Feds probing Santos’ role in service dog charity scheme

NEW YORK — FBI agents are investigating Rep. George Santos’ role in an alleged GoFundMe scheme involving a disabled U.S. Navy veteran's dying service dog.

Two agents contacted former service member Richard Osthoff Wednesday on behalf of the U.S. Attorney’s Office in the Eastern District of New York, he told POLITICO.

Osthoff gave the agents text messages from 2016 with Santos, who he says used his plight to raise $3,000 for life-saving surgery for the pit bull mix, Sapphire — then ghosted with the funds, as first reported by Patch.

“I’m glad to get the ball rolling with the big-wigs,” Osthoff said in an interview Wednesday. “I was worried that what happened to me was too long ago to be prosecuted.”

The alleged fundraising scheme is one of many scandals plaguing the freshman Republican, who has refused to leave office despite a series of allegations of lying and fraud that first came to light in December shortly after he won a swing seat on Long Island.

New York Democratic Reps. Ritchie Torres and Daniel Goldman, who called for a Federal Election Commission investigation into Santos’ campaign finances last month, welcomed the news that the Eastern District investigation is proceeding at a serious clip.

“Only the U.S. attorneys are capable of moving at the speed that’s necessary,” Torres said in an interview.

“There’s no one that poses a greater threat in Congress than Santos. It’s undeniable that he’s broken the law. We have to protect Congress from George Santos, who threatens it from within,” Torres said.

Goldman, an ex-federal prosecutor who has a seat on the House Committee on Oversight and Accountability, echoed Torres’ comments in a separate interview.

“Given that a serial liar like Santos is still walking the halls of the Capitol, it is imperative that the Justice Department move quickly to determine whether an indictment is appropriate.”

On Tuesday, Santos stepped down from his Congressional committee assignments, telling colleagues he was trying to avoid becoming a further “distraction” for House Republicans. The announcement followed a meeting a day earlier with House Speaker Kevin McCarthy, who declined to disclose the reason for the discussion.

McCarthy made his strongest statement yet on Santos last week. He told Capitol Hill reporters that if Santos is found to have broken the law by the House Ethics Committee he will be removed from Congress.

Joshua Schiller, a senior trial lawyer who has practiced in the Eastern District, said the veteran’s encounter with Santos could offer prosecutors a quick way to hit the Republican congressman with criminal charges even though they’re also investigating heftier possible financial crimes.

“I think there is an urgency here because Santos is currently in a position to make laws,” Schiller said. “I can think of examples where the government used a lesser indictment to seize assets and try to cause the defendant to plea to a deal before bringing a second or third indictment on more serious charges, and I bet that is the case here.”

Santos’ attorney, Joseph Murray, declined to comment. Santos has previously said he merely exaggerated portions of his resume and denied that he broke any laws.

Spokespeople for the U.S. Attorney's Office in the Eastern District of New York and the FBI did not immediately respond to requests for comment.

Osthoff was sleeping in a tent on the side of the road in New Jersey in 2016 when a veterinary technician connected him with a pet charity. Anthony Devolder, who ran Friends of Pets United, promised to help Osthoff get a tumor removed from his dog’s stomach, the veteran said.

Devolder, a version of Santos’ full name he used before entering politics, set up the GoFundMe account and promoted it on social media saying, “When a veteran reaches out to ask for help, how can you say no?” according to screenshots of the postings.

When the account had reached its $3,000 goal, Devolder gave a series of excuses about why he couldn’t help Sapphire get treatment, then became difficult to reach, text messages between the two show.

Osthoff says Santos deliberately used his story of being a homeless disabled veteran with a sickly service dog to extract donations, then took off with the funds, leaving him unable to afford Sapphire’s surgery.

Osthoff said the experience was so traumatic it prompted him to contemplate suicide. Sapphire died from the tumor in 2017.

Friends of Pets United was not a registered charity, The New York Times reported in December when it first broke the story that Santos had fabricated much of his campaign biography.

Schiller said the GoFundMe allegations could result in several types of charges, including wire and mail fraud as well as bank fraud. Santos could have also committed tax crimes if he claimed exemptions for an unregistered charity, Schiller said.

CBS News first reported that federal investigators in New York were“looking into” Santos following the Times articles and other reporting that raised more questions about his background and how he funded a successful run that flipped his Long Island district from blue to red in November.

Last week, the Department of Justice asked the FEC to pause any enforcement action against Santos as the department worked on its own case, according to a report last week in the Washington Post.

Over $700,000 Santos initially listed as a personal loan to his campaign may have been an illegal straw donor scheme, according to FEC complaints.

The New York Attorney General’s office, as well as the Queens and Nassau County district attorneys, are also probing Santos.

Osthoff said the New York Attorney General’s Office Public Integrity Bureau, which handles fraud and criminal inquiries into elected officials, began investigating the GoFundMe drive last month.

A spokesperson for Attorney General Tish James said on Dec. 22 that her office was “looking into” several issues surrounding Santos, but did not get into specifics. The Attorney General’s office did not reply to questions about the status of its GoFundMe inquiry.

A spokesperson for GoFundMe declined to comment on specifics, but indicated the company has been cooperating with ongoing investigations.

Joe Anuta contributed to this report.

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Marty Walsh under consideration for spot atop NHL players’ union

Labor Secretary Marty Walsh has been approached about running the NHL Players Association and is in consideration for the gig, in what could be the second major shakeup to the Biden administration in recent weeks.

A person familiar with the discussions said Walsh is a strong contender for the lead role atop the hockey players’ union but that no deal is yet done. The Department of Labor declined to comment.

NHLPA spokesperson Jonathan Weatherdon did not deny Walsh was under consideration in an email to POLITICO. "The Search Committee has been actively interviewing potential candidates and remains engaged in the process of selecting a new NHLPA Executive Director,” he said. “While the process is getting closer to completion, we are unable to comment further at this time."

Should Walsh take the gig, he would be the second member of the president’s Cabinet to depart the Biden administration following Eric Lander, who resigned as Biden’s top science adviser in February 2022 after POLITICO first reported allegations that he bullied subordinates at the Office of Science and Technology Policy. Biden had elevated that post to Cabinet level, making Walsh the first traditional Cabinet official to potentially exit.

A Walsh departure would also possibly come amid other major administration staff shake ups. Chief of staff Ron Klain is set to hand off duties to Jeff Zients, marking the start of a new chapter for a White House still buoyed by better-than-expected midterm results for Democrats but now forced to tangle with a Republican controlled House.

Walsh’s name had been loosely discussed as a possible successor to Klain, though the labor secretary maintains his residence in Massachusetts and stays in a hotel when he’s in D.C.

The former Boston mayor has also been regularly talked about as a future candidate for office in Massachusetts, though his electoral options back home appear limited for the near future. He passed on running for the state’s open governor’s seat last year, unwilling to get involved in a primary against Democrats’ heir apparent, now-Gov. Maura Healey. And Sens. Elizabeth Warren and Ed Markey (D-Mass.) have both pledged to seek reelection to their Senate seats in 2024 and 2026, respectively.

Going to the NHLPA would, instead, mark a return to organized labor for Walsh, who previously headed up the Building and Construction Trades Council in Boston before entering electoral politics and becoming the city’s mayor in 2014.

As Labor secretary Walsh frequently served as a key surrogate for the Biden administration, particularly as a go-between with unions and the business community. That included keeping tabs on the ongoing impasse between dockworkers and West Coast port operators as well as stepping into last year’s Major League Baseball lockout.

Biden tapped Walsh to lead DOL in part due to his ties to the labor movement, as well as their personal bond: in public appearances Biden often ribs Walsh for his unvarnished Boston accent.

The White House credited Walsh for his work overseeing negotiations last year that threatened to halt the nation’s freight rail system. However, several of the unions involved in those discussions later rejected their tentative agreements, leading Biden in December to seek Congress’ help and impose contract terms on the industry to keep the system online.

In his first months as secretary, Walsh also visited striking Kellogg’s workers on a picket line in Pennsylvania, drawing howls from Republicans that it was an inappropriate use of his office.

The Labor Department’s inspector general looked into the Kellogg’s visit and some of Walsh’s other interactions with unions and did not find ethical violations, though House Education and Workforce Chair Virginia Foxx has vowed to continue probing the matter.

Apart from his record on labor disputes, Walsh also oversaw a number of regulatory changes at DOL aimed at unwinding Trump-era policies.

That includes a just-finalized rule allowing retirement planners greater flexibility to factor ESG-metrics in their investment decisions, overseeing the Biden administration’s attempt to impose a vaccination-or-test mandate — much of which was blocked by the Supreme Court — and other Covid-era measures.

Close associates of Walsh appeared to be in the dark about the NHLPA talks as word spread Wednesday afternoon. But at least one wasn’t surprised by the potential development, given his history with labor relations and his love of hockey.

Walsh is a lifelong Boston Bruins fan. But he also has a darker history tied to the sport. Walsh, a recovering alcoholic, has spoken openly of being thrown out of a Bruins game in the 1990s for being too drunk, part of a series of events that led him to seek help for his addiction.

If Walsh did take the players’ association gig, the former Boston mayor would follow his close friend, former Massachusetts Gov. Charlie Baker into the sports-executive world. Baker takes over as president of the NCAA in March.

Eleanor Mueller and Sam Stein contributed reporting.

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Dems name former Trump impeachment officials to GOP investigative panel

House Democrats have tapped a former Donald Trump impeachment manager to lead their counterattack to Republicans’ sweeping investigative panel.

Minority Leader Hakeem Jeffries announced his picks to sit on the select subcommittee on the “weaponization” of the federal government, which will be the home of several high-profile, controversial Republican probes — including a broad dive into the FBI and Justice Department.

Jeffries, in a letter to his colleagues, named Del. Stacey Plaskett, a Democrat who represents the Virgin Islands, as the party’s top member on the panel, putting her at the forefront of the party’s efforts to push back on the GOP investigations. Plaskett was part of House Democrats’ impeachment team during the 2021 Senate trial in the wake of the Jan. 6 attack, when a mob of the former president’s supporters breached the Capitol in an effort to subvert President Joe Biden’s Electoral College win.

Plaskett, a former prosecutor, made history in the role as the first delegate to serve as an impeachment manager. Fellow impeachment manager Rep. Jamie Raskin (D-Md.), now the top Democrat on the Oversight Committee, was once her law professor at American University.

Jeffries also nominated three members of the Oversight Committee for the select panel: Reps. Stephen Lynch (D-Mass.), Gerry Connolly (D-Va.) and Dan Goldman (D-N.Y.). Connolly and Lynch ran against Raskin for the top spot on that panel but fell short. And Goldman, a freshman, previously served as counsel for House Democrats during Trump’s first impeachment trial.

Democratic Reps. Linda Sánchez (Calif.), Debbie Wasserman Schultz (Fla.), John Garamendi (Calif.), Colin Allred (Texas) and Sylvia Garcia (Texas) also got seats on the select subcommittee. Technically, McCarthy appoints all members of the panel, meaning he’ll need to sign off on the Democratic picks, but the California Republican has said he would let Democrats name their own members for the subcommittee.

Jeffries, in the letter to his colleagues, said that the Democrats leading their party on the committees would need to “stand up to extremism from the other side of the aisle.” In addition to picking Plaskett as the top Democrat on the weaponization subcommittee, Jeffries also picked Rep. Jim Himes (D-Conn.) to be the top Democrat on the Intelligence Committee after McCarthy blocked Rep. Adam Schiff (D-Calif.), the longtime lead Democrat, from serving on the panel.

The minority leader also tapped Rep. Raja Krishnamoorthi (D-Ill.) to head Democrats on a select committee on strategic competition between the United States and China and Rep. Raul Ruiz (D-Calif.) to be the party’s top official on a subcommittee on the coronavirus pandemic.

“It remains my goal to prioritize and value input from every corner of the Caucus so we may unleash the full potential of our team. The members of the select committees reflect the tremendous experience, background and ability of the House Democratic Caucus, and authentically represent the gorgeous mosaic of the American people,” he added.

Under a fix passed by the House earlier Wednesday, the select panel members were expected to include Reps. Jim Jordan (R-Ohio) and Jerry Nadler (D-N.Y.), who serve as chair and ranking member of the full Judiciary Committee, as well as an additional 19 lawmakers — no more than eight of whom would be Democrats. But Jeffries, in his announcement, said that Nadler would instead serve as an ex-officio member. The overall break down of the panel is 12 Republicans to 9 Democrats.

Democrats on the subcommittee will be tasked with finding an offensive lane to counter the GOP investigations, with Republicans on the panel expected to expand the scope of their probes to include the intelligence community, the Department of Education, big tech and other targets.

The minority party largely avoided naming any bomb throwers to the subcommittee, but their members are well-steeped in investigative tactics and procedural mechanisms Republicans may choose to deploy as they pursue their own favored probes.

In addition to serving as an impeachment manager, Plaskett was also on the Ways and Means Committee in the last Congress, which was at the center of the fight for Trump’s tax returns. Sánchez is also a member of the tax writing committee.

Connolly, in particular, also has a long history of tangling with Jordan and other GOP members of the panel through their time on the Oversight Committee.

Kyle Cheney contributed to this report.

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Harris at Tyre Nichols’ funeral: This isn't public safety

The funeral of Tyre Nichols, a Black man fatally beaten by police officers in Memphis, Tenn., was marked by emotion, music and a sharp call to justice on Wednesday, including by Vice President Kamala Harris.

“This is a family that lost their son and their brother through an act of violence, at the hands and the feet of people who had been charged with keeping them safe,” Harris said at the service in Memphis.

With the families of other victims of police violence in attendance, Harris called for the passage of the George Floyd Justice in Policing Act, a reform bill she co-authored as a senator and that stalled in Congress.

“This violent act was not in pursuit of public safety. … When we talk about public safety, let us understand what it means in its truest form,” Harris said of the police action that killed Nichols. “Tyre Nichols should have been safe.”

Harris traveled to Memphis for the funeral, which was held at Mississippi Boulevard Christian Church. She was not listed as a speaker on the program, but was invited up by civil rights leader the Rev. Al Sharpton during the service.

“They told her she shouldn’t be here today, but the snow backed up and she’s here,” Sharpton said of Harris at the funeral, to applause.

The Rev. Dr. J. Lawrence Turner, pastor at the Memphis church, also called for lawmakers to act as he opened the speaking portion of the program.

“We have come with heavy hearts that can only be healed by the grace of God, full transparency, accountability and comprehensive legislative reform,” Turner said, noting that Wednesday marked the first day of Black History Month.

Former Atlanta Mayor and White House adviser Keisha Lance Bottoms, Rep. Sheila Jackson Lee (D-Texas) and Rep. Steve Cohen, a Republican who represents Memphis, were also present, Sharpton said.

The families of many other Black victims of police killings, including loved ones of George Floyd, Eric Garner and Breonna Taylor, came to the funeral as well, Sharpton said.

Nichols’ parents are scheduled to attend President Joe Biden’s State of the Union speech next week. The Congressional Black Caucus will meet Thursday with Biden and Harris.

Biden previously said he was “outraged” watching the video of the police violence that led to Nichols’ death.

The 29-year-old father liked skateboarding and photographing sunsets. He died three days after the brutal police beating on Jan. 7.

While lawmakers including Sen. Cory Booker (D-N.J.) called for reform in the wake of the attack, Republicans including Rep. Jim Jordan (R-Ohio) have actively resisted doing the same.

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Black caucus press Biden to use the bully pulpit to push for police reform

When Rep. Steven Horsford heads to the White House to meet with President Joe Biden this week, he will bring a message directly from the family of Tyre Nichols: Act now.

“They want action,” the Nevada Democrat and Congressional Black Caucus chair said of his conversation with Nichols’ parents. “The action is legislative action; that's here in Congress and at the state and local level, they want executive actions that still can be taken by the president and his administration.”

Horsford and the CBC will sit down Thursday with Biden and Vice President Kamala Harris. But it’s unclear how they will produce the action that Nichols’ family wants following last week’s release of the video that captured the beating death of Tyre Nichols at the hands of Memphis, Tenn., police officers.

The White House and the Black community find themselves at another tragic and all-too-familiar inflection point: eager to respond to another police killing of a Black man that has captured the nation’s attention but with limited capacity to do so. Horsford and the Black caucus plan on leading a full court press to show the country that D.C. isn’t completely toothless when it comes to this issue — that this time should be different. But those calls come in the shadow of a lack of movement on police reform. And even reform’s biggest boosters aren’t bullish on that shadow lifting.

“I'm not optimistic. I'm not confident that we are going to be able to get real police reform,” said Rep. Maxine Waters (D-Calif.), who will attend the White House meeting. “I approach working on this issue as a responsibility that I have to do, that we must try.”

Faced with the likelihood of legislative inertia, lawmakers and advocates have looked for solutions — even incremental ones — elsewhere.

In a CBC meeting Tuesday night, lawmakers zeroed in on their first and biggest request of Biden: a commitment to talk about policing in his State of the Union next week. They also discussed using the George Floyd Justice in Policing Act as a starting framework for legislation to present to Biden — knowing that lawmakers would need to scale back the bill to open up the possibility of passage.

On Tuesday, Horsford met with Susan Rice, the director of the Domestic Policy Council, to preview requests the CBC will present to the president — including executive actions for changes to criminal justice laws. He said Rice appeared “open to hearing further recommendations for areas that may be things that the executive branch can do.”

More broadly, lawmakers, civil rights leaders and criminal justice reform advocates are pushing for Biden to use the bully pulpit to gather support to pass legislation, however it is shaped.

“The president has unique powers in the office of the presidency. He's committed to this issue,” Horsford said. “He can use his position to help, just like he did by getting the [Bipartisan] Safer Communities Law across the finish line. Just like he did with getting the infrastructure law across the finish line, just like he did getting the CHIPS and Science law across the finish line.”

On both sides of Pennsylvania Avenue, the death of Nichols has led to a sense of political agony and déjà vu. Lawmakers recognize they’ve been in this place before, as do White House officials. But there is also the feeling that little is left to do but run the same playbooks.

The last round of negotiations failed in September 2021 after a flurry of finger pointing and general disagreement over the issue of qualified immunity, the legal doctrine that protects police officers from lawsuits. Advocates say that this time around, they hope that a more consistent message from Biden — not just calling for one piece of legislation and stepping away to let members of Congress hash it out — can move the bill along. But those calling for action are also clear-eyed that Republicans now control the House of Representatives and that nine GOP votes are needed to overcome a filibuster in the Senate.

The White House has taken steps to show it’s invested in the issue. After the George Floyd Justice in Policing Act failed to get a Senate vote in 2021, Biden eventually signed an executive order that created a national database of police misconduct, mandated body-worn camera policies and banned chokeholds from federal law enforcement agencies.

After Nichols’ death, the administration has taken additional steps to show that it is eager for action and attuned to the anguish felt by the Black community. When the video of Nichols’ death was released, both Biden and Harris reached out to his family to send their condolences. While speaking with Nichols’ mother and stepfather, Harris was invited to attend Wednesday’s funeral in Tennessee and accepted.

The White House has again called for Congress to pass the police reform bill but Biden has also consistently alluded to a lack of executive power left in his toolbox. “I can only do so much,” the president told reporters Friday.

“The president will continue to do everything in his power to fight for police reform in Congress,” a White House official said, “but it is Republicans in Congress who need to come together with their Democratic colleagues to ensure our justice system lives up to its name.”

Whether that will be enough for those looking to the White House for action is doubtful. Advocates praise the White House for doing what it can, often calling attention to the work of the Justice Department to be more aggressive in addressing policing and shootings involving officers. But how the next few days and weeks go will give the country an early indication of the ways in which the president plans to operate during major national crises without the power of both chambers of Congress.

Next week’s State of the Union address will provide Biden with his biggest audience. Members of the Nichols family will be attending the speech as guests of Horsford. Their presence, one Hill aide said, “means the president will all but have to speak to the issue.”

“Good politicians are able to adapt to the weather, the political weather. So if it's raining, you go out with an umbrella,” said Maurice Mithchell, the national director of the Working Families Party. “We're counting on his ability to address this in the shadow of this horrific murder that the political climate has shifted. And so that requires a different type of politics, not the politics of two weeks ago or the politics of a year ago.” 

But activists are also going to be looking at how the White House operates outside the bright lights of next week’s State of the Union.

Marc Morial, the National Urban League president who has met with Biden multiple times over the administration, said the president has “expressed to us in some meetings before [that he] could get out there and talk about this every day, but then sometimes that undermines the ability to get it done.”

But Morial, who has commended the administration for its executive orders and work using the Justice Department to address policing, added that on issues like criminal justice reform, the administration needs to be “showing efforts.”

“People will read that if you don't talk about it, you don't care. Because the way people define the presidency is by the bully pulpit,” Morial said. “They're not in the meetings with members of Congress. They're not in the telephone conversations. They don't see the staff work all the time. And that's the tension that the White House has got to figure that out.”

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Fed hikes rates again even as inflation cools

The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, bringing policymakers another step closer to an expected pause in their inflation fight sometime this year.

For now, the central bank’s rate-setting committee signaled that borrowing costs will increase further, saying rate hikes will be "ongoing." But Wednesday’s move is the smallest hike since last March, a reflection of the fact that price spikes have been cooling for months.

"Inflation has eased somewhat but remains elevated," the committee said in a statement following two days of meetings. The Fed's main borrowing rate now sits between 4.5 percent and 4.75 percent.

Unemployment is still at modern lows, even after aggressive rate hikes for the past year by the Fed, feeding hopes that the U.S. may be able to avoid a recession — a crucial goal for President Joe Biden before the 2024 election. But that will hinge on how much more the central bank increases rates and how long it holds them at punishingly high levels.

Fed officials have signaled that they expect to raise rates to about 5 percent before stopping, but that will depend on whether inflation continues its downward trend. They're also closely monitoring worker pay, which grew about 5 percent in 2022. Chair Jerome Powell has said inflation probably won't be able to return to the Fed's 2 percent target without a deceleration in wage growth.

The economy grew at a 2.9 percent annualized pace in the last three quarters of the year, suggesting the U.S. is still far from dipping into a recession. But growth could slow further as the Fed's rate moves feed through to economic activity.

A closely watched survey from the Institute of Supply Management on Wednesday showed the manufacturing sector is contracting, and the housing market has been hammered for months by high mortgage rates, though the job market has remained resilient.

"The Committee is strongly committed to returning inflation to its 2 percent objective," the Fed said in its statement.

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Biden and McCarthy meet as White House aides envision a debt ceiling off-ramp

When President Joe Biden meets with House Speaker Kevin McCarthy on Wednesday to discuss the lifting of the nation's debt ceiling, it will kick off what’s likely to be a drawn-out fight over the nation’s fiscal path — one that could lead to an economic catastrophe.

The White House has insisted that it will not negotiate over the debt ceiling, warning that an extended stalemate could spark a financial crisis and push the U.S. to the brink of default. Republicans, meanwhile, view the debt ceiling as an opportunity to extract concessions from an administration dealing with a divided Congress for the first time in Biden’s presidency.

McCarthy signaled in the lead-up to the White House meeting that he would seek steep spending cuts.Yet it remains unclear what programs he proposes targeting, and the White House has shown little willingness to enter formal negotiations until he does so.

Instead, Biden officials have privately discussed the potential for a compromise that heads off a debt ceiling crisis while separately granting McCarthy small concessions that would allow him to save face with his party — such as creating a commission to study and propose future spending reforms.

But the White House is unwilling to touch entitlement spending or gut programs central to Biden's agenda. And while McCarthy has tamped down early talk of cuts to Medicare and Social Security, he is still likely to pursue major funding reductions across much of the government.

That means that any agreement the White House might consider supporting at this early stage, officials have concluded, is unlikely to appeal to the GOP.

“Every indication is that absent radical budget cuts and slashing some of the programs that Biden championed, the right wing of the House Republican caucus is not going to go along,” said one Biden economic adviser. “McCarthy has not yet demonstrated that he can get the maximalists in his party to agree to anything other than the maximal position."

Key to the discussions, the White House believes, is establishing some sort of baseline about what type of bill McCarthy could actually get through the House. The GOP has yet to consolidate behind a set of demands, and the White House is reluctant to lend McCarthy any preemptive help as he tries to wrangle his fractious caucus.

Biden officials have gleefully seized on signs of discord among House Republicans, highlighting GOP lawmakers' own frustration with the party's lack of a concrete plan.

The White House also views this initial meeting as the first of many over the next several months; an opportunity for both sides to size each other up and establish a starting point for talks that could drag well into the spring and summer.

Though Biden and McCarthy talked occasionally during the Obama era, the two men are not close. The early sitdown, some aides suggested, is part of an effort by Biden to build a relationship with a House speaker he'll need to work with on an array of priorities over the next two years.

"What you're not going to see is either party move their position," the Biden adviser said. "This is the meeting where folks scope things out and get a sense of where everybody is."

Senior White House officials sought to reinforce their position ahead of time, writing in a memo Tuesday that Biden would press McCarthy to commit to avoiding a debt default and to releasing a budget showing where the GOP wants to rein in funding.

“Any serious conversation about economic and fiscal policy needs to start with a clear understanding of the participants’ goals and proposals,” top economic adviser Brian Deese and Office of Management and Budget Director Shalanda Young wrote.

The White House plans to release its budget proposal on March 9, offering what officials hope will provide a clear contrast with Republicans’ demands and sharpen the public debate over lifting the debt ceiling.

The government hit its borrowing limit in January and estimates it may only be able to pay its bills into June without an increase. The U.S. has never intentionally defaulted, and Congress in recent years routinely voted to increase its borrowing limit under both the Trump and Biden administrations. Pointing to that track record, Democrats have insisted on passing a clean increase yet again, arguing the need to avoid economic catastrophe is too great to haggle over the debt ceiling.

The last time the U.S. came close to default, in 2011, the standoff rattled global financial markets and prompted a downgrade of the country’s credit rating. Should the government breach the debt ceiling this time, economists predict it would trigger an immediate recession and tank the stock market.

Still, House Republicans have relished a fight over the debt ceiling, fueled by a conservative faction that blocked McCarthy’s path to the speakership until he made a series of commitments that included using the debt ceiling to force spending cuts.

That stance has unnerved Democrats, who question McCarthy’s ability to negotiate on behalf of a GOP majority that includes lawmakers who have already indicated they won’t agree to raise the debt limit no matter what deal the two sides strike.

“I have a pretty strong suspicion that once the American people see what the Republican MAGA fringe is up to here, and what their hostage-taking demands are, there will be a sudden collapse [in support],” said Sen. Sheldon Whitehouse (D-R.I.), who chairs the chamber’s budget committee.

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