Playbook PM: Have shutdown talks stalled?

Politico

07-02-2025

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THE CATCH-UP
SHUTDOWN SHOWDOWN: Speaker Mike Johnson warned today that government funding talks had stalled and it seemed that Democrats had walked away, putting the onus on House Minority Leader Hakeem Jeffries to re-engage, Meredith Lee Hill, Katherine Tully-McManus and Nick Wu report. Jeffries shot back at his presser that Johnson's comment was just 'projection,' since Republicans hold all the power.
But top appropriators sounded more optimistic about ongoing negotiations than Johnson did: 'The Speaker is mistaken,' House Appropriations ranking member Rosa DeLauro (D-Conn.) posted on X. 'No one has walked away from the table. We sent them an offer yesterday.' And per Punchbowl's Melanie Zanona, Chair Tom Cole (R-Okla.) declared, 'We are not shutting down the government. … You can take that to the bank!' Cole said Johnson's comment was 'not true.'
With just five weeks left until the government would shut down, appropriators warn that Congress needs to move quickly to strike a deal on topline numbers, NOTUS' Riley Rogerson reports. Rep. Chip Roy (R-Texas) indicated that a continuing resolution may be necessary, per Fox News' Chad Pergram.
RECONCILABLE DIFFERENCES: In a shift, Johnson said today that raising the debt limit will 'probably' be wrapped up in the budget blueprint for party-line reconciliation legislation. You may also have to wait a while longer to get the details of that bill: Johnson said the party is still working out the specifics through the weekend and maybe into Monday, per The Hill's Mychael Schnell. But the Senate is filling the void: Senate Budget Chair Lindsey Graham (R-S.C.) put out the text of his reconciliation plan, focused on the border, defense and energy, and said his committee will take it up Wednesday and Thursday for a vote, per Jordain Carney.
JOBS DAY: The latest jobs report shows that the U.S. added 143,000 jobs in January as unemployment dipped to 4 percent. The numbers came in a bit weaker than economists had projected, but they indicate a labor market that remains solid despite a cooldown — and despite disruptions from the California wildfires and winter storms. Despite the drop, data for November and December was revised higher by 100,000 jobs in total. Perhaps most promisingly, wage growth beat expectations at 4.1 percent annually and ran faster than inflation. Details from Bloomberg
The data likely won't change the Fed's pause on cutting interest rates. Since the numbers largely reflect the end of Joe Biden's presidency, President Donald Trump's White House was quick to highlight the downside: 'Today's jobs report reveals the Biden economy was far worse than anyone thought,' press secretary Karoline Leavitt said in a statement.
It's too early to tell how Trump's policies will affect the labor market. But the 'fresh numbers suggest that the labor market may be losing momentum heading into the second administration of President Trump, whose policy agenda — including sharp cuts to federal payrolls and large-scale deportations of unauthorized migrants — could affect both employment and the availability of workers,' writes NYT's Lydia DePillis.
Trump's immigration crackdown could have an especially big impact, as new arrivals (both legal and illegal) fueled a significant amount of job growth in recent years, Sam Sutton reports.
MAN OF STEEL: Trump today said he hasn't changed his mind on opposing Nippon Steel's acquisition of U.S. Steel. But CBS' Jennifer Jacobs and Richard Escobedo just reported that he is considering allowing it to go through.
THE POPULIST IN CHIEF: Trump announced he'll sign an anti-paper-straw executive order next week.
LOOK WHO'S BACK: 'Trump considering Blagojevich for ambassador to Serbia,' scooped by Eric Bazail-Eimil and Amy Mackinnon
Happy Friday afternoon. Thanks for reading Playbook PM. Drop me a line at [e-mail].
8 THINGS YOU NEED TO KNOW
1. DEADLY FALLOUT: For weeks, aid groups have warned that Trump's foreign aid freeze would kill some of the world's most vulnerable people. Now, Reuters' Shoon Naing reports that Burmese refugee Pe Kha Lau died after the U.S. ordered an International Rescue Committee hospital to close and she was sent home. The 71-year-old on the Thai border had been oxygen-dependent due to lung issues.
USAID's future: With almost the entire aid agency set to be axed tonight, Reuters also reports that the number of essential staffers who'll be retained is roughly 600, twice the count that was reported yesterday. House Foreign Affairs Chair Brian Mast (R-Fla.) has teed up a hearing on 'The USAID Betrayal' for Thursday morning, Joe Gould reports. (That presumably is betrayal by, not of, the agency.) Republicans have aligned with Trump in lambasting USAID for wasteful spending, arguing that the federal government should focus more on the U.S. and supporting the effort to fold whatever of USAID remains into the State Department.
The 360: USAID had long enjoyed bipartisan support in Washington, but NBC's Brandy Zadrozny and CNBC's Lora Kolodny track how Elon Musk helped mainstream a mixture of conservative criticism and false conspiracy theories about the agency. Much of it traces back to former State Department official Mike Benz. As for the 12 examples of waste and abuse at USAID that the White House has circulated this week, WaPo's Glenn Kessler dives in with a fact check that finds that 11 of them are misleading, missing context or outright false.
The impact: When USAID's Middle East team shrinks from more than 200 to 21 tonight, emergency food and medical aid to hundreds of thousands of Palestinians in Gaza could get gummed up — and delays in aid might in turn threaten the Israel-Hamas cease-fire, NYT's Patrick Kingsley and Adam Rasgon report. Meanwhile, opposition activists, rights groups and independent media are scrambling to find other funding, AP's Dasha Litvinova and Yuras Karmanau report.
2. THE COIN OF DOGE: As Musk's 'Department of Government Efficiency' takes on federal agencies for cuts and monitoring, one by one, the Treasury Department is installing Musk ally Tom Krause in charge of the payment systems that disburse $5 trillion annually, WaPo's Jackie Alemany and Jeff Stein report. He succeeds David Lebryk, who resigned after refusing to choke off foreign aid payments at Krause's direction, which Lebryk said would be illegal — a situation that has rattled the department and infuriated staffers.
Meanwhile, intelligence agencies fear their time is coming next, Bloomberg's Natalia Drozdiak reports. From 30,000 feet, as Musk's largely inexperienced team operates behind the scenes to gain access to federal data systems, several IT civil servants tell The Atlantic's Charlie Warzel and Ian Bogost that they're 'terrified and struggling to articulate the scale of the crisis.'
From air traffic control to sensitive security clearances, they warn that this is a massive security breach: 'Their message is unambiguous: These are not systems you tamper with lightly. Musk and his crew could act deliberately to extract sensitive data, alter fundamental aspects of how these systems operate, or provide further access to unvetted actors. Or they may act with carelessness or incompetence, breaking the systems altogether. Given the scope of what these systems do, key government services might stop working properly, citizens could be harmed, and the damage might be difficult or impossible to undo.'
But Musk maintains that his team is doing necessary work to radically transform/shrink the federal government. And he seems reluctant to give an inch: After Marko Elez resigned in the wake of his racist X posts being found, Musk posted a poll today asking if he should be brought back.
3. THE PURGE: 'Trump continues federal purge, gutting cyber workers who combat disinformation,' by John Sakellariadis and Maggie Miller: 'Roughly half a dozen employees from the Cybersecurity and Infrastructure Security Agency who once worked in its Election Security and Resilience division were notified Thursday night they were being put on administrative leave.'
4. IMMIGRATION FILES: The White House is placing 'tremendous pressure' on ICE to ramp up immigration arrests, saying law enforcement has not reached their targets, CNN's Priscilla Alvarez reports. Though the average numbers are already higher than during Biden's last year, resource constraints are weighing on Trump's goals. Meanwhile, Alvarez reports, other new immigration plans potentially in the offing include 'adding buoys in the Rio Grande … assessing more military bases to hold migrants … [and sending] migrants from Africa to another country.'
One obstacle removed: Border czar Tom Homan said the Trump administration's successful negotiations with Venezuela have paved the way for deportation flights to the country to begin within a month, NYT's Julie Turkewitz and Hamed Aleaziz report. That's the first timeline the administration has announced on the issue.
5. DEMOCRACY WATCH: 'Supreme Court rules Wisconsin election chief Meagan Wolfe can remain past the end of her term,' by the Milwaukee Journal Sentinel's Molly Beck: 'The [unanimous] decision is the latest development in a years-long saga over whether Wisconsin Elections Commission administrator Meagan Wolfe should continue to oversee state elections amid intense backlash from Republicans triggered by false election claims by President Donald Trump about the 2020 election.'
6. JD VANCE'S GIG: The VP has been assigned to lead negotiations for a sale — and thus salvation — of TikTok, Punchbowl's Ben Brody, John Bresnahan and Jake Sherman report. National security adviser Mike Waltz will focus on the national security pieces. It's a high-profile task, with plenty of potential political upside and downside.
7. KNOWING BO HINES: 'Ex-Yale Football Player Ascends to Key Crypto Job at White House,' by Bloomberg's Claire Ballentine, Stephanie Lai and Teresa Xie: 'Two months ago, Bo Hines was a twice-failed candidate for a North Carolina congressional seat with loose ties to a memecoin. Now, the 29-year-old will be guiding cryptocurrency policy in Washington. … With [David] Sacks planning to remain in San Francisco for parts of the year, Hines will be the one on the ground in DC, serving as a conduit between the digital asset world and the presidential administration.'
8. MIDDLE EAST LATEST: Iranian Ayatollah Ali Khamenei today derided the concept of U.S. negotiations as 'unwise, unintelligent and not honorable,' undercutting President Masoud Pezeshkian's openness to Trump's suggestion, per NYT's Erika Solomon and Leily Nikounazar. But Khamenei didn't go so far as to order the government not to do so. Meanwhile, the U.S. faced blowback around the world for Trump's order targeting the International Criminal Court, which said Trump threatened its independence, AP's Molly Quell and Raf Casert report. And in Lebanon, U.S. deputy regional envoy Morgan Ortagus met with President Joseph Aoun and urged Lebanon not to include Hezbollah in its government, per NYT's Euan Ward.
But the biggest news continues to be Trump's radical plan to seize Gaza and displace Palestinians. Experts warn that the suggestion will empower jihadist terrorists throughout the region with a new 'rallying cry' to fight against the U.S., NBC's Dan De Luce reports. It has already filtered into pro-Islamic State propaganda.
TALK OF THE TOWN
IN MEMORIAM — 'Reid G. Miller, longtime AP international correspondent and editor, dies at 90,' by AP's Ted Anthony: 'Along the way, he survived a lethal explosion in Nicaragua, covered the genocide in Rwanda and spearheaded the release of a kidnapped colleague in war-ravaged Somalia. … [In] Washington, where he became assistant bureau chief, [he] was a mainstay of the bureau softball team and helped raise a generation of reporters.'
OUT AND ABOUT — SPOTTED at Third Way's NewDem reception: Reps. Brad Schneider (D-Ill.), Derek Tran (D-Calif.), Eric Sorensen (D-Ill.), Hillary Scholten (D-Mich.), Janelle Bynum (D-Ore.), John Mannion (D-N.Y.), Kristen McDonald Rivet (D-Mich.), Marc Veasey (D-Texas), Sean Casten (D-Ill.), Tim Kennedy (D-N.Y.), Wesley Bell (D-Mo.), Pete Aguilar (D-Calif.), Nikki Budzinski (D-Ill.), Adam Gray (D-Calif.), Gil Cisneros (D-Calif.), Bill Foster (D-Ill.), Rick Larsen (D-Wash.), Eugene Vindman (D-Va.), Deborah Ross (D-N.C.) and Sharice Davids (D-Kan.), Del. Stacey Plaskett (D-U.S. Virgin Islands), Matt Bennett, Jim Kessler, Matt Coglianese, Paul Thornell, Annie Sokolov, Emma Weir, Bruce Andrews, Elizabeth Burks and Tizzy Brown.
— The Alvin Ailey American Dance Theater's 25th annual D.C. gala benefit raised $1.2 million at the Kennedy Center on Wednesday, part of a weeklong Black History Month engagement. SPOTTED: Reps. Steven Horsford (D-Nev.), Troy Carter (D-La.), Sylvester Turner (D-Texas), Joyce Beatty (D-Ohio), Emilia Sykes (D-Ohio), Jahana Hayes (D-Conn.), Yvette Clarke (D-N.Y.) and Wesley Bell (D-Mo.), Bryan Anderson, Lyndon Boozer and Karen Anderson, Sela Thompson Collins and Art Collins, Yebbie Watkins, Anthony Lewis, Joyce Brayboy, Michael Collins, Lawrence Duncan III, Chanelle Hardy, Colette Honorable, Jana Taylor Jennings, John Mason, Jennifer Stewart, Marie Sylla Dixon, Nicole Venable, Shawna Watley, Michelle Persaud, Nikki Clifton, Dontai Smalls, Shashrina Thomas, Lance West, Ed An, Tory Newmyer, Kimball Stroud, Andre Wells, Amos Jackson, Tony Powell, Daniel Swartz, Tasia Jackson and Vince Evans.
FIRST IN PLAYBOOK — Steven Kelly has launched a speechwriting and executive comms consultancy. He previously was director of speechwriting to VP Kamala Harris.
MEDIA MOVE — Melanie Zanona will be a Capitol Hill correspondent at NBC. She currently is a senior congressional reporter at Punchbowl, and is a CNN and POLITICO alum.
TRANSITION — Adam Piper is returning to the Republican Attorneys General Association for another tenure as executive director. He previously led the organization from 2018-2021, reportedly leaving after a controversy over its support for the Jan. 6 march on the Capitol.
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