Every issue of the Punchbowl News newsletter, including our special editions, right here at your fingertips.
Join the community, and get the morning edition delivered straight to your inbox.
The ERC is a vital lifeline for job creators and workers in times of crisis. Congress revived it during the pandemic to sustain business and payroll. Over a million await IRS processing; it’s time for promised relief. Demand the IRS to do their job.
Happy Thursday morning.
News: We expect Senate Majority Leader Chuck Schumer to take the first procedural step today to tee up a stopgap funding bill to avert a partial government shutdown on Jan. 19 — and potentially a full shutdown two weeks later.
That means filing cloture on an underlying legislative vehicle that would eventually be replaced with a continuing resolution to keep federal agencies open beyond Jan. 19 or Feb. 2, the two current funding deadlines. That cloture vote would come Tuesday.
So Schumer’s move today will kick off what’s usually a weeklong process needed to overcome objections from both sides of the aisle to fund the government. And it gives the Senate enough time to act before the first deadline.
The big question here is the duration of a new CR and whether it maintains the “laddered” approach pushed by Speaker Mike Johnson. Schumer doesn’t have to decide right away. But a longer stopgap package — one that extends existing funding to late February or early March, as those in leadership are predicting — could help insulate Johnson from his far-right critics in the House by ensuring he wouldn’t need to pass yet another CR in short order.
But Johnson will need Democrats’ help to pass anything. And after cutting a topline spending deal with Schumer that conservatives hate, there could be an effort to oust Johnson. That’s a potentially nightmarish scenario for House Republicans. More on this below.
Schumer’s mission here is to preserve the Fiscal Responsibility Act’s spending levels and prevent wider chaos — even if that means throwing a lifeline, indirectly, to Johnson. During his floor speech Wednesday, Schumer defended Johnson from House conservatives whom he said are trying to “bully their own speaker.”
Guess who? He’s under unrelenting fire for a spending deal with Democrats who he now may need to survive. The House has slunk into a state of paralysis with rebellious Republicans taking down a rule and trashing the speaker. The House Freedom Caucus’ hair is on fire. Hardline conservatives are calling him a no-good squish while constantly changing positions on what they want. He goes on Fox News to explain himself but that doesn’t make much difference to a House Republican Conference that’s losing trust in his ability to lead them to victory.
Who is he? Speaker Kevin McCarthy or Mike Johnson?
Johnson, on day 78 of his speakership, finds himself in a stunningly similar position to his predecessor.
Johnson came into the speakership riding high, garnering support from every single House Republican after weeks of internecine fighting that included McCarthy’s ouster. The House GOP conference hoped that Johnson, a self-proclaimed “hardline conservative,” would have the spine to win political showdowns with President Joe Biden and the Democrats.
But some in the House GOP ranks are growing tired of Johnson just as they did McCarthy. It’s a bad sign.
We’ll defend Johnson for a moment. The Louisiana Republican is indeed inexperienced at the ways of high-level governance. Biden, Schumer, Senate Minority Leader Mitch McConnell and key White House aides were negotiating complex budget deals when Johnson was still a lawyer back in Louisiana.
So what was Johnson to do here? He got the only deal that was available to him. The speaker is beginning to realize that, just like McCarthy, he is the only bastion of Republican control in a sea of Democratic power. And Johnson’s control is tenuous — at best.
He has a two-seat majority and a conference where a dozen lawmakers are sure to be against him every single day. Johnson had no choice but to accept the Fiscal Responsibility Act even though some in his conference considered the top-line spending number to be too high. Johnson had no leverage going into talks with Schumer — and it showed.
Johnson now has a tough task in front of him. House and Senate Republicans demanded that Biden and the Democrats agree to a border security and immigration policy package in order to secure tens of billions of dollars in new funding for Ukraine, Israel, Taiwan and the Indo-Pacific region.
But HFC members are now pressing for Johnson to demand a border deal as part of any government-funding debate. This could lead to a partial or full government shutdown that Johnson knows — as does his entire leadership team — House Republicans can’t win. It would be an absolute gift to Biden.
Johnson also faces strong pushback from House Judiciary Committee Chair Jim Jordan (R-Ohio) over government funding. Jordan wants Johnson to insist on a year-long CR, which, under the FRA, would lead to big cuts in domestic programs while freezing the Pentagon budget. Defense hawks don’t like this plan, and neither do Senate Republicans, but Jordan — a co-founder of the Freedom Caucus — has enormous sway with hardliners.
With Schumer moving to set up a CR vote next week, Johnson has to decide if he wants to send his own stopgap to the Senate. Say what you want about McCarthy — and there are lots of legitimate criticisms of the California Republican — but he was able to make quick decisions. Some of these decisions were wrongheaded and flawed. Yet McCarthy generally didn’t linger long on decisions that could give him a strategic advantage.
So, in sum, Johnson either moves quickly on a CR or he gets jammed by the Senate. Which may actually prove a blessing in terms of governance, but a huge problem with his fellow House Republicans.
— Andrew Desiderio, Jake Sherman and John Bresnahan
PRESENTED BY THE NATIONAL RETAIL FEDERATION
For more than a century, NRF has advocated for the people, brands, policies and ideas that help retail succeed. Visit the NRF Action Center to learn about the policies affecting the retail industry, and how NRF is taking a stand on the issues that matter most — like fighting organized retail crime, reducing credit card swipe fees, and supporting jobs and economic growth.
A border-security and immigration deal hasn’t yet been clinched — and may never be — but Senate Republican leaders are already working to mollify skeptical conservatives.
At a closed-door Senate GOP Conference meeting Wednesday, Sen. James Lankford (Okla.), the lead Republican negotiator, sought to reassure his colleagues on the direction of the talks by insisting that Democrats hate the proposed policy changes on the table, according to several attendees.
Some of those have been agreed to in principle already, but there’s no overall deal yet because Democrats are resisting GOP efforts to restrict presidential parole authority. Democrats cite long-standing precedent allowing the president to parole groups of people for humanitarian or other purposes. Republicans have said there won’t be a deal without these changes.
“Unless all of it gets tightened down into lower numbers and parole is really addressed… that’s the pivot point,” Sen. Mike Braun (R-Ind.) said after the meeting. “We’re a ways away. And will it dovetail with what the House is interested in? To me, there’s some distance there too.”
Cross-Capitol dynamics: Senate GOP leaders remain openly concerned about House Republicans’ willingness to take up any Senate deal on border security and foreign aid.
“If we send them something and they try to amend it, I just don’t know where the votes come from,” Senate Minority Whip John Thune said. “Because there are going to be Republicans over there for whom nothing’s going to be good enough unless it’s H.R. 2.”
Senators generally believe a deal is within reach. But a number of GOP senators have complained that there wouldn’t be enough enforcement mechanisms written into the law, giving the Biden administration too much discretion in setting policy.
Lankford tried to quell those concerns by noting that a future Republican president — perhaps as soon as next year — would be empowered to take drastic steps to reduce border crossings, according to senators who attended the meeting.
Senators close to the talks have been emphasizing this in public as well.
“It’s going to be dependent in the short-term on President Biden’s willingness to abide by that and to actually enforce it,” Sen. John Cornyn (R-Texas) said. “But I do think there is some benefit longer-term to making changes in border security that then could be enforced by the next president.”
Republicans also discussed the idea of capping the number of migrants who can be paroled and released into the country while their cases await adjudication. This was already under discussion even before the Senate GOP huddle.
“For example, we cap refugees,” Thune said earlier Wednesday. “Maybe there’s a way you can put a cap on the number of people and significantly reduce the abuse of that [parole] authority.”
So far, there are few indications that the closed-door meeting did anything to reassure conservatives who are skeptical of the talks. Some said they believe Senate leaders will try to attach an eventual agreement to a must-pass bill — such as a funding measure — as a way to jam it through.
“I kind of doubt we do the supplemental as a standalone, just because I don’t think the House will take that up,” Sen. Josh Hawley (R-Mo.) said.
— Andrew Desiderio
The leaders of Congress’ tax committees are trying to close out a bipartisan deal on the child tax credit and business tax benefits. But new roadblocks are already cropping up.
The framework pitched to lawmakers as detailed in our PM edition would come with a roughly $70 billion price tag. Lawmakers would bring down the costs by ending employee retention tax credit claims early.
About $35 billion would go to the child tax credit — expanding access for lower-income families and adjusting the $2,000 maximum benefit for inflation. The other $35 billion would include retroactively bringing back a trio of bigger tax deductions for businesses — though it would cover domestic R&D spending, not foreign.
Smith-Wyden push: House Ways and Means Committee Chair Jason Smith (R-Mo.) and Senate Finance Committee Chair Ron Wyden (D-Ore.) still have some outstanding policy debates to settle. One key hangup: Senate Democrats are pushing for the low-income housing tax credit to be part of the package, according to multiple sources.
The incentive for building affordable rental housing has bipartisan support, and it’s coming up amid a serious housing shortage. But adding it would broaden the deal even further — a tough sell for House Republicans already wary about a price tag.
Smith and Wyden are still hoping to release a joint statement announcing a framework agreement as soon as today, though that timeline is in flux. The two know they need to show momentum as opposition in both parties builds behind the scenes.
Senate GOP pessimism: Idaho Sen. Mike Crapo, the top Republican on the Finance Committee, isn’t on board right now. Crapo has raised concerns about how a tax deal gets across the finish line. Even basic governing is extremely hard in this Congress.
If Senate Republicans don’t support this deal, it can’t pass. And Wyden’s Jan. 29 deadline — for filing season — is quickly approaching.
Some Republicans are also wary of expanding the child tax credit — a signature issue for the Biden administration — in an election year, according to a GOP aide.
House Democrats iffy: Ways and Means Democrats hammered Ranking Member Richard Neal (D-Mass.) in a closed-door meeting on the talks Wednesday.
Progressive House Democrats are railing against the idea of compromising on the child tax credit after they passed a bigger expansion in 2021 and questioning whether the deal really offers parity for families and businesses.
Neal could still back this deal if it was on a path to passing, we’re told, but that’s a big if.
Here’s some news: Any effort to pass the tax package would likely start in the House. But between the pressure from the right on Speaker Mike Johnson and government funding deadlines about to hit, there’s not much room to maneuver here.
And now Rep. Nick LaLota (R-N.Y.) is circulating a letter to Johnson requesting that any tax deal go through “regular order,” saying it shouldn’t be brought up under suspension, according to a draft we obtained.
Of course, this is about pushing for more deductions for state and local taxes, or SALT, a huge political issue in blue states like New York. Blue state GOP freshmen like LaLota have been vocal on SALT this Congress, and they’ve got allies on the other side of the aisle.
“When our party presents a bill considering a plethora of tax provisions, our party’s leadership should, at a minimum, simultaneously facilitate a debate on a SALT amendment,” the letter says.
— Laura Weiss and Brendan Pedersen
PRESENTED BY THE NATIONAL RETAIL FEDERATION
Retail crime is rising. Tell Congress to pass the bipartisan Combating Organized Retail Crime Act, which would increase federal coordination with state and local law enforcement.
ON THE AIR
California Democratic Rep. Katie Porter is up on television in the Bay Area with her first Senate campaign ad. The spot talks about her use of a whiteboard in congressional hearings. It also notes that Porter is “leading” the effort to ban stock trading by members of Congress. The ad implores voters to “shake up the Senate” by voting for Porter to fill the late Sen. Dianne Feinstein’s (D-Calif.) seat.
Porter is running against Reps. Adam Schiff (D-Calif.) and Barbara Lee (D-Calif.) for the seat.
— Jake Sherman
Rep. Robert Garcia (D-Calif.) is endorsing Laura Gillen’s bid to unseat Rep. Anthony D’Esposito (R-N.Y.). Garcia is the vice-chair of recruitment for the DCCC and the Democratic freshman class president for the 118th Congress.
— Max Cohen
PRESENTED BY THE NATIONAL RETAIL FEDERATION
Tell Congress to pass the Combating Organized Retail Crime Act.
ALL TIMES EASTERN
The December 2023 consumer price index data will be released by the U.S. Bureau of Labor Statistics.
President Joe Biden will get his daily intelligence briefing.
House Minority Leader Hakeem Jeffries will hold a press conference.
Press Secretary Karine Jean-Pierre, NSC Coordinator for Strategic Communications John Kirby and National Economic Adviser Lael Brainard will brief.
– Katie Rogers
– Gordon Lubold and Nancy Youssef
– Natalie Allison, Kimberly Leonard, Adam Wren and Meridith McGraw
– Betsy Woodruff Swan and Kyle Cheney
PRESENTED BY THE NATIONAL RETAIL FEDERATION
Organized retail crime (ORC), violence and theft continue to impact the retail industry at unprecedented rates. According to NRF’s 2023 National Retail Security Survey, retailers reported that all forms of theft accounted for nearly two-thirds (65%) of their shrink in 2022. Even more concerning, 67% of retailers also noted an increase in violence and aggression associated with ORC compared with the previous year. These crimes put employees and customers at risk — and also add to total shrink, costing the industry over $112 billion in 2022. Policymakers in Washington are considering the Combating Organized Retail Crime Act, which would increase federal coordination with state and local law enforcement to fight retail crime. Contact your representatives in Congress and ask them to support this bipartisan solution to fight retail crime.
Editorial photos provided by Getty Images. Political ads courtesy of AdImpact.
Crucial Capitol Hill news AM, Midday, and PM—5 times a week
Join a community of some of the most powerful people in Washington and beyond. Exclusive newsmaker events, parties, in-person and virtual briefings and more.Subscribe to Premium
The Canvass Year-End Report
And what senior aides and downtown figures believe will happen in 2023.Check it out
Every single issue of Punchbowl News published, all in one placeVisit the archive
The ERC has been an effective and critical measure for economic recovery from the pandemic. Small businesses did their job. They kept employees on payroll. They deserve funds owed to them. It’s time for the IRS to do its job.Take action. Act now.