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Presented by The American Petroleum Institute (API): The unofficial guide to official Washington. | | | | |  | | By Eugene Daniels, Ryan Lizza and Rachael Bade | | | |  President Joe Biden meets with Congressional Leaders to discuss legislative priorities through the end of 2022, at the White House on November 29, 2022 in Washington, DC. | Getty Images | With help from Eli Okun and Garrett Ross
| | | |  | DRIVING THE DAY | | As of tomorrow, the Treasury Department will have to use “extraordinary measures” to keep paying America’s bills as the White House and congressional Republicans continue their epic staring contest over raising the federal debt limit. The “X date” — when the U.S. really can’t continue paying its bills — is still at least six months off, and the posturing is underway. As Republicans, particularly in the House, insist on massive spending cuts as a condition for any deal, President JOE BIDEN and his congressional allies are laying down a hard line. “We’re not going to negotiate on this,” White House Press Secretary KARINE JEAN PIERRE reiterated to reporters Tuesday, insisting that the debt limit will be raised “without conditions.” It’s a posture rooted in hard-won lessons for Democrats. Brinkmanship during BARACK OBAMA’s presidency upended the financial markets and only encouraged more hostage-taking, the thinking goes. But many Republicans took the opposite lesson — the brinkmanship, after all, resulted in significant curbs on federal spending, even though future Congress voted repeatedly to undermine them. With the debt standoff likely to underpin most every interbranch interaction in the coming months, the question we’re pondering is: How do you hammer out a deal when the two sides can’t even agree on whether there will be any hammering? Two stories we’re reading set the scene: — Our colleagues Olivia Beavers, Caitlin Emma And Zachary Warmbrodt write that the two sides are “effectively shrugging” in the face of the looming default deadline. And they identify the key roadblock to any deal resulting in a “clean” debt limit increase: “Concessions over the debt ceiling were a vital part of the deal that [House Speaker KEVIN] McCARTHY negotiated with his 20 conservative holdouts to finally attain the speakership. He agreed that the GOP House wouldn’t move to lift the debt ceiling unless Congress slashes at least $130 billion in federal spending next fiscal year or addresses broader fiscal reforms that tackle the ballooning debt.” — Meanwhile, the NYT’s Jeanna Smialek and Joe Rennison lay out the enormous stakes, warning that “a perennial source of partisan brinkmanship could finally tip into outright catastrophe.” They quote experts warning that an actual default could send Treasury and the Fed into uncharted territory, and they worry that the markets would not register the risk of a meltdown until it is too late to avoid one: “While the government has done contingency planning for a default, former officials say there is no foolproof option for staving off a disaster,” they write. In light of those bracing facts, we pressed a number of key Democratic aides last night on just how credible their no-negotiations stance is. What we heard back did not give us much reason to think the fundamentals of this showdown would be changing anytime soon. — First, Democrats note: Republicans still aren’t on the same page on what concessions they want or what their own plan would look like. If they unite, Democrats will find it tougher to hold their line. — Second, recent history is bearing on Dems’ minds: A brief clash over raising the debt limit in late 2021 fizzled after Senate Minority Leader MITCH McCONNELL agreed to pave the way for a debt limit increase, teaching Democrats that despite all the talk, Republicans will ultimately ditch their planned concessions. — Third, while McConnell and McCarthy are different leaders with different styles and wildly different conferences, Democrats think that if they can get the White House, their congressional caucuses and a critical mass of moderate Republicans on the same page, McCarthy will eventually yield. The biggest unknown is when and how a deal gets done — and whether McCarthy and House Republicans will have to be placated or sidelined. Already aides and lawmakers are publicly and privately investigating the possibility of a discharge petition or other procedural off-ramp that could avert a crisis. But we’re not yet picking up an overwhelming sense that Democrats want to give McCarthy and the House GOP an off-ramp. Recall earlier this month how Democrats watched with a mixture of horror and glee as Republicans failed over and over again to elect a speaker. The stakes might be higher in the future, but the sentiment remains. “What possible way could this get done in a clean way that allows him to save face?” one senior Democratic aide asked. “The problem is just that none of us want him to save face.” There is bipartisan agreement, however, that pressure will eventually build to the point that talks will be unavoidable. What we don’t know is what it will take to reach that point. Rep. DON BACON (R-Neb.), an emerging moderate leader who is likely to play a role in any deal, warned Democrats their no-negotiations stance “is a non-starter.” He told POLITICO that while Republicans “can’t get 100 percent of what we want with only control of half of Congress … our voters sent us to D.C. to control spending, so the Democrats have to show some movement our way, too.” And one moderate Democrat told Playbook last night that at some point the kayfabe will give way to reality: “[The White House is] posturing because they have to, just like McCarthy is, and then they’ll negotiate,” the person said, adding that a default would be “disastrous, and I think there'll be a pox on all of our houses.” Good Wednesday morning. Thanks for reading Playbook. Got any clever debt limit off-ramps that don’t involve minting trillion-dollar coins? Drop us a line: Rachael Bade, Eugene Daniels, Ryan Lizza.
| | | | A message from The American Petroleum Institute (API): The solution is right here in America. By wide margins, voters say our country is safer and more prosperous when we develop our own energy. Presidents from both parties, stretching back more than 50 years, were firmly on the side of energy and fuel production here at home. API has a plan in three parts to Make, Move, and Improve American energy. | | | THE KANTER-BURY TALES — Our Josh Sisco is out this morning with a deep dive on DOJ’s antitrust chief, JONATHAN KANTER, who has seen more setbacks than wins after more than a year on the job. Whether he can find new and more successful approaches will determine whether the Biden administration is successful in resetting the power dynamic between boardrooms and government, Josh writes. “Interviews with more than a dozen antitrust players in and out of government portray a department stretched crucially thin as it prepares for a year taking on even bigger targets — including potential landmark cases against trillion-dollar tech titans,” Josh writes. “If successful, they would amount to a meaningful legacy for Biden — and would also put Washington in the driver’s seat in a wider contest between U.S. and EU regulators to set the ground rules for global corporate expansion. High-profile defeats, by contrast, would be a warning for any future leaders looking to tangle with the new class of global tech behemoths.” THE TALENTED MR. SANTOS — Another day, another tough-to-believe headline about Rep. GEORGE SANTOS (R-N.Y.). This time, Santos is accused of swiping $3,000 from a GoFundMe for a dying service dog belonging to a disabled veteran. Patch’s Jacqueline Sweet spoke to the veteran, RICHARD OSTHOFF, who said in 2016 he needed help caring for his service dog, Sapphire. “When Sapphire developed a life-threatening stomach tumor, Osthoff, now 47, learned the surgery would cost $3,000. A veterinary technician took Osthoff aside, he recounted, and told him about someone with a pet charity who could help. “His name was Anthony Devolder, and his pet charity was called Friends of Pets United, the vet tech told him. Anthony Devolder is one of the names that Long Island Rep. George Santos used for years before entering politics in 2020.” But once the GoFundMe reached $3,000, Santos closed the account and disappeared, Osthoff told Patch, supplying their text exchanges. “Sapphire died Jan. 15, 2017. After being out of work with a broken leg for over a year, Osthoff couldn’t afford the dog’s euthanasia and cremation, he said. ‘I had to panhandle. It was one of the most degrading things I ever had to do,’ he remembered.” — And for good measure: GREGORY MOREY-PARKER, a former roommate of Santos’ in New York, told CNN that Santos had “delusions of grandeur” during their time living together. “Morey-Parker, who shared an apartment with Santos for a few months, said the future GOP member of Congress made a series of claims about his life and personal finances that ‘didn’t seem feasible’ and that Santos ‘would go to bars with rolls of hundred dollar bills and, three days later, he would have no money.’” — Meanwhile, back on Capitol Hill, Santos was seated on the House Small Business and Science committees, WaPo’s Azi Paybarah and Leigh Ann Caldwell report. Senior GOP officials said in the absence of criminal charges, he is being treated like any other freshman: “I don’t condone what he said, what he’s done. I don’t think anybody does. But that’s not my role. He was elected,” Small Business Chair ROGER WILLIAMS (R-Texas) told CNN.
| | | | A message from The American Petroleum Institute (API):   API has a plan to learn more about how we can Make, Move and Improve American energy. | | | | | BIDEN’S WEDNESDAY:
9 a.m.: The president will receive the President’s Daily Brief.
Press secretary Karine Jean-Pierre will brief at 3 p.m.
VP KAMALA HARRIS’ WEDNESDAY: The VP has nothing on her public schedule. | | | | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | PHOTO OF THE DAY
|  Golden State Warriors star Stephen Curry shakes hands with VP Kamala Harris and President Joe Biden at the White House ceremony for the 2022 NBA Championship on Tuesday, Jan. 17. | Susan Walsh/AP Photo | | | PLAYBOOK READS | | ALL POLITICS DRAFTING DeSANTIS — Florida Gov. RON DeSANTIS is getting prodded to jump into the 2024 presidential primary field from an unexpected — and distant — camp: Michigan Republicans. “Last month, BRYAN POSTHUMUS, the Republican floor leader in the Michigan state House, flew to Florida and hand-delivered DeSantis a letter encouraging him to run for president,” our colleague Alex Isenstadt reports this morning. “The letter — which was signed by 18 Republican members of the state House, one quarter of the party’s caucus — called DeSantis ‘uniquely and exceptionally qualified to provide the leadership and competence that is, unfortunately, missing’” in the White House. “While the letter doesn’t explicitly endorse DeSantis over [DONALD TRUMP], it illustrates simmering discontent with the former president among Republicans, following a series of elections that saw the party get bludgeoned at the ballot box,” Alex writes. SCHLAPP ACCUSER FILES SUIT — The former staffer for HERSCHEL WALKER’s Senate campaign who accused MATT SCHLAPP of inappropriately touching him filed a lawsuit against the Republican activist and his wife, MERCEDES SCHLAPP, on Tuesday. “The former Walker staffer, who filed the lawsuit anonymously, is seeking $9.4 million in damages from the Schlapps, saying not only did Matt Schlapp commit sexual battery, but he and his wife defamed him afterward. Reached for comment, Schlapp’s attorney CHARLIE SPIES called the complaint ‘false,’ and said the ‘Schlapp family is suffering unbearable pain and stress’ as a result,” Natalie Allison writes. 2024 WATCH — South Dakota Gov. KRISTI NOEM spoke with CBS’ Bob Costa and addressed her potential 2024 presidential candidacy: “I get up every single day and work to help South Dakota be successful. So I’m not convinced that I need to run for president. But I also believe that this country needs somebody to lead us that has a vision that appreciates the freedoms that this country provides to the people that live here and really does want to protect them and our constitutional rights going forward.” She said Trump’s policies “helped my people be successful” but stopped well short of an endorsement. Watch the interview THE WHITE HOUSE DOCU-DRAMA — “Justice Department Considered but Rejected Role in Biden Documents Search,” by WSJ’s Aruna Viswanatha, Sadie Gurman and C. Ryan Barber: After classified documents were found at his think-tank office in November, “Mr. Biden’s legal team prepared to search his other properties for any similar documents, and discussed with the Justice Department the prospect of having FBI agents present while Mr. Biden’s lawyers conducted the additional searches. Instead, the two sides agreed that Mr. Biden’s personal attorneys would inspect the homes, notify the Justice Department as soon as they identified any other potentially classified records, and arrange for law-enforcement authorities to take them.” Related read: “After criticism for silence, Biden White House takes questions about classified documents,” by NBC’s Peter Nicholas CONGRESS WHAT McCARTHY GAVE UP — NBC’s Scott Wong and Kyle Stewart did the work on putting together a comprehensive list of where all of the antagonizers who slowed McCarthy’s ascension to the speakership ended up after committee assignments were settled Tuesday. A few of the notables:
- Reps. ANDY BIGGS (R- Ariz.), DAN BISHOP (R-N.C.) and MATT GAETZ (R-Fla.) kept their seats on the Judiciary Committee;
- Rep. LAUREN BOEBERT (R-Colo.), who like Biggs and Gaetz voted ‘present’ on the final ballots, won a seat on the Oversight and Accountability Committee, in addition to keeping her seat on Natural Resources;
- Rep. MICHAEL CLOUD (R-Texas) won a spot on the coveted Appropriations Committee; and
- Rep. BYRON DONALDS (R-Fla.), who was nominated to run against McCarthy for speaker and flipped to him on the 12th ballot, was awarded a seat on Financial Services as well as a spot on the House GOP steering committee, which doles out panel assignments.
INVESTIGATION INVENTORY — “House GOP lays groundwork for Mayorkas impeachment as moderates balk,” by CNN’s Melanie Zanona, Manu Raju and Annie Grayer: “Key committee chairmen are already preparing to hold hearings on the problems at the southern border, which Republicans say could serve as a prelude to an impeachment inquiry against [DHS Secretary ALEJANDRO] MAYORKAS. … “The House Judiciary Committee, which would have jurisdiction over an impeachment resolution, is prepared to move ahead with formal proceedings if there appears to be a consensus within the GOP conference, according to a GOP source directly familiar with the matter. The first impeachment resolution introduced by House Republicans already has picked up support, including from a member of the GOP leadership team. A GOP source said the first Judiciary Committee hearing on the border could come later this month or early February.” STILL A PROBLEM — “Capitol Police chief says threats against members of Congress ‘still too high’ despite drop in case numbers,” by CNN’s Jack Forrest TOP-ED — Former Sen. GARY HART (D-Colo.) for NYT Opinion: “I Was on the Church Committee. The New Republican Version Is an Outrage” TRUMP CARDS GETTING THE BAND BACK TOGETHER — When former President DONALD TRUMP makes his first stop of the 2024 campaign season in South Carolina on Jan. 28, he’ll be joined by Sen. LINDSEY GRAHAM and Gov. HENRY McMASTER, AP’s Meg Kinnard reports, as well as members of the South Carolina House delegation. STORMY WATERS — “Trump’s Former Lawyer Meets With Prosecutors About Hush Money,” by NYT’s Ben Protess and William Rashbaum: “The Manhattan district attorney’s office on Tuesday took a significant step forward in its investigation of Donald J. Trump, meeting with his former personal lawyer about hush money paid to a porn star who said she had an affair with Mr. Trump, according to people with knowledge of the matter. The questioning of the lawyer, MICHAEL D. COHEN, offered the clearest sign yet that the district attorney’s office was ramping up its investigation into Mr. Trump’s role in the $130,000 hush money deal.”
| | | | A message from The American Petroleum Institute (API):   API has a plan to learn more about how we can Make, Move and Improve American energy. | | | POLICY CORNER HEADS UP — “Justice Department Offers New Incentives for Companies to Self-Report Wrongdoing,” by WSJ’s Dave Michaels: “Companies that disclose wrongdoing to the Justice Department won’t be prosecuted if they fully cooperate with investigators and fix the underlying problems, including any shortcomings in their compliance programs, according to Assistant Attorney General KENNETH POLITE JR., who leads the criminal division.” THE CRYPTO CRACKDOWN — SEC Chair GARY GENSLER has warned for months that crypto companies are flouting the country’s securities laws by not registering with his agency. Now, nearly two years into his tenure, Wall Street's top cop is finally fed up, and an enforcement onslaught is in the works, Declan Harty reports this morning. Related reads: “Dems debate influence of crypto money on key panel,” by Ally Mutnick and Nicholas Wu …“FTX Executives Expressed Concern Over Use of Customer Funds, Documents Show,” by NYT’s David Yaffe-Bellany …“In Hunt for FTX Assets, Lawyers Locate Billions in Cash and Crypto,” by NYT’s Matthew Goldstein and David Yaffe-Bellany WAR IN UKRAINE BREAKING OVERNIGHT — “Kyiv helicopter crash kills 18, top Ukraine officials dead,” AP’s Andrew Meldrum: “There was no immediate word on whether the crash was an accident or a result of the war with Russia. … Interior Minister DENYS MONASTYRSKYI, his deputy YEVHEN YENIN and State Secretary of the Ministry of Internal Affairs YURII LUBKOVYCH were among those killed, according to IHOR KLYMENKO, chief of Ukraine’s National Police.“ TANKS FOR NOTHIN’ — Davos Playbook reports that Germany could sign off on sending tanks to Ukraine as soon as Friday, per an exclusive interview with Lithuanian Foreign Minister GABRIELIUS LANDSBERGIS. THE ARMS RACE — “Pentagon Sends U.S. Arms Stored in Israel to Ukraine,” by NYT’s Eric Schmitt, Adam Entous, Ronen Bergman, John Ismay and Thomas Gibbons-Neff THE VIEW FROM MOSCOW — “Moscow Details Plan to Boost Military as Ukraine Warns of Fresh Russian Offensive,” by WSJ’s Matthew Luxmoore and Georgi Kantchev AMERICA AND THE WORLD COMING TO AMERICA — “Turkey’s top diplomat to travel to U.S. amid troubled ties,” by AP’s Suzan Fraser and Andrew Wilks THE REPORT FROM DAVOS — “Davos struggles to get used to a world without Russia,” by Erin Banco in Davos, Switzerland: “Behind the scenes, global CEOs and leaders question how long the West can ignore Moscow and still find new markets for energy, metals and food.” More from the Alps: “At Davos, Mood Is Somber as Many CEOs Question Economic Outlook,” by WSJ’s Chip Cutter and Sam Schechner …“China Returns to Davos With Clear Message: We’re Open for Business,” by NYT’s Mark Landler and Keith Bradsher in Davos, Switzerland BEYOND THE BELTWAY STATE OF THE STATES — “Governors to voters: The state of our nation is bleak, except under me,” by David Siders: “Do dark times respect state boundaries? At least 50 people believe they do.” THE LATEST OUT OF NEW MEXICO — “Failed GOP candidate visited homes of New Mexico Democratic politicians to dispute election before shootings, officials say,” by NBC’s Deon Hampton, Phil McCausland and Mirna Alsharif More on the suspect: “He Cheered Trump on Jan. 6. Now He’s Accused of Targeting Political Rivals,” by NYT’s Simon Romero and Alan Feuer … “Solomon Pena was belligerent to neighbors who opposed his political views, condo official says,” by NBC’s Deon Hampton and Mirna Alsharif CALLED TO ORDER — “Free speech or out of order? As meetings grow wild, officials try to tame public comment,” by WaPo’s Karin Brulliard: “Across a polarized nation, governing bodies are restricting — and sometimes even halting — public comment to counter what elected officials describe as an unprecedented level of invective, misinformation and disorder from citizens when they step to the microphone.”
| | | | POLITICO’s exclusive interview with Uber CEO Dara Khosrowshahi will take place on Thursday, January 19 at 1:30 PM EST – live from the Davos mountaintop. Register today to join us online. | | | | | | | PLAYBOOKERS | | Antony Blinken is pushing a major State Department policy change: Replacing Times New Roman with Calibri. Lina Khan welcomed a baby boy over the weekend. Chuck Schumer and Hakeem Jeffries got together to talk Brooklyn at Junior’s. Joe Biden and Stephen Curry did a co-tweet. Mike Huckabee is boarding the Ron DeSantis train. Pras Michel is trying to secure testimony from Donald Trump and Barack Obama at his upcoming trial. FIRST IN PLAYBOOK — Ronja Abel is joining Left Hook as VP of public affairs. She most recently was deputy director of campaign comms for EMILY’s List and is a Steve Bullock alum. — Michael Esposito is joining the American Conservation Coalition as chief of staff. He previously was a project manager at Strong Manufacturers. — Kenneth Mika is launching Politicoin, a political fundraising firm, where he will be CEO. He previously was director of email marketing for the RNC and is a Trump campaign alum. WHITE HOUSE ARRIVAL LOUNGE — Ben Krauss has started a stint as a senior adviser to clean energy czar John Podesta at the White House. Krauss, who is taking a leave of absence as CEO of Fenway Strategies, is an alum of the Biden and Hillary Clinton campaigns and the Obama White House. TRANSITIONS — Cristina Martin Firvida is now investor advocate at the SEC. She previously was VP of financial security and livable communities for government affairs at AARP. … Justice Action Network has added Jenna Bottler as president and ED and Diana Rademacher as comms director. Bottler was previously deputy director at JAN. Rademacher was previously policy director with Americans for Prosperity. … Remmington Belford is now the deputy chief of staff for Rep. Emilia Sykes (D-Ohio). He previously was comms director for the Congressional Black Caucus. … … Sen. Katie Britt (R-Ala.) has staffed up with several key hires: Dan Hillenbrand is legislative director, Sean Ross is comms director and Mark McKinnon is national security adviser. Hillenbrand most recently was chief of staff for former Sen. Jim Inhofe (R-Okla.), Ross held the same role throughout the campaign and was previously editor in chief of Alabama-based Yellowhammer News and McKinnon was NSA for former Sen. Richard Shelby (R-Ala.). … George P. Bush is joining Michael Best Strategies as a partner. He previously was Texas land commissioner. ENGAGED — Brendan Jaspers, director of campaigns for the Club for Growth, and Mallory Blount, deputy comms director for the Senate Republican Conference and a Trump administration alum, recently got engaged. The couple was set up on a blind date by Herschel Walker campaign manager Scott Paradise while Mallory was on the Walker campaign. “A few weeks after I started with Herschel, Scott called Brendan and said ‘I just met your future wife. Y’all have to meet.’ We hit it off and racked up a lot of airline points traveling between D.C. and Atlanta to see each other.”Pic… Another pic HAPPY BIRTHDAY: Rep. Kay Granger (R-Texas) … Brett Horton of House Majority Leader Steve Scalise’s (R-La.) office … Keisha Lance Bottoms … The White House’s Josh Orton … … Ben Jealous of the Sierra Club … Martin O’Malley … POLITICO’s Evan Gaskin and Calder McHugh … Lindsay Monaghan … Yagmur Cosar of the U.S. Chamber of Commerce Foundation … Irvin McCullough … Yudhijit Bhattacharjee of National Geographic … National Review’s John McCormack … Adam Radman of Americans for Tax Reform … Charlotte Fox of the International Women’s Media Foundation … Ryan Taylor of Forbes Tate Partners … Nan Powers Varoga … NBC’s Jane Timm … Samara Yudof Jones … Fox News’ Jonathan Serrie … former Sen. Paul Kirk (D-Mass.) … former Reps. Debbie Mucarsel-Powell (D-Fla.) and Mike Michaud (D-Maine) … CNN’s Sam Waldenberg … Ben Nuckels … Brian Callanan of Liberty Strategic Capital … WJLA’s Dave Lucas … American Conservation Coalition's Lily Moll … Gabrielle Mannino of Rep. Chellie Pingree’s (D-Maine) office … Gadi Dechter … Kyle Peterson of Boldly Go Philanthropy … SoftBank Group’s Brian Conklin Did someone forward this email to you? Sign up here. Send Playbookers tips to playbook@politico.com or text us at 202-556-3307. Playbook couldn’t happen without our editor Mike DeBonis, deputy editor Zack Stanton and producers Setota Hailemariam and Bethany Irvine. Correction: Tuesday’s Playbook misstated former first lady Michelle Obama's age. She turned 59 in 2023. | | | | A message from The American Petroleum Institute (API): Making American Energy: We face a global energy supply crisis. Americans are increasingly poised to suffer under the biggest imbalance between energy supply and demand in a generation. America needs more of what’s under our feet – more natural gas, more oil, more fuels. Smart energy policies are critical to supporting U.S. economic growth and strengthening U.S. energy security. U.S. producers increased production in 2022, but more is needed. Lifting development restrictions on federal lands and waters could add an average of 77,000 barrels of oil equivalent per day through 2035 and generate $2.8 billion for the federal government. As the world’s leading producer of natural gas and oil, America can advance an affordable, reliable, and cleaner future by developing more energy and refining more fuels in America where they’re produced to among the highest standards in the world. Read more to see how we can Make, Move and Improve energy. | | | | | | | Follow us on Twitter | | | | Subscribe to the POLITICO Playbook family Playbook | Playbook PM | California Playbook | Florida Playbook | Illinois Playbook | Massachusetts Playbook | New Jersey Playbook | New York Playbook | Ottawa Playbook | Brussels Playbook | London Playbook View all our political and policy newsletters | | Follow us | | | | |  |
