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What is going on in House Republican leadership?

Partisan rift on display with Werfel at W&M today

Jeffries plots House comeback through New York

The hunt for the GOP’s crypto-money laundering plan

THE TOP

What is going on in House Republican leadership?

Happy Thursday morning.

Just this week, Speaker Mike Johnson has:

→	Seen Democrats win a special election in New York, narrowing the already minuscule GOP majority to two votes.

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Lost a sixth rule vote on the House floor — a measure that would’ve allowed an increase in the state-and-local tax (SALT) deduction — when 18 Republicans bucked their own leadership and voted no. This Republican majority has lost more rule votes than any other majority in five decades, a stunning sign of weakness.

→	Abruptly pulled a bill to overhaul FISA due to Republican infighting. The GOP leadership said the House would vote on the bill before locking down the votes, despite some senior Republicans raising internal objections. This is the second time Johnson had to pull a FISA bill this Congress.

→	Seen another committee chair announce his resignation. Rep. Mark Green (R-Tenn.), chair of the Homeland Security Committee, is leaving Congress after only six years. The 59-year-old Green — the fourth committee chair to retire — just led the impeachment of DHS Secretary Alejandro Mayorkas.

→	Decided against putting a bill on the floor to provide billions of dollars in new aid to Israel without offsets. Just a week ago, Johnson allowed a vote on Israel aid that he knew was going to fail.

→	Provided absolutely no insight to rank-and-file lawmakers on how he’ll handle the Senate’s bipartisan $95 billion foreign aid package. Johnson said the bill isn’t a priority because the federal government is scheduled to shut down in a few weeks.

→	Witnessed the House Intelligence Committee chair issue a dire public warning about a “serious national security threat” to the country, only to have Senate Intelligence Committee leaders and the White House downplay the issue.

This is the most chaotic, inefficient and ineffective majority we’ve seen in decades covering Congress. It started this way under former Speaker Kevin McCarthy and has gotten worse under Johnson.

And things aren’t going to get easier. The House is leaving town today by 2:30 p.m. for the 13-day Presidents Day recess. When members return on Feb. 28, there will be only three days to fund a huge swath of the federal government or face a partial shutdown. There’s another full shutdown deadline a week later.

Fair or not, there’s a tremendous amount of criticism focused on Johnson right now. The 52-year-old Louisiana Republican — speaker for just 113 days — is a very pleasant man. But he and his top aides, most of whom are new to the leadership, have still failed to get a feel for governing successfully. And hanging over this is the possibility of another motion to vacate if Johnson alienates hardline conservatives.

“Watching Speaker Johnson, who I have great respect for, grow up has been really fascinating. I just hope he has the time to finish growing up,” said Rep. Frank Lucas (R-Okla.), a 30-year veteran of the House.

Johnson truly keeps his own counsel. His leadership colleagues often begin the week having no idea what the speaker is thinking or what he hopes to achieve. The speaker was also particularly hamstrung by having House Majority Leader Steve Scalise out for the last six weeks. Scalise has deep relationships across the conference and a true sense for fault lines within the GOP. Johnson has at times ignored the guidance of House Majority Whip Tom Emmer as well.

“There’s always this internal struggle [for Johnson] being a movement conservative and then having to be pragmatic. So that’s playing out a lot,” said a top Republican of Johnson. “It feels like chaos. Rudderless.”

Some of the power centers in the House Republican Conference seem more eager to buck Johnson than help him. House Judiciary Committee Chair Jim Jordan (R-Ohio), for example, has been yanked around on the rewrite of FISA, a top priority for the outspoken conservative. Many factions in Johnson’s conference feel the same way on other issues.

Unlike speakers before him, this House Republican Conference was built without Johnson’s input or effort. McCarthy was the lead architect for this majority, having traveled incessantly for hundreds of candidates across the country. Former Speaker Paul Ryan led two committees, helping build relationships with dozens of lawmakers as he wrote budgets and passed bills. Former Speaker John Boehner had two stints in leadership, led a committee and traveled all year for the GOP.

Johnson has done none of that. He’s a backbencher plucked from obscurity to be the third-highest-ranking official in the American government.

The FISA episode is nearly a perfect encapsulation of Johnson’s curious decision-making. Johnson blew past warnings from his own leadership and Democrats, who said it was a mistake to even float a possible vote this week. Yet the House Rules Committee met and floor action was tentatively scheduled for Thursday.

By Wednesday afternoon, with Rules in a recess, Johnson pulled the plug and the leadership announced that they were cutting the week short.

There’s a charitable explanation here. Johnson does have the smallest Republican majority in contemporary times. Here’s Scalise on what Johnson has to contend with:

— Jake Sherman and John Bresnahan

Two weeks out! Sens. Mark Warner (D-Va.) and Todd Young (R-Ind.) will join Punchbowl News founder Anna Palmer and senior congressional reporter Andrew Desiderio on Thursday, Feb. 29, at 9:30 a.m. ET for an interview on news of the day and AI policy. RSVP!

Partisan rift on display with Werfel at W&M today

There are two very different stories you can expect lawmakers to spin this morning about an agency that can’t seem to get itself out of the hot seat: The IRS.

Commissioner Danny Werfel is testifying at the House Ways and Means Committee today after Republicans sought an early visit to press him on a tax reporting decision. But they’ll go broader too, since this is their annual shot at talking all things IRS with the agency’s top official.

If you ask Republicans, the IRS is failing taxpayers on multiple fronts. If you’re on the Democratic side of the dais, the agency is riding high on a multi-billion dollar influx of funding and doing its job better than ever.

This fall’s election results could chart the agency’s future, with a nearly $80 billion chunk of funding for the IRS — which Democrats passed and Republicans are already chipping away at — in the balance.

GOP focus: Republicans are likely to press Werfel on a few fronts:

→	That nearly $80 billion in IRS funding will be a GOP target, particularly how much of it is for enforcement compared to taxpayer services. A small chunk of the money is for testing an IRS-run online free tax filing system too, and Republicans don’t like that venture either.

→	Republicans are expected to raise some familiar oversight issues. For one, after the sentencing of a former IRS contractor for disclosing private taxpayer information, IRS leaks are almost certain to be discussed.

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The 1099-K issue could also ignite some fireworks. Republicans oppose Democrats’ 2021 change that lowered the tax reporting threshold for online sales and gig work. They’ve objected to the IRS decision to delay the new requirements, arguing it’s an attempt to dodge the implications of Democrats’ new law.

Democratic focus: We expect Democrats to argue every dollar for the IRS has been a good investment — in offering better taxpayer services, heightened enforcement against tax evasion by the wealthy and bringing in more revenue for the government.

Here’s Ways and Means’ top Democrat, Richie Neal (D-Mass.):

Werfel has touted the extra funding for IRS services, tech and enforcement. Werfel isn’t a very controversial figure on the Hill, but today he’ll be appearing as the face of an agency that takes a lot of knocks.

— Laura Weiss

LEADER LOOK

Jeffries plots House comeback through New York

No one was a bigger winner in New York’s special election this week than House Minority Leader Hakeem Jeffries.

On the surface, Jeffries appeared to play a minimal role in former Rep. Tom Suozzi’s (D-N.Y.) easy win over GOP candidate Mazi Pilip. In reality, Jeffries was far more involved in the 3rd District special than previously reported.

Jeffries was wary of publicly participating in the campaign due to the Suozzi team’s desire to avoid nationalizing the race. When Jeffries did visit the district to rally with Suozzi at the start of early voting, the event wasn’t noticed to the press.

But Democrats told us Jeffries played a lead role in bringing together key stakeholders to turn out the base for Suozzi in an unusual February election.

DCCC Chair Suzan DelBene credited Jeffries with coordinating the New York delegation to serve as surrogates for Suozzi, singling out the roles of Democratic Reps. Grace Meng and Gregory Meeks.

“Leader Jeffries was very involved in terms of making sure that we had the ground game and folks working together so that we could really get out the vote,” DelBene said.

Jeffries himself was responsible for raising $1 million for the NY-3 effort. The House minority leader held fundraisers in D.C., New York and Florida and shifted money to the New York State party to assist Suozzi.

And Democrats flagged the essential role of the top House Democratic super PAC launching a $45 million New York fund last year. As evidenced by the massive Democratic spending advantage in the Suozzi campaign, it’s clear the minority party won’t be skimping on investing in these seats.

Let’s zoom out for a minute: This win is as important symbolically as it is practically. Yes, it further narrows Republicans’ already razor-thin majority this Congress to just two votes.

But more importantly, this victory really helps Jeffries long term. He needed to prove Democrats could win on Long Island, beating back the Republican inroads that are threatening his chance at the speakership. Jeffries also needed to prove Democrats could win on tricky issues like the border and the economy. And, most of all, Jeffries needed to show they could win with him at the helm.

Jeffries largely avoided blame for any role New York Democrats’ overreach had in the redistricting disaster last Congress. But history likely wouldn’t be so kind if Democrats whiff in New York again, with Jeffries firmly established atop the Democratic Caucus.

Jeffries is already working to head off another Election Day disaster, playing a more heavy-handed role in Democrats’ redistricting strategy, leading litigation on the issue and installing longtime allies in key positions.

Of course, Jeffries could end up speaker if Democrats emerge victorious in the New York blue districts where Republicans triumphed in 2022. Democrats are eager to right the ship and avoid another embarrassing setback in the Empire State.

Along with Democratic Gov. Kathy Hochul and Sen. Kirsten Gillibrand (D-N.Y.), Jeffries is building up the ground operation in New York to flip the House blue. It’s a critical effort given how decimated the state party was during the former Gov. Andrew Cuomo era.

“From Governor Kathy Hochul, Nassau County Chairman Jay Jacobs, Queens County Chairman Greg Meeks, Rep. Grace Meng and the entire Congressional delegation, to the hardworking men and women of organized labor, we built an unstoppable coordinated campaign,” Jeffries told us in a statement, embossing the team effort.

All eyes will be on New York’s independent redistricting commission, which will later today vote on a proposed new map for House districts.

Also: Jeffries will be co-leading the House delegation to the Munich Security Conference this weekend, alongside House Intelligence Committee Chair Mike Turner (R-Ohio). This will be one of Jeffries’ first major forays into foreign policy.

— Max Cohen, Heather Caygle and Andrew Desiderio

CRYPTO CORNER

The hunt for the GOP’s crypto-money laundering plan

A House Financial Services subcommittee has a hearing scheduled this afternoon to talk about crypto and crime.

We’re not quite sure what to expect, and neither were the lawmakers we asked on Wednesday. But we think you should pay close attention to this hearing, which will be stocked with witnesses representing Coinbase, Circle, TRM Labs and more.

House Republicans led by Chair Patrick McHenry (R-N.C.) have made crypto policy a focus of this Congress, cranking out bills that would reshape the legal and regulatory environment for digital assets.

But the question of what the House GOP actually wants to do to address gaps in the federal government’s authority to police crypto’s role in organized crime and terrorism remains open. McHenry signaled in late 2023 that this was something he wanted to tackle this year, yet specifics have been elusive.

So how Republicans on the House Financial Services Subcommittee on Digital Assets begin to publicly address this today will set up a lot of conversations later this year. If Congress is going to send any meaningful crypto legislation to the president’s desk soon, we expect crypto anti-money laundering reform to be a key ingredient.

It won’t be easy. “I cannot speak to what Republicans believe, but I’m aware of no consensus in Congress as to how to best address AML, [combatting the finance of terrorism] questions in the context of crypto,” Rep. Ritchie Torres (D-N.Y.) said.

We’ve been asking a lot of folks in Washington what a Republican approach to crypto AML reform might look like in recent weeks. For now, a deep shrug remains the consensus.

“I don’t know that I can answer that question,” Rep. Frank Lucas (R-Okla.) told us. “I expect the hearing to take on a life of its own. There’s a diversity of opinion in the committee.”

We also asked Rep. Stephen Lynch (D-Mass.) this question. Lynch is the top Democrat on the crypto-focused subcommittee, and he told us that Republicans have ground to make up in this area.

“I would need them to have cooperation with law enforcement, right?” Lynch said. “Bring them in. Bring the regulators in, as opposed to trying to kill the regulators, defund them.”

— Brendan Pedersen

…AND THERE’S MORE

Neguse’s pitch: Here’s a first look at DPCC Chair Joe Neguse’s (D-Colo.) letter to colleagues making the pitch to be the next assistant Democratic leader. We scooped on Wednesday that Neguse was running to replace Rep. Jim Clyburn (D-S.C.) in the position.

“As a son of immigrants, the first Black Congressperson elected by the State of Colorado, and as someone who represents a large rural and suburban district, with agricultural communities extending all the way to the Wyoming border, I’ve long worked hard to effectively communicate to a broad constituency,” Neguse writes in the letter.

Calvert hits Rollins: Rep. Ken Calvert (R-Calif.) is going negative against his Democratic challenger Will Rollins in a new crime-focused ad. The spot labels Rollins “the worst kind” of prosecutor, accuses Rollins of reducing sentences for criminals and links the Democrat to the “defund the police” movement.

The Calvert-Rollins race is flagged by both parties as a key bellwether in 2024 and will be a bitter, expensive matchup.

— Max Cohen

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