the filibuster’s 60-vote threshold. But Republicans torpedoed that effort too, arguing—correctly—that Democrats can raise the debt limit through the budget reconciliation process without any GOP votes. Democrats are expected to try again today or tomorrow, and those efforts will almost certainly fail. 

As these procedural votes—preordained to fail—continue to be lined up, Senate Minority Leader Mitch McConnell and President Biden are engaged in a public, heated back-and-forth over who is to blame for the stalemate. “Democrats need to tackle the debt limit,” McConnell said earlier this week. “We gave them a road map and three months’ notice. I suggest that our colleagues get moving.”

McConnell sent a letter to the White House on Monday reiterating his argument. “Bipartisanship is not a light switch that Speaker Pelosi and Leader Schumer may flip on to borrow money and flip off to spend it,” he wrote. “Since your party wishes to govern alone, it must handle the debt limit alone as well.”

The letter went on to reference Biden’s own history on the issue. “In 2003, 2004, and 2006, Mr. President, you joined Senate Democrats in opposing debt limit increases and made Republicans do it ourselves,” McConnell wrote. “You explained on the Senate floor that your ‘no’ votes did not mean you wanted the majority to let the country default, but rather that the President’s party had to take responsibility for a policy agenda which you opposed. … Your view then is our view now.”

Biden, meanwhile, delivered a speech on Monday clearly aimed at convincing the American public to take Democrats’ side in the spat. “Folks watching at home, you should know this is the Republican position,” Biden said, noting—correctly—that the debt ceiling would’ve needed to be raised regardless of his administration’s spending plans due to the deficit spending that took place during the Trump presidency. “[Republicans] won’t vote to raise the debt limit to cover their own spending. Democrats voted with them to cover that spending the last four years. … They say Democrats should do it alone.”

“Let’s be clear,” he continued. “Not only are Republicans refusing to do their job, they’re threatening to use their power to prevent us from doing our job: saving the economy from a catastrophic event. I think, quite frankly, it’s hypocritical, dangerous, and disgraceful. Their obstruction and irresponsibility knows absolutely no bounds.”

As Democrats scramble to figure out how to forge a path forward, progressives and some economists are rallying behind two alternative solutions to tide the Treasury over in the event that Senate Democrats are unable to raise or suspend the debt ceiling by October 18. 

One option is to change the Senate rules so that debt ceiling increases or suspensions are no longer subject to the filibuster, an idea Biden called a “real possibility” Tuesday evening for the first time since taking office. Doing so would free Democrats from having to pass a debt limit increase through reconciliation, a lengthy process that could suck up a lot of Senate floor time before October 18.

But tweaking the Senate rule would require the support of all 50 Democratic senators, including centrist Sens. Joe Manchin and Kyrsten Sinema, who have repeatedly stated that they’re against nuking the filibuster.

Another idea that has been floated among progressive economists is for the Treasury Department to unilaterally mint a $1 trillion coin so that the White House can theoretically circumvent the debt-ceiling once and for all. As progressive New York Times columnist Paul Krugman wrote last week, “there’s a strange provision in U.S. law that empowers the Treasury secretary to mint and issue platinum coins in any quantity and denomination she chooses.” Technically speaking, Yellen could mint a $1 trillion platinum coin, deposit it at the Federal Reserve, and use the funds to continue spending without going into more debt.

That idea faces long odds. The Washington Post reported that people in the president’s inner circle have studied the $1 trillion coin option. But publicly, the Biden administration has ruled it out. “There is only one viable option to deal with the debt limit: Congress needs to increase or suspend it, as it has done approximately 80 times, including three times during the last Administration,” White House spokesperson Mike Gwin told the Post.

Yellen has also said that a $1 trillion coin is a nonstarter. “The platinum coin is equivalent to asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt,” she told CNBC’s Squawk Box on Monday. “It compromises the independence of the Fed conflating monetary and fiscal policy, and instead of showing that Congress and the administration can be trusted to pay, to pay the country’s bills, it really does the opposite.” 

But it’s still technically possible for the Treasury to mint a coin last minute. Philip Diehl, former director of the United States Mint, told Axios Tuesday that a coin could be minted “within hours of the Treasury Secretary’s decision to do so.” 

But at this point, the most likely option is for Democrats to begin pushing a debt ceiling increase through a standalone reconciliation bill, which might require Democratic leaders to cancel the chamber’s October recess. “We’re going to stay here until we get this done,” Senate Majority Leader Chuck Schumer said Tuesday.

In the meantime, Republicans have made clear that they’ll be using the issue as a PR cudgel  ahead of the 2022 midterms. “I think that it is going to be a good campaign issue for Republicans to talk about reckless Democrat spending,” GOP Sen. Rick Scott, who runs the National Republican Senatorial Committee, told The Dispatch on Tuesday.

SCOOP: Federal Investigators Looking Into American Conservative Union

Andrew is doing his darndest to get in as much reporting as he can before heading out on paternity leave later this month. Up on the site today, he has a piece detailing the potential legal troubles facing the American Conservative Union (ACU), the political organization headed up by Matt Schlapp that organizes the Conservative Political Action Conference. You can (and should!) read the whole piece, but here are some highlights.

The ACU is facing scrutiny for its spending in support of a Tennessee congressional candidate, Brian Kelsey, in 2016.

Sources tell The Dispatch that federal investigators are currently looking into possible criminal campaign finance misdeeds at ACU during Schlapp’s tenure. As part of the investigation, the FBI has interviewed former and current ACU employees about the financial dealings of the organization and its leaders—and in particular, as one source said, about their “knowledge of the events leading up to the endorsement of Brian Kelsey.”

Who is Brian Kelsey? He’s a Tennessee state senator who in 2016 was trying to secure the Republican nomination for the open seat in his state’s 8th Congressional District. Beginning in July 2016, Kelsey made a series of odd financial moves. As reported by the Tennessean, his state Senate campaign sent more than $100,000 to a political action committee, the Standard Club PAC, affiliated with a Nashville members-only club. That PAC then sent $37,000 to a federal PAC called Citizens 4 Ethics in Government, which then turned around and sent $36,000 to the ACU. The Standard Club PAC also sent $30,000 to the ACU directly.

Immediately thereafter, the ACU, which had endorsed Kelsey in the federal race shortly before, inked an $80,000 radio ad buy trumpeting him as the race’s true conservative champion. “It is often difficult to cut through confusing campaign rhetoric to figure out which candidate is the best conservative in a race, but we think this is actually an easy call,” Schlapp said in a statement at the time. “If voters in western Tennessee are looking for a proven leader with a conservative track record, the decision is easy. Brian Kelsey is the real deal.”

Kelsey went on to place fourth in the primary, won by Republican David Kustoff, who represents the district to this day.

Neither the Standard Club PAC nor Citizens 4 Ethics in Government were high-dollar funds with large sums going in and out: Kelsey’s six-figure donation was the only one the Standard Club PAC received during the relevant reporting period. A nonpartisan watchdog organization, the Campaign Legal Center, filed complaints against Kelsey, the ACU, and various other alleged participants in the scheme to the Federal Elections Commission and to the Department of Justice in 2017, arguing there were “strong grounds to believe” that the participants had “engaged in knowing and willful violations of the federal campaign finance laws.” The CLC filings, based on Kelsey’s financial disclosures and reporting in the Tennessean, alleged that Kelseyappeared to have financed his own endorsement by a supposedly independent third party, with the money trail obscured through several shell PACs. What’s more—and from the point of view of federal election law, this is the salient point—the CLC alleged Kelsey appeared to have financed that in-kind contribution to his federal campaign with money from his state accounts, which is prohibited by law. 

In addition to the state-to-federal campaign issue, they argued, the flow of money strongly suggested that ACU had coordinated with the Kelsey campaign in its ad expenditures, making that spending a forbidden in-kind contribution.

Sources tell The Dispatch the FBI has been interviewing current and former ACU employees in connection with the matter.

“They asked me about Matt Schlapp and [ACU Executive Director] Dan Schneider’s involvement within the organization, how they were involved with the disbursements of money and the decision of who to financially support,” one source said. “One of the questions that really stuck with me was, ‘Was Matt Schlapp in those meetings when they decided who to endorse?’ I said yes. And they said, ‘So was he directly involved with the decisions to financially support the candidates?’ I said, I don’t know. And they said, ‘But would it be weird if Matt Schlapp didn’t know?’ I said yes.”

The ACU denies being “the target of any review by the government at this time.”

“ACU is one of the oldest and most respected conservative institutions in America,” ACU communications director Regina Bratton told The Dispatch in a statement Tuesday night. “We are aware of campaign finance allegations lingering from the 2016 election cycle that were reported in multiple press outlets after a Soros-funded group complained. We continue to believe ACU’s activities, which took place more than five years ago, were legally compliant. We have been assured that ACU is not a target of any review by the government at this time.” Schlapp and the ACU did not respond to particular questions about the nature of the investigation.

The Campaign Legal Center, which has received donations from George Soros’s Open Society Foundations, was founded by Trevor Potter, a Republican and former George H.W. Bush appointee to the FEC, and regularly makes FEC complaints against candidates of both parties. Recently, the CLC has publicly supported a number of Democrat-sponsored pieces of voting rights legislation.

Worth Your Time

• With Francis Collins announcing his retirement from the National Institutes of Health yesterday, take a few minutes to read this Time magazine profile of him from earlier this year. Although Dr. Anthony Fauci became the U.S. government’s most famous scientist over the past 18 months, Collins quietly shaped our pandemic response, often from behind the scenes, and brings a unique perspective to the public health field as a devout Christian. “Collins came to faith during the period when he worked as a physician,” Belinda Luscombe writes. “He noticed how many gravely ill people seemed to draw strength from their beliefs, and when one patient eventually asked him what he believed, he was disturbed that he didn’t have an answer. ‘Atheism for a scientist is really hard to defend because it’s the assertion of a universal negative,’ he says. ‘And scientists aren’t supposed to be able to do that.’ A minister directed him to every brainiac Christian’s favorite writer, C.S. Lewis. Eventually, Collins wrote a best-selling book of his own, The Language of God, in which he uses scientific phenomena as evidence of a Deity.”

• In his latest Washington Post column, David Von Drehle tries to bring a sense of perspective to our modern political debates. “What distinguishes the present age is the widespread and lucrative focus on the apocalyptic: the magnification of threats and minimizing of opportunities; the exaggeration of differences; the desire to see things as worse than they are,” he argues. “If you feel, as so many do today, that these are some of America’s worst days, if you fear for the future of this democratic republic, then your duty is to master the fear and refuse to be governed by it. If the voice on TV is trying to scare you, turn it off. If your social media leave you anxious, shut them down. Let the worst of times bring out the best of you, for a light shines brightest in the dark.”

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Toeing the Company Line

• For more on the debt ceiling—plus items on reining in the executive branch’s war powers and the latest on the January 6 committee—be sure to check out yesterday’s Uphill. “We’re two weeks out from a catastrophic debt default, and neither side is showing any signs yet of blinking in their staredown over how to address the problem.”

• Sarah made it back from the Galápagos Islands just in time to record Monday’s episode of Advisory Opinions. On the docket: The Supreme Court’s fall term, a spicy speech from Justice Samuel Alito, the latest on Alex Jones and Sandy Hook, a professor suing UCLA, and much more.

• In this week’s Sweep: Sarah on the 2022 Senate map and some gubernatorial trickery in Virginia, Audrey on a Republican secretary of state candidate in Michigan, and Chris Stirewalt on Donald Trump’s phantom 2024 campaign. “Whether he is a declared candidate or not, Trump, Democrats and the political press will find themselves once again in accord on what the main subject of conversation should be: Trump, the whole Trump, and nothing but the Trump,” Chris writes. “As congressional Republicans try to make 2022 about Biden and House Speaker Nancy Pelosi, they will have to do so over the roar of the Trump wind tunnel.”

• David’s Tuesday French Press (🔒) focuses on political threats and harassment—and the need for everyone to dial it back several notches. “We cannot be empathetic only to our allies,” he writes. “We cannot allow fear of law enforcement excess to deprive fellow citizens of the protection they need. And we have to recognize both that threats and harassment are always wrong and that in our present moment they’re especially dangerous. Our nation is playing with fire. It’s imperative that it stop now, or the angry and the cruel will ignite a blaze that we cannot contain.”

• George Will made his long-awaited return to The Remnant this week to discuss his latest book, American Happiness and Discontents. Together, he and Jonah examine why Americans have become so restless and what can be done to address the causes of their disaffection.

• Scott Winship has the latest installment in his series on poverty and policy during the pandemic, this time looking at how a mistaken narrative on hunger emerged in the early days of the pandemic, and how Democrats have pushed for anti-poverty spending that goes beyond our needs.

Let Us Know

Who will you blame if legislators fail to reach an agreement to raise the debt ceiling and the United States defaults later this month?