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THE TOP
The Tax Bill Cometh – Maybe?
Happy Thursday morning.
The House passed a bipartisan tax package to expand the child tax credit and revive business tax breaks, putting up an eye-popping 357-70 tally Wednesday night. Bipartisanship — it’s not dead!
This was a major win for House Ways and Means Committee Chair Jason Smith (R-Mo.), who is the youngest tax-writing chair since the Civil War.
Democrats were also able to get a win — significant but not overwhelming — on one of their key priorities, the child tax credit.
But now watch what happens. This popular bipartisan tax bill is going to get caught up in a Senate legislative logjam over the next few weeks. Just consider what’s on the agenda already for the World’s Greatest Deliberative Body:
→ | The Senate is currently in the middle of trying to craft a national defense supplemental, including border security money and aid to Israel, Ukraine and Taiwan. This is the chamber’s top priority right now. |
→ | The federal government’s shutdown deadlines under the current continuing resolution are coming up very soon — March 1 and March 8. Each of these bills include hundreds of billions of dollars in spending, and party leaders will need plenty of time to get them across the floor. |
→ | The FAA’s authority expires March 8. The Senate Commerce Committee has yet to mark up the upper chamber’s version of the FAA reauthorization. But March 8 is a hard deadline for the FAA to be reauthorized. |
→ | Most importantly, if the House impeaches Homeland Security Secretary Alejandro Mayorkas — which could happen as soon as next week — the Senate will need to hold an impeachment trial immediately. Impeachment has the highest privilege in the Senate. |
Keep in mind: After next week, the Senate is scheduled to leave town for two weeks during the Presidents’ Day recess. In fact, the House and Senate will be in session at the same time for just three days this month, according to the current schedule.
Senate Minority Whip John Thune said that if the Senate gets on the border security-Ukraine bill by the end of next week, part of the recess may need to be scrapped. “I don’t know that you could let this thing hang out there much longer,” he said.
The Senate would likely need two weeks or so to process the tax legislation if Majority Leader Chuck Schumer tries to move it as a standalone bill.
GOP still cool to deal: It’s not just a crush of major priorities in the Senate that’s a complication here. Despite the bill clearly being on a path to a big House vote, Republican senators were no closer to getting on board Wednesday. They’ve been pushing changes to the tax bill and proposing a markup in the Senate Finance Committee, which could slow down or derail the whole effort.
The top Republican on the Finance panel, Sen. Mike Crapo of Idaho, has been in no rush to embrace it, and he’s pointed to concerns over the child tax credit expansion as the reason why.
“I look forward to working with my colleagues to vet the legislation, address concerns, and make the necessary changes to build support,” Crapo said in a statement.
Senate Republicans have picked at the child tax credit policy in the bill, the pay-for and the broader politics.
“I think passing a tax bill that makes the president look good, may allow checks before the election — means that [Joe Biden] could be reelected and then we won’t extend the 2017 tax bill,” Sen. Chuck Grassley (R-Iowa) told reporters. Those are the 2017 Trump tax cuts.
The White House has backed the package and Democrats have touted the child tax credit since their temporary 2021 expansion, which was significantly bigger than what’s in this bipartisan bill.
The bet from backers of the tax package has been that Senate Republicans will bow to pressure if the House passed it, particularly in a big bipartisan vote. We certainly expect the business lobby to turn up the heat now. The House package includes business tax benefits like one for research and development spending that Republicans have pressed for.
And there could be broader legislative vehicles on the horizon that up the stakes, such as a government funding bill.
Plus, we’re still talking SALT: In the House, the bill sailed through with one major snag — a group of New York Republicans who wanted to wedge more state and local tax deductions into the bill. That would’ve almost certainly doomed its chances. It was mainly a member-management issue for the House GOP leadership, who looked to buy off the New York Republicans for as cheap a price as possible.
That effort is ongoing this morning, with the House Rules Committee set to meet at 8 a.m. on a bill from a broader group of blue-state Republicans that would allow married couples filing taxes jointly to take double the SALT deductions — up to $20,000 — for 2023, as long as their adjusted gross income is under $500,000.
This bill might not get through Rules. If it does, the rule will likely die on the floor. That will be a massive embarrassment for the New York Republicans.
— Laura Weiss, Jake Sherman and Andrew Desiderio
February Events: Join Punchbowl News founder Anna Palmer and senior congressional reporter Andrew Desiderio later this month for a bipartisan conversation with Sens. Mark Warner (D-Va.) and Todd Young (R-Ind.). On Thursday, Feb. 29, at 9:30 a.m. ET, the senators will discuss the news of the day and AI policy. RSVP now!
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THE SENATE
3 big questions about the Senate’s border security package
Senate Republicans on Wednesday once again debated the merits of moving forward with a bipartisan border-security package that would unlock billions of dollars in new aid for Ukraine, Israel and Taiwan.
Senate GOP leaders delivered a sobering warning to their members: The chances of securing support from at least half of the Republican Conference — leadership’s stated goal — are getting worse. Senate Minority Whip John Thune explicitly and repeatedly told Republicans that things are heading in the wrong direction, GOP senators said.
As we await the release of legislative text, we wanted to explore the three biggest questions that will determine the path forward.
Will Republicans back away? There’s no question that the tide is turning against the border security-Ukraine deal. With each passing day, Speaker Mike Johnson and former President Donald Trump are fueling opposition to the yet-to-be-released border security agreement negotiated out between Sens. Chris Murphy (D-Conn.), James Lankford (R-Okla.) and Kyrsten Sinema (I-Ariz.).
Thune acknowledged Wednesday that the House’s hostility to the package is the “complicating factor” that many Republicans will take into consideration when they decide whether to vote for the supplemental.
Meanwhile, Senate Republican leaders are desperate for the legislative text to be published in order to combat what they say is “misinformation” and “propaganda” being spread by Johnson and Trump about what’s actually in the bill.
“Everybody’s saying, ‘prove me wrong on this. Here’s an internet rumor, prove that this is wrong.’ The only way to do that is to get the text out,” said an exasperated Lankford, the lead GOP negotiator. Lankford added: “People can decide if they’re going to believe a lie or if they’re going to believe the truth.”
Interestingly, Sen. Josh Hawley (R-Mo.), who opposes Ukraine funding and has expressed skepticism about the border deal, said the breakdown of Republicans for and against the effort is “more even than I would have thought.”
Will Schumer put it on the floor anyway? Senate Majority Leader Chuck Schumer has said the national-security supplemental is too important to back away from, so it’s entirely possible that he puts the full package on the floor for a vote regardless of whether enough Republicans will back it.
Schumer has a political incentive to do so. He and President Joe Biden can use a failed vote to argue that Republicans blocked the very thing they said they wanted — enhanced border security measures — in an effort to help Trump in the presidential race.
“I didn’t want to enter these negotiations because I was very pessimistic about success. But we got a compromise,” Murphy said. “Why would we walk away from it after achieving that compromise?”
And Schumer’s most vulnerable members — think Sens. Jon Tester (D-Mont.) and Sherrod Brown (D-Ohio) — will be able to say they voted for the strictest border policy changes in a generation.
There are very few people who would doubt that this kind of message helps these Democrats in their campaigns. And Republicans who support the underlying effort suggested it would be hypocritical for them to back away now.
“Forty-nine Republicans made this a priority — that is, the negotiation of border security into a supplemental — before Republicans could get behind it,” Sen. Todd Young (R-Ind.) told us. “Political calculations for the 2024 election associated with this bill are not what people sent us to come here to do.”
What’s the backup plan? Well, there isn’t one.
Here’s the problem: The same Republicans who’ve been railing against the border package ahead of the release of legislative text are those who have sought to thwart any chance of passing additional aid for Ukraine. That’s been true from the start.
Senate Minority Leader Mitch McConnell vaguely referenced the idea of splitting off the foreign-aid package during his weekly press conference while also making clear that he’s still hoping for the border component to be included. McConnell’s allies say they’ll need to explore other ways to get the foreign-aid package through.
“We’re going to have to find a path for the other measures if [border security] is not a part of it,” Sen. Thom Tillis (R-N.C.) said. “Those who would oppose it and kill it are going to regret that day — people who will read about their opposition in the history books.”
— Andrew Desiderio
Weekday mornings, The Daily Punch brings you inside Capitol Hill, the White House, and Washington.
Waters isn’t rolling over on capital reform
The top Democrat on the House Financial Services Committee was in a lonely spot on Wednesday. Rep. Maxine Waters (D-Calif.) was the sole lawmaker present during a subcommittee hearing who unambiguously defended the Biden administration’s approach to capital reform.
Waters said she was “a bit irritated” by the contents of the hearing, where she was one of the last lawmakers to ask questions.
Left unsaid: Whether she was more frustrated with Republicans or Democrats.
We’ve written elsewhere about Democrats’ mixed feelings about the Basel III Endgame proposal from Federal Reserve Vice Chair for Supervision Michael Barr. The plan would overhaul the calculation of banks’ capital requirements and increase them for the largest institutions. Banks are opposed, and there are billions of dollars on the line.
In an interview, Waters told us she believes her Democratic colleagues are “sincere” in their worries about capital reform. Those concerns range from the impact capital reform might have on small business lending, mortgage lending and clean energy tax credits.
But it’s also clear the two banking crises of the last 15 years still weigh on the California Democrat. “Have you forgotten so soon?” Waters said. “What happened with Silicon Valley Bank, Signature [Bank] and First Republican — that just happened last year.”
Waters said she would be meeting with Democratic members on the House Financial Services Committee in the weeks ahead to “take each of their arguments, challenge them and pull people back.”
“I’m going to be able to pull some back,” Waters added.
Some news here: Waters also said she’s got a letter in the works that will urge the Fed to “promptly finalize these rules and reject industry-led attacks to materially weaken if not block the implementation of these safeguards,” according to a draft we obtained. The California Democrat is actively hunting for signatories on that letter now.
“I’m trying to make people understand the big banks are very powerful. They’re very powerful, and they are weighing on this big time,” Waters said. “They’re telling people, don’t sign on to Maxine Waters’ letter.”
Waters will also tell colleagues that banks’ warnings are overblown, including how capital reform might undercut their ability to do business in areas like small business lending.
“[Democrats] are sincere about raising questions about whether or not this will somehow impede the banks from doing minority lending as well as business lending. That’s an easy answer: They don’t do any now, so it is not something you have to worry about.”
— Brendan Pedersen
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WPCF DINNER
Highlights from the 78th WPCF dinner
Top congressional leaders and the Capitol Hill press corps came together Wednesday night for the 78th annual Washington Press Club Foundation dinner. The dinner is WPCF’s main fundraiser and helps fund internships and educational programs for rising journalists. Rep. Lisa McClain (R-Mich.) brought down the house. Sen. Tina Smith (D-Minn.) had to drop out sick at the last minute, but still recorded a brief video address.
Punchbowl News once again hosted the VIP reception ahead of the dinner with lawmakers, bureau chiefs, senior editors and top Washington reporters. Raising a glass with us: Ukrainian Ambassador Oksana Markarova, Senate Majority Leader Chuck Schumer and Sens. Susan Collins (R-Maine), John Fetterman (D-Pa.), John Kennedy (R-La.), Todd Young (R-Ind.) and Tom Carper (D-Del.), along with Reps. Steny Hoyer (D-Md.), Richard Hudson (R-N.C.), Jim Clyburn (D-S.C.) and McClain.
And Reps. Jamie Raskin (D-Md.), Bennie Thompson (D-Miss.), Beth Van Duyne (R-Texas), Robert Garcia (D-Calif.), Scott Peters (D-Calif.), Becca Balint (D-Vt.), Rich McCormick (R-Ga.), Debbie Dingell (D-Mich.), Dusty Johnson (R-S.D.), Gabe Amo (D-R.I.), Ro Khanna (D-Calif.), John James (R-Mich.), Jared Huffman (D-Calif.), Kelly Armstrong (R-N.D.), Mikie Sherrill (D-N.J.), Robin Kelly (D-Ill.), Maxwell Frost (D-Fla.) and Deborah Ross (D-N.C.).
The dinner highlights:
→ | Schumer hailed the bipartisan love he’s been enjoying recently with Senate Minority Leader Mitch McConnell by using a Jay-Z pun: “I got 99 problems but Mitch ain’t one.” |
→ | McClain got some laughs for noting that on the House Oversight Committee, she sits right between Reps. Marjorie Taylor Greene (R-Ga.) and Lauren Boebert (R-Colo.). And she didn’t much appreciate that MTG flashed nude pics of Hunter Biden during a recent hearing. “Marjorie, appreciate that butt by my face, but it’s all right,” McClain said. |
→ | House Minority Leader Hakeem Jeffries pulled off the best expelled former Rep. George Santos’ (R-N.Y.) joke of the night — and yes, there were tons. Jeffries said the House took the step of “removing the first gay astronaut ever to hold elected office.” |
→ | Smith made a timely crack at the poor attendance at Rep. Dean Phillips’ (D-Minn.) presidential rallies. |
— Max Cohen
THE CAMPAIGN
News: Fairshake, the Silicon Valley based super PAC, has $66 million in the bank. The PAC is mostly backed by Coinbase and Andreesen Horowitz.
Fundraising news: The campaign arm of the New Democrat Coalition — the New Dem Action Fund — raised over $5 million in 2023 for its PAC, members, candidates and the DCCC.
The New Dem Action Fund raised over $1 million for the DCCC this week during the group’s annual fundraiser.
California endorsements: The Blue Dog PAC is endorsing Adam Gray and Rudy Salas, two candidates in crucial red-to-blue seats. Gray is running against Rep. John Duarte (R-Calif.) and Salas is challenging Rep. David Valadao (R-Calif.). Last month, the PAC backed Adam Frisch in Colorado’s 3rd District and Rebecca Cooke in Wisconsin’s 3rd District.
— Max Cohen
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MOMENTS
ALL TIMES EASTERN
7 a.m.
President Joe Biden will get his daily intelligence briefing.
8 a.m.
Biden will attend the National Prayer Breakfast at the Capitol, returning to the White House at 9:45 a.m. Speaker Mike Johnson and House Minority Leader Hakeem Jeffries will be in attendance.
11 a.m.
Jeffries will hold his weekly press conference.
11:40 a.m.
Biden will depart the White House for Joint Base Andrews. From there, the president will fly to Detroit, arriving at 1:35 p.m. Press Secretary Karine Jean-Pierre and NSC spokesperson John Kirby will gaggle on Air Force One.
3:45 p.m.
Biden will participate in a political event.
7:35 p.m.
Biden will depart Detroit en route to Philadelphia.
9:05 p.m.
Biden will depart Philadelphia en route to New Castle, Del., arriving at 9:20 p.m.
CLIPS
WaPo
“USAID’s Samantha Power, genocide scholar, confronted by staff on Gaza”
– John Hudson
WSJ
“Dianne Feinstein’s Longtime Washington, D.C., Home Hits the Market”
– E.B. Solomont
AP
“Israel and Lebanon are prepping for a war neither wants, but many fear it’s becoming inevitable”
– Abby Sewell in Beirut and Melanie Lidman in Tel Aviv
Politico
“Baseball star Steve Garvey raises $600,000 in California Senate race”
– Lara Korte in Sacramento, Calif.
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Editorial photos provided by Getty Images. Political ads courtesy of AdImpact.
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