Playbook: Inside the brewing debt limit deal

RON DeSWAMPIS — NBC’s Matt Dixon and Jonathan Allen broke a killer story late last night: “Officials who work for Gov. RON DeSANTIS’ administration — not his campaign — have been sending text messages to Florida lobbyists soliciting political contributions for DeSantis’ presidential bid, a breach of traditional norms that has raised ethical and legal questions and left many here in the state capital shocked.”

Said one Florida lobbyist: “The bottom line is that the administration appears to be keeping tabs on who is giving, and are doing it using state staff. … You are in a prisoner’s dilemma. They are going to remain in power. We all understand that.”

Said another: “It is state employees leveraging their official position to ask people whose livelihood[s] depend on access to state government for money.”

A DEBT CEILING DEAL BEGINS TO TAKE SHAPE — With less than a week before a possible June 1 federal default, negotiators appear to be homing in on a deal to raise the debt ceiling and avert an economic catastrophe.

The two sides have all but finalized the spending portion of discussions, a source familiar with the talks told Playbook late last night. And as one Republican negotiator said recently, once those caps get locked in, the rest of the deal should fall into place fairly quickly.

A note of caution: As the old Washington adage goes, nothing is agreed to until everything is agreed to. Talks could blow up as conservatives and progressives balk at details that are starting to leak out. Even absent a meltdown, enough sticking points remain to drag negotiations on through the weekend.

But for once, we actually believe the White House and Republican leaders when they say there’s been real progress.

Here’s what we know this morning:

ON SPENDING CAPS: The two sides appear to be in agreement on raising the debt ceiling for two years (through the 2024 election) and essentially capping discretionary spending over that time frame for everything except the Pentagon and veterans programs.

Where Republicans relented: GOP negotiators initially demanded that Democrats reduce spending on non-defense programs to FY 2022 levels. But they’ve now agreed to pare back those expectations and meet the White House closer to (but below) its own offer of freezing spending at FY 2023 levels.

Where Democrats relented: Because the deal will reduce non-defense discretionary spending below the FY 2023 level, Republicans can say that they secured spending cuts. But the inchoate agreement will also include accounting maneuvers to allow Democrats to shift funds from other places, meaning that the cuts are almost a wash. More details from NYT’s Jim Tankersley and Catie Edmondson

Defense spending, meanwhile, will see a small increase, matching President JOE BIDEN’s proposed 2024 budget in yet another concession from Republicans who were demanding a large influx of cash for the Pentagon. More from Roxana Tiron and Jennifer Jacobs at Bloomberg

ON THE IRS CLAWBACKS: The still-being-ironed-out framework would also claw back $10 billion of Democrats’ $80 billion IRS funding infusion, a nod to GOP demands to rescind that money altogether. Part of that $10 billion, however, will be moved to other discretionary programs, helping Democrats avoid the steeper non-discretionary cuts demanded by the right. We’re told part of this matter is still under discussion; WaPo has more deets.

Happy Friday. Thanks for reading Playbook. Drop us a line: Rachael Bade, Eugene Daniels, Ryan Lizza.

THE STEPBACK — Progress on the spending caps and the IRS portion of talks comes days after negotiators appeared to be finalizing an agreement to recoup unspent pandemic funds. At present, it’s unclear if that Covid money will be saved altogether or merely moved around, as with the IRS funding reduction.

There are two major unresolved issues:

1. A stalemate on work requirements. With House Democrats resisting Biden’s apparent willingness to beef up work requirements for certain social programs, the issue remains at an impasse. This is a must-have for Republicans. But with the GOP unwilling to consider something big in exchange (like closing tax loopholes for the wealthy and corporations), Democrats aren’t feeling a need to offer such a major concession — at least not yet.

2. The process of permitting reform. While both parties agree in theory that they want to include a permitting reform agreement in the deal, we’re told that the logistics of putting together such a complicated proposal by June 1 is weighing on negotiators.

The premise sounds simple enough: Democrats want to make it easier to build electricity lines and approve solar and wind energy projects; Republicans want to make it easier to drill oil — so both sides could just agree to give each other what they want.

But writing the legislation on this abbreviated timeline is difficult. One possibility: Both parties could commit to a framework and make a gentleman’s agreement to pass legislation at a later date. But some people close to talks still hold out hope legislation could be included in the debt ceiling package.

A few dynamics to keep an eye on:

1. Unhappy conservatives. As reported in Playbook PM yesterday, conservatives are already starting to revolt over the yet-to-be-finalized agreement, seething that they don’t like what they’re hearing. In a letter yesterday, members of the House Freedom Caucus urged Speaker KEVIN McCARTHY to “hold the line” and push for additional GOP priorities. Meanwhile in the Senate, MIKE LEE (R-Utah) vowed to do everything in his power to hold up passage of a deal he doesn’t like.

It didn’t get a lot of attention yesterday, but CNN’s story about MARK MEADOWS advising the Freedom Caucus as part of debt ceiling talks is worth a read. The former North Carolina Republican congressman and Trump chief of staff is a longtime McCarthy foe, and is infamous on the Hill for making ex-speakers PAUL RYAN and JOHN BOEHNER miserable. His meddling will almost surely cause problems for GOP leadership.

Watch this space closely. The more Republicans peel away from McCarthy, the more the speaker will need to rely on Democratic votes to get anything passed in the lower chamber. That could potentially mean a more watered-down bill than the agreement they’re trying to finalize now.

2. Unhappy Democrats. As we reported in Playbook yesterday, Biden’s own party continues to grumble that the White House is losing the messaging war. And House Dems are especially peeved that Biden is planning to leave Washington for the weekend. “Please tell me that’s not true,” one anonymous Dem lawmaker told our colleagues. “You’re going to see a caucus that’s so pissed if he’s stupid enough to do that.”

Meanwhile, McCarthy tweeted last night that he’s “staying in DC to fight for an agreement that’s worthy of the American people — for as long as it takes.” (Not a great side-by-side for the White House.)

Then there’s the discontent over the contents of a deal, which is prompting some surprising Democrats to warn that their votes for a deal are far from assured, according to CNN. Late last night, Rep. JARED GOLDEN (D-Maine) — the kind of moderate Democrat whose vote Biden will ultimately need — told our colleague Adam Cancryn that he remains noncommittal on backing any compromise.

Golden’s problem? The IRS rescissions, which he called “shockingly bad from a policy perspective” and would hurt the administration’s effort to crack down on tax cheats.

“They can’t count on me just because they think that’s what a Blue Dog is,” he said. “I’ve never been afraid to take tough votes, in either direction.”

3. A mischievous Trump. The former president has been cheering Republicans to embrace a default if they don’t get everything they want.

Yet that’s exactly where things stand: The tentative deal is going to look nothing like the GOP debt limit bill that passed the House a few weeks ago. Barring major changes, Republicans will have allowed Democrats to essentially continue spending at the same level for two years while raising the debt ceiling — a far cry from capping spending for a decade like they proposed.

So how will Trump react? It’s hard to tell. On the one hand, he’s never been a fiscal conservative. On the other, he loves to please the base. Should he blast the deal, swaths of Republicans will have a hard time voting for an agreement. If he blesses it, GOP leadership can keep defections to a minimum.

McCarthy appears to be aware of this wild card. Yesterday, he spoke with Trump and told reporters the former president offered one piece of advice: “Make sure you get a good agreement.”

FIRST IN PLAYBOOK — A pair of big new ad campaigns from outside organizations urge Washington to reach a debt limit deal — from different perspectives.

• Future Forward USA Action is putting seven figures behind national TV and digital ads blasting Republicans for risking default by cowing to Trump. “With so much on the line, now is their chance to finally stand up to Trump’s chaos,” a narrator says, as “MAGA AGENDA” hovers on the screen across several images. Watch it here

• The National Taxpayers Union supported House Republicans’ bill, but now the group is launching a roughly $300,000 ad campaign encouraging them to reach and pass a deal that also cuts spending. The TV and radio push running across “Meet the Press,” “Fox News Sunday,” WTOP, WMAL and more warns about “disastrous default.” Watch it here

TALK OF THIS TOWN — Michael Schaffer’s latest column: “Do D.C.’s Police Have an Extremism Problem?”

PHOTO OF THE DAY

2024 WATCH

JUST POSTED — “North Dakota Gov. Doug Burgum Poised to Enter GOP Presidential Race,” by WSJ’s John McCormick: “Wealthy former software entrepreneur is planning a June 7 announcement in Fargo.”

MARK YOUR CALENDARS — “Fox News Sets Trump Town Hall Moderated by Sean Hannity,” by The Wrap’s Loree Seitz: “The pretaped event will air next Thursday.”

DeSANTIS, DAY ONE — The fallout from DeSantis’ roundly mocked Twitter Spaces campaign launch continued yesterday, but he plowed right through, raking in an eye-popping first-day haul and planning an aggressive schedule of campaigning and fundraising.

— The money: The campaign raised a staggering $8.2 million in its first 24 hours, NYT’s Shane Goldmacher scooped — blowing big first-day sums from past cycles, like Biden’s or BETO O’ROURKE’s, out of the water. $1 million came in during one hour alone. Donations flew in both online and from a blitz of donor calls at the Miami Four Seasons known as “Ron-o-Rama,” as Alex Isenstadt scooped. More from The Messenger’s Marc Caputo on DeSantis’ polling/strategy presentation to donors

— The media blitz: DeSantis himself started barnstorming conservative media (not the mainstream press, of course), where he finally took some pointed shots at Trump. DeSantis said the former president had moved to the left, abandoned some of his 2016 campaign positions. And he blasted Trump for erring on Covid, immigration, debt and the nomination of FBI Director CHRISTOPHER WRAY. DeSantis also cast himself as the more electable option.

But, but, but: DeSantis also made big news by saying he’d consider pardoning Trump himself, along with Jan. 6 defendants and others, on his first day in office. (One overarching promise of DeSantis’ media hits, CNN’s Steve Contorno notes: that he’ll expand the powers of the presidency in unprecedented ways.)

— The tour: DeSantis announced that he’ll hit the trail next week with four days of campaigning across Iowa, New Hampshire and South Carolina, with a kickoff of sorts in Iowa on Tuesday. And it’s not just the public events: Puck’s Teddy Schleifer scooped the intense schedule of DeSantis fundraising travel through June, which will take the governor through Texas, California, Jersey, Vegas, Florida and more.

WARNING SIGNS FOR BIDEN — The president musters just 60% of the Democratic primary vote in the latest CNN poll, a weak showing for an incumbent who isn’t facing any top-tier opponents. ROBERT F. KENNEDY JR. pulls 20% (though you can expect that to drop as awareness of his anti-vaxxer activism catches up with last-name recognition), and MARIANNE WILLIAMSON is at 8%. More concerningly for Biden: 16% of Dem-aligned white, non-college-educated voters say they definitely would not support him in the general.

EXCLUSIVE INTERVIEW — Williamson sat down with our colleagues Jackie Padilla, Meiying Wu and Chris Farmer to talk about her latest presidential bid, making the case for her candidacy and explaining what’s different from her 2020 run. Watch the interview on The POLITICO Show on Snapchat