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Paxton plots to take on Cornyn in Texas battle royale

Senate Budget Republicans to huddle with parliamentarian

The Vault: Inside the scramble to save CDFIs

BOLD PAC backs Galán-Woods

THE TOP

Paxton plots to take on Cornyn in Texas battle royale

Happy Tuesday morning.

Get ready for a blockbuster primary between Sen. John Cornyn (R-Texas) and Texas Attorney General Ken Paxton in 2026.

During a wide-ranging interview in Punchbowl News’ D.C. office on Monday, Paxton gave the clearest signs yet that he’s planning to challenge Cornyn in what could be one of the most expensive Senate primaries in history.

Cornyn, a decades-long fixture in conservative politics, who nearly became Senate GOP leader, would face a formidable opponent in Paxton, a 62-year-old MAGA loyalist who’s popular with the Texas Republican base.

“I think I can win if I have $20 million,” Paxton said, referring to his fundraising target for a possible primary challenge. “I’ve run these primaries in Texas before. I honestly don’t see how [Cornyn] overcomes his numbers.”

An official announcement won’t come until Paxton can get enough fundraising commitments. Paxton said his timeline is in “the next couple of months.”

But Paxton sounded a lot like a candidate during our interview. Paxton was easily able to rattle off what he sees as the 73-year-old Cornyn’s vulnerabilities — all to make the argument that the veteran senator is out of step with the GOP base in Texas.

“I think it’s just time,” Paxton said of a Cornyn challenge. “He’s had his chance. He hasn’t performed well, and the voters know it. You can go a long time without people paying attention. And they’re paying attention now.”

Paxton added: “If the numbers were the other way, I wouldn’t be sitting here.”

The AG’s case against Cornyn: Paxton zeroed in on Cornyn’s role in crafting legislation to tighten gun laws following the 2022 Uvalde school shooting, which left 19 students and two teachers dead. Paxton said Cornyn “sunk his ship” with this effort.

Another liability, according to Paxton, is Cornyn’s previous support for tens of billions of dollars in U.S. aid for Ukraine.

“I’m going to start calling him ‘Senator Ukraine,’ because he’s funding Ukraine more than he’s funding our border, and that’s a problem in Texas,” Paxton said.

Paxton also has experience running — and winning — in statewide elections. He won two GOP primary runoffs for attorney general with more than 60% of the vote.

Yet Paxton would face a number of headwinds challenging Cornyn.

First, Cornyn has always been an impressive fundraiser. He’s raised more than $400 million throughout his two-decade-plus Senate career.

Plus, Cornyn has the support of the NRSC and Senate Republicans broadly. NRSC Chair Tim Scott made this point recently to discourage Rep. Wesley Hunt (R-Texas) from running.

There’s also Paxton’s litany of legal troubles. In May 2023, the Texas House of Representatives voted to impeach the attorney general on corruption and bribery charges. The Texas Senate acquitted Paxton of all charges months later.

Paxton was also indicted on state securities fraud charges in 2015, but the charges were dropped nearly a decade later. Paxton agreed to perform 100 hours of community service and pay more than $270,000 in restitution.

Cornyn’s list of conservative legislative accomplishments is long. As Senate GOP whip, he was instrumental in passing the 2017 Tax Cuts and Jobs Act and shepherding President Donald Trump’s Supreme Court nominees through the chamber.

Cornyn has been hugging Trump tightly, noting that he’s voted for all of the president’s nominees in Trump’s first and second terms and has voted with Trump 92% of the time. Cornyn has also applauded Trump’s recent moves regarding the war in Ukraine.

Paxton sees this as a disingenuous effort by Cornyn to shore up his right flank as the primary approaches:

Cornyn also lacks a formal leadership role since losing the race for majority leader back in November. And while he has impressive committee assignments, including a spot on the Finance Committee, Cornyn isn’t a full committee chair, despite his seniority.

Cornyn was in Houston for an official event and a fundraiser on Monday. He wasn’t available for an interview.

The Trump factor: The wild card in this race is Trump. Paxton told us there’s a “reasonable chance” he’d get the coveted Trump endorsement. Paxton said he plans on speaking with the president about it. Senate Republicans are sure to lobby Trump aggressively against backing a primary challenger to Cornyn.

But Paxton, referencing recent favorability surveys, claimed Cornyn is so unpopular that Trump’s endorsement might not even be needed in order for him to defeat the incumbent in a primary.

“The numbers that we have are good without the endorsement,” Paxton said. “But clearly an endorsement would… put the nail in the coffin.”

“I don’t want to run against Trump’s pick, but, I mean, I think [Cornyn’s] numbers are so bad, I don’t think there’s any reviving,” Paxton added.

General election: Texas has swung further to the right in recent cycles, driven by GOP gains among Latino voters. Democrats burned cash late in the cycle last year to boost former Rep. Colin Allred’s (D-Texas) unsuccessful challenge against Sen. Ted Cruz (R-Texas).

While Allred lost by nine points, Democrats could be intrigued at the prospect of facing Paxton in a midterm year that should be favorable to the party out of power. Yet Paxton, who won statewide in 2018 during a tough year for Republicans, is projecting confidence.

“People always say I can’t win the general. I always do,” Paxton said.

We’ll have more in the Midday edition, including Paxton’s thoughts on Senate Majority Leader John Thune.

— Andrew Desiderio and Max Cohen

RSVP: Join Punchbowl News Founder and CEO Anna Palmer and Rep. Nicole Malliotakis (R-N.Y.) next week on Tuesday, March 25 at 8:30 a.m. ET. They’ll discuss the news of the day and tax policy. Reserve your spot now!

ROAD TO RECONCILIATION

Senate Budget Republicans to huddle with parliamentarian

News: Senate Budget Committee Republicans are planning to begin a series of meetings over the next few weeks with the Senate parliamentarian’s office on budget reconciliation, according to sources familiar with the plans.

The GOP’s goal is to get guidance on the “current policy baseline” in early April. That information could be critical to writing the tax portion of Republicans’ reconciliation package.

This baseline is a relatively untested scoring method that Senate Republican leaders want to use to make the Trump tax cuts permanent in their reconciliation bill.

The baseline would essentially say it costs nothing to extend the 2017 tax cuts that expire this year, rather than the more than $4.5 trillion price tag under Congress’ typical tax scoring methods.

That would help get around Senate reconciliation rules that require everything to be paid for after the first 10 years in reconciliation. Republicans don’t view the amount of budgetary offsets they’d need to cover the tax cuts after 10 years as politically viable.

But as we mentioned, this scoring method hasn’t been used in reconciliation before, which has House Republicans on edge. They want better assurances that it won’t run into problems with Senate rules down the line, so what Parliamentarian Elizabeth MacDonough has to say will be crucial.

MacDonough won’t give ironclad rulings at this stage of the reconciliation process. But the Budget Committee can get an informal sense of how she views different options.

When it comes to the baseline, there are other challenges, too. Key House Republicans have also warned that deficit hawks may not go for it if the Senate lowers the budget blueprint’s $1.5 trillion floor for spending cuts.

Senate Republicans are expected to focus heavily on reconciliation plans in the upcoming work period — a three-week stretch before the April recess for Easter and Passover.

— Samantha Handler, Laura Weiss and Andrew Desiderio

The Vault: Inside the scramble to save CDFIs

A Friday night executive order from the White House set off a bomb in community development finance. Lawmakers and advocates are racing behind the scenes to contain the damage.

Over the weekend, the Treasury Department’s Community Development Financial Institution Fund was included on a list of government agencies to be “eliminated to the maximum extent consistent with applicable law.” That inclusion came as a shock to financiers, advocates and lawmakers of both parties.

Until this week, the industry financed in part by the CDFI Fund had been a bipartisan darling of public-private partnership. CDFIs are a type of financial institution certified by Treasury to specialize in community lending and affordable housing finance. CDFIs play a particularly crucial role in rural and tribal communities.

The tiny CDFI industry took on a larger role amid the Covid-19 pandemic after policymakers realized that many business owners of color were not receiving emergency funding. “They can’t do work like this without the CDFI Fund,” said Jeannine Jacokes, CEO of the Community Development Bankers Association.

CDFIs have never faced a threat this serious. But advocates have receipts, and they’re ready to mount a counter-offensive.

“Of the 435 voting congressional districts, 92% have at least one CDFI physically located within and serving their community,” Jacokes said. “If you count the number of physical offices, 60% are in Republican-held districts,” she added.

Friends in high places: The industry has built up considerable support in Congress over the last decade, culminating in the launch of a congressional CDFI caucus chaired by Sens. Mark Warner (D-Va.) and Mike Crapo (R-Idaho) two years ago. The two senators issued a joint statement on Saturday saying they were “proud to reaffirm our bipartisan commitment to support the CDFI Fund’s mission.”

The CDFI approach is a “capitalist-driven approach” to reach underserved and rural communities, Warner said in a Monday interview.

“The idea that they’re somehow going beyond their statutory authority – I have no idea what they’re talking about,” Warner added.

News nugget here: Warner told us he spoke to Treasury Secretary Scott Bessent and received some assurances about the CDFI Fund.

“I talked with him briefly this weekend,” Warner said of Bessent. “I think – he said they would try to correct this. But the proof will be in the pudding.”

A Treasury spokesperson didn’t respond to a request for comment.

Republicans have been quiet so far. A Crapo spokesperson declined to comment beyond the joint statement issued over the weekend. But without a clarification or reprieve from the White House, Warner doesn’t think Republicans will stay quiet for long.

“Many times since the Trump administration, on whatever is the issue of the day, I’ve had to go out and try to reach out to my Republicans and try to get them on,” Warner said. “This is one where our phones are ringing off the hook from Republican members saying, ‘Hey, we wanna help.’”

In the meantime, the U.S. economy’s not looking so hot. CDFI advocates say they’re prepared to help here – if the administration lets them. A White House spokesperson didn’t respond to a request for comment.

“In the event of the economic downturn, policymakers are going to need CDFIs,” Jacokes said, “because they have the unique ability to go deep into local markets to promote recovery.”

– Brendan Pedersen

THE CAMPAIGN

BOLD PAC backs Galán-Woods

News: The Congressional Hispanic Caucus BOLD PAC is endorsing Marlene Galán-Woods in the Democratic primary for Arizona’s 1st District, the latest sign that Democratic groups are trying to coalesce around Galán-Woods in the swing seat.

Galán-Woods, who unsuccessfully ran for the seat in 2024, is a former broadcast journalist who was married to former Arizona Attorney General Grant Woods.

In 2024, Galán-Woods finished third in an extremely tight six-person Democratic primary. The primary victor, Amish Shah, had 23.5%, followed by Andrei Cherny with 21.3% and Galán-Woods with 21.2%.

Shah lost to incumbent GOP Rep. David Schweikert by four points in November.

— Max Cohen

… AND THERE’S MORE

Job Move. Matt Esguerra is now chief of staff for Rep. Lance Gooden (R-Texas).

Esguerra was previously senior communications advisor for the House Judiciary Committee and Rep. Eric Burlison (R-Mo.)’s communications director.

– Mica Soellner

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