The Post-Debt Ceiling Dynamics. A high-stakes debt ceiling deal left DC with some winners and losers. But the losers will have opportunities for wins later in the year.
President Biden and House Speaker Kevin McCarthy (R-CA) feel emboldened. The two most underestimated politicians in DC proved naysayers wrong in getting a deal with limited blowback. McCarthy got two-thirds of House Republicans to raise the debt ceiling. Biden got even more House Democrats, as well as 90 percent of Senate Democrats.
The partisan extremes largely folded, for now. But the theoretical leverage to challenge the job security of McCarthy (motion to vacate) or Biden (primary and general election support) leaves the two leaders needing to give red meat to their bases.
The House out-Senated the Senate. The Senate wants to return the favor. The Biden-McCarthy debt ceiling negotiations forced the upper chamber to swallow the Fiscal Responsibility Act (FRA) from the lower chamber, a rare switch in congressional power dynamics. But senators, particularly defense hawks, want to reverse the dynamic when it comes time for money to get authorized and appropriated.
FRA's Cloudy Future. Sometimes a done deal isn't a done deal in DC, as future negotiations on appropriations and authorizations bring new dealmakers and dynamics into the mix.
The governing majority in Congress supported the FRA. They also want to change it. Most members of Congress believe the FRA's three percent increase in defense spending for FY24 is insufficient. Most Democrats oppose the cuts to non-defense spending. This puts increased pressure on sizable defense authorization and supplemental appropriations packages to bypass the FRA's spending caps.
The FRA included changes to SNAP work requirements. Not all agriculture leaders are ready to call the issue settled. Some Republicans want to implement further reforms to work requirements in the Farm Bill while Democrats are unhappy with the reforms put in place by the FRA.
The "Fiscal Responsibility Act" does not imply future austerity or so-called fiscal responsibility. Negotiations continue over trillions in tax cuts with House Republicans expected to release their opening bid on a tax package later this month.
The Big Questions for What's to Come. The FRA has brought new questions and dynamics to congressional relations and spending for the rest of the year.
China. Representatives from the United States and European Union (EU) met for the fourth meeting of the US-EU Trade and Technology Council (TTC) last week, and limiting tech transfer and outbound investment to China was a major issue.
Artificial Intelligence (AI). Since ChatGPT took the world by storm in recent months, generative AI has become more of a priority for governments to address.
Data Privacy. With US big tech companies operating globally, the collection and treatment of data is a major issue in the US-EU relationship.
Republican Map Advantage. This election cycle sees multiple good pick-up opportunities for Republicans as the 2024 Senate map leaves them almost entirely on the offense and Democrats on the defense.
Fool Me Twice, Shame on Me. Republicans narrowly lost almost every battleground race in the Senate last year due in part to poor candidates. They’re trying not to repeat their mistake.
2024 Elections Create High Stakes for 2025 Policies. The outlook for trillions in spending and taxes are on the line based on which party controls the Senate, House, and White House.