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January 5, 2024
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PRESENTED BY
THE TOP
Happy Friday morning.
We have two pieces of big news this morning on behind-the-scenes machinations related to border security talks and government funding.
Johnson floats opening negotiations with Biden. Speaker Mike Johnson told House Republican freshmen on a private conference call Thursday that he may try to negotiate directly with the White House on changes to border security and immigration policy, according to multiple sources familiar with the call.
The view inside Johnson’s operation is that any Senate-negotiated deal is unlikely to pass the GOP-controlled House, so it may be time for the Louisiana Republican to try to open a channel for talks with the Biden administration.
Let’s be clear: The details here aren’t fleshed out in any way. Johnson has been publicly saying that Democrats and the White House should accept H.R. 2, the House GOP’s hardline border security and immigration bill. President Joe Biden and Democrats have rejected this proposal. Johnson has also urged Biden to take executive actions to try to stem the influx of migrants.
At this point, it’s uncertain if Johnson would want to negotiate border policy changes as part of a government-funding bill or a national-security supplemental package, as Senate negotiators have been trying for weeks.
But Johnson, who just spent two days at the U.S.-Mexico border, seems to want to get in the game here.
To get a sense of the gap between the White House and Johnson’s operation in the border-security debate, read this memo, which Raj Shah, Johnson’s deputy chief of staff for communications, will send around today.
On spending: Johnson separately is seeking billions of dollars in additional spending cuts — especially in Covid relief funding — before making any deal with Senate Majority Leader Chuck Schumer and Democrats on FY2024 funding levels.
Schumer is looking to make this happen while trying to stave off GOP efforts to slash domestic programs. Schumer wants to make sure the non-defense discretionary spending topline figure doesn’t go below $772 billion, which is the Fiscal Responsibility Act-mandated level plus the “side deal” hammered out by Biden and former Speaker Kevin McCarthy.
The goal is for Democrats to be able to tout the fact that domestic spending isn’t being cut below FRA levels. For his part, Johnson needs to sell any deal to hardline conservatives by pointing to spending cuts beyond what McCarthy signed off on last spring.
Johnson is pressing to speed up IRS spending cuts, as well as pushing for roughly $6 billion in rescissions of already appropriated Covid funding. There’s possibly a couple billion more in spending cuts needed on top of that, sources familiar with the situation said. Democrats seem amenable to accelerating IRS cuts scheduled to kick in several years from now, believing that the additional money the agency is getting right now is enough to go after tax cheats.
Yet some House GOP conservatives want Johnson to renege on McCarthy’s side deal, potentially jeopardizing tens of billions of dollars in non-defense funding. These House Republicans believe the “side deal” between McCarthy and Biden is just that — and McCarthy isn’t here anymore.
Johnson, Schumer and their aides have been negotiating privately for weeks now and could clinch an agreement soon, we’re told. Of course, both Johnson and Schumer will need a healthy number of lawmakers from the minority party in their respective chambers to get this done. Nobody has all of the leverage here.
There’s a bipartisan desire to avert what would amount to steep spending cuts to both defense and non-defense programs if Congress resorts to a continuing resolution to fund federal agencies through the rest of FY2024. Depending on the length of any CR, different levels of spending cuts are mandated by the FRA unless Congress waives it.
Remember: Before agreeing to quickly pass the FRA last spring, Senate appropriators and defense hawks like Sen. Susan Collins (R-Maine) sought written assurances from Schumer and Minority Leader Mitch McConnell that the Senate would work to avoid these types of cuts. That meant finishing FY2024 appropriations in time to avoid using a CR, as well as passing a defense-focused supplemental package to make up for what they saw as a Pentagon-funding shortfall.
The question many senators are wondering is whether the latter will be somehow paired with the first of two funding deadlines over the next month — Jan. 19 and Feb. 2.
Schumer was noncommittal when asked about that possibility this week but cited “good progress” on funding.
“We’ve got to get agreements on each of these,” Schumer said, referring to government funding and the supplemental. “We’ll see how the two of them fit together, if they fit together at all.”
A new Congressional Budget Office analysis released Wednesday said a year-long CR would lead to tens of billions in spending cuts — especially on the non-defense side — depending on when it’s passed. How much would be cut eventually would be up to the Office of Management and Budget under that scenario.
But the CBO, like everyone else, is guessing right now because the situation is both fluid and complex.
“Significant uncertainty surrounds the effects of the limits on discretionary funding contained in section 102 and section 101 of the FRA. Ultimately, funding will depend on the actions of lawmakers and on OMB’s decisions about sequestration,” CBO Director Phillip Swagel told House Budget Committee Chair Jodey Arrington (R-Texas) and Rep. Brendan Boyle (D-Pa.), the ranking member.
— Andrew Desiderio, John Bresnahan and Jake Sherman
Top tax writers near bipartisan deal benefiting families, businesses
Congress’ top tax writers are circling a long-anticipated deal to expand the child tax credit and revive some expired tax benefits for businesses.
Bipartisan negotiations spearheaded by House Ways and Means Committee Chair Jason Smith (R-Mo.) and Senate Finance Committee Chair Ron Wyden (D-Ore.) have been active in recent days. Sources close to the committees are increasingly optimistic the pair could produce an agreement as early as next week, though there’s still work to be done.
Any bipartisan tax deal would be a huge development. And lead negotiators are eyeing a very ambitious deadline. They could try to attach a tax compromise to whatever government funding deal leaders cobble together later this month, just in time for the 2023 filing season.
We still think a tax agreement clearing Congress anytime soon is unlikely. But the shape of a bipartisan deal on issues like the child tax credit would lay significant groundwork for 2025, when a large swath of former President Donald Trump’s 2017 tax law is set to expire.
Here’s what to expect: The package would likely expand the child tax credit along with business benefits that recently lapsed for research and development spending, purchases of assets that lose value over time and interest expenses.
Whatever tax writers do is expected to sunset after 2025 to align with the upcoming expiration of the GOP’s tax cuts.
A key factor — and one lawmakers are still finalizing — is the cost. Negotiators from both sides are well aware that Republicans, particularly in the House, won’t go for anything with a huge price tag. Tax writers are looking at ways to bring down the total cost.
The looming tax filing season means that any retroactive deal would need to pass in the next few weeks or so in order for the IRS to implement it. And that would still be a huge challenge. Not to mention, Congress has its plate full of higher-priority fights over government funding, Ukraine aid and the U.S.-Mexico border.
More news: We’re two days away from the launch of Premium Policy: The Vault, our first policy-based membership service. Designed to take members inside the corridors of power from Washington to Wall Street, Premium Policy provides added coverage including a weekly look-ahead each Sunday, quarterly briefings, exclusive interviews with top lawmakers and more.
Don’t miss out on the inaugural edition of The Sunday Vault newsletter — join Premium Policy today to stay ahead of the curve. We’ll have much more on this issue in the coming weeks.
— Laura Weiss
… AND THERE’S MORE
Two more news nuggets:
1) The House GOP leadership still hasn’t given the Biden administration a date for the State of the Union.
2) North Carolina Democratic Rep. Don Davis is touring the U.S.-Mexico border today with Rep. Tony Gonzales (R-Texas). The pair will be in Eagle Pass, Texas, which is part of Gonzales’ expansive district. We were there with Speaker Mike Johnson this week.
Gonzales has hosted more than 200 border delegations and has only had three Democrats come — Sen. Kyrsten Sinema of Arizona, who is now an independent, Rep. Darren Soto (D-Fla.) of the Progressive Caucus and Rep. Henry Cuellar (D-Texas).
— Jake Sherman
PRESENTED BY NATIONAL ASSOCIATION OF LETTER CARRIERS
Unfair pension obligations cost the Postal Service a shocking $3 billion in 2023. Let’s stop the raid.
JAN. 6
3 years on, new footage emerges of close calls on Jan. 6
Three years after the Jan. 6 attack on the Capitol, new footage obtained by Punchbowl News shows just how close rioters came that day to encountering a group of House Democrats on the third floor of the U.S. Capitol.
One of those Democrats, Rep. Annie Kuster (N.H.), told us the tape is relevant in 2024 because “people need to understand the threat that Donald Trump poses to our democracy going forward.”
It’s the latest example of how Democrats nationwide intend to make former President Donald Trump’s conduct on Jan. 6 a key campaign issue this cycle. Later today, President Joe Biden will deliver a speech warning of Trump’s extremism in Valley Forge, Pa., on the third anniversary of the Capitol attack.
In the security video, a group of House Democrats wearing safety hoods frantically rush out of the House gallery, ushered to safety by a U.S. Capitol Police officer. Thirty seconds later, three rioters enter the same hallway.
“I’ve often wondered, ‘What the hell would have happened?’ I don’t know, rip us limb from limb?” Kuster said. “You know, what are the zip ties and the bear mace all about? They were prepared to take members of Congress either hostage, or kill us right then and there, or at least make us go to the hospital so that we couldn’t have come back to vote that night.”
Kuster’s office has had access to the video for over a year but decided to sit on it due to the jurisdiction of the Jan. 6 select committee and for security reasons. But after Speaker Mike Johnson released all of the J6 footage, Kuster thought it was time the close encounter was seen.
Republicans have largely downplayed the violence of Jan. 6, its aftermath and the possibility it could happen again. A violent mob, egged on by Trump, brutally attacked law enforcement officers at the Capitol in an attempt to stop the certification of Biden as president. Five police officers at the Capitol on Jan. 6 later died. Several rioters — including Ashli Babbitt, shot by a USCP officer — also died.
But there’s almost no discussion of the attack nowadays among congressional Republicans, other than the bizarre conspiracy theory that the assault was somehow perpetrated by the FBI or government officials. Or Republicans defending Trump, who faces federal and state charges related to Jan. 6 and alleged attempts to subvert the election.
Kuster said that running against Trump’s extremism is a winning message in her home state of New Hampshire, “on both sides of the aisle.” Kuster credited the strength of both former Gov. Nikki Haley and former Gov. Chris Christie in the early voting state over Trump on the GOP side.
“People are very focused on not allowing Donald Trump to be president of the United States ever again,” Kuster said. “They do not trust him to be acting in the best interest of our democracy.”
— Max Cohen
PUNCHBOWL NEWS FAMILY
We’re super excited to announce our newest member of the Punchbowl News team, Jasmine Karshenas.
Jasmine is joining us as our director of Business Development, focused on our NEW Premium Policy: The Vault membership. She was most recently at Bloomberg focused on subscription growth. A Nashville native, Jasmine attended the University of Maryland.
Our team is growing! Check out our available jobs here.
PRESENTED BY NATIONAL ASSOCIATION OF LETTER CARRIERS
Biden needs to fix the problem. Let’s stop the raid.
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Presented by Wells Fargo
At Wells Fargo, we cover more rural markets than many large banks, and nearly 30% of our branches are in low- or moderate-income census tracts. What we say, we do. See how.