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Reality strikes House Republicans. Here’s what they will do now

Lawmakers sweat Trump’s impact on ‘safe haven’ Treasuries

Young calls for White House biotech adviser

The Ones to Watch: Advancing with AI

ICYMI: Pfluger on tariffs, budget, taxes and more

THE TOP

Reality strikes House Republicans. Here’s what they will do now

Happy Thursday morning.

Just after 8 p.m. last night, the check came due for Speaker Mike Johnson and President Donald Trump.

Johnson and House GOP leaders delayed a vote on a compromise budget resolution, yielding to conservative hardliners who want deeper spending cuts than the Senate can likely stomach.

At the end of the day, Johnson had more than a dozen holdouts. And despite his patience, Johnson couldn’t convince that many GOP lawmakers to hold their nose and vote for a budget plan that they believed inadequate.

Let’s be blunt here: The gaping divide between the House and Senate on spending cuts is a big problem that can’t be papered over.

It also starkly demonstrates the limits — once again — of Johnson’s hold on his conference, even with Trump’s backing. The House Freedom Caucus and its allies have little faith in Johnson, and even less in the Senate.

For their part, Senate GOP leaders maintain that their spending-cut number was kept lower on purpose to ensure Byrd Rule compliance when a final reconciliation package reaches the Senate, and that they’re just as committed to big spending cuts as the House. That was the message Senate Majority Leader John Thune and Majority Whip John Barrasso delivered in a meeting with HFC members last night.

But there’s an underlying reason for the two spending-cut targets in the budget resolution — $4 billion for the Senate versus $1.5 trillion for the House: Many Senate Republicans simply don’t want to cut as much spending. Conservative House Republicans know it. The bifurcated spending-cut target was a sleight of hand by GOP leaders in the two chambers that conceded the point. The budget resolution, as written, allows the Senate to roll House Republicans.

Senators have far different political incentives than their House colleagues. A significant faction of GOP senators aren’t hot on deep cuts to Medicaid or repealing large chunks of the Inflation Reduction Act, for example. But that’s a principal objective for a large number of House Republicans, which puts the two groups in conflict.

So where does Johnson go from here? The House Republican leadership is eyeing four options to break this logjam.

1) As of late last night, House GOP leadership was working to get informal assurances on spending cuts from Senate GOP leadership. We’ll see whether that’s enough because that’s the leading option right now.

2) Johnson publicly floated entering a formal conference negotiation with the Senate. This was the hot topic in the conversation between Johnson and the HFC members. Hardline conservatives have been pushing this for weeks now, much to the chagrin of House and Senate GOP leaders who desperately want to avoid it.

“Going to conference takes more time and the calendar is not our friend,” Johnson told reporters late Wednesday night after canceling a vote on the budget resolution. “We have real deadlines upon us and lots of reasons to move this along.”

Left unsaid by Johnson: Splitting the difference between $4 billion and $1.5 trillion in spending cuts is nearly impossible. Trying to negotiate these numbers in a budget resolution gets Republicans no closer to bridging the divide between the two chambers. They’ve already agreed to negotiate the precise cuts during the next phase – drafting the actual reconciliation package – anyway.

Even the mere suggestion from Johnson that he’d be open to a conference negotiation upset the Senate GOP leadership.

“They got on our case for delaying. Now they’re the ones delaying,” one GOP senator complained. “The president was right, these guys are grandstanding.”

3) Johnson has also discussed crafting an amendment stating that the House won’t take up any reconciliation package unless it includes a certain level of spending cuts. Like $1.5 trillion, for instance. This would be an attempt to bind the Senate to the House’s spending-cut target.

Of course, the Senate could just ignore this, and likely would. Furthermore, in the House, rules can always be broken, changed or waived. But putting this target in writing would go a long way toward convincing skeptical conservatives that Johnson is going to try to force the Senate’s hand.

“We just want to ensure that there’s some binding way of ensuring that there will be spending cuts in the final reconciliation,” said Rep. Lloyd Smucker (R-Pa.), one of the holdouts. “That’s all.”

4) The least best option is amending the budget resolution. That would be time-consuming and would force another vote-a-rama in the Senate. Some hardline conservatives are pushing for that, but the House GOP leadership is eager to avoid it. Nobody in the Senate wants to add another vote-a-rama to the process. They’ve already done two and still need to do another before final passage of a reconciliation package.

Johnson wouldn’t “forecast” which option he’ll choose.

“I just want to tell you there’s a very good, healthy spirit of cooperation and discussion,” the speaker said. “Everyone is trying to get to the right point that will satisfy every member of this conference. And I encourage that. I’m encouraged by it, and I’m very optimistic that we are going to get this job done.”

Johnson is planning a vote for today. But he planned a vote for Wednesday and that didn’t work out.

But here’s one more thing: The speaker said he will not keep the chamber in over the weekend because the Jewish holiday of Passover begins at sundown Saturday.

— Jake Sherman, John Bresnahan, Laura Weiss, Samantha Handler, Mica Soellner and Andrew Desiderio

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WASHINGTON X WALL STREET X THE WORLD

Lawmakers sweat Trump’s impact on ‘safe haven’ Treasuries

The world’s collective sigh of relief Wednesday afternoon — when President Donald Trump declared a 90-day pause on much of his administration’s tariff agenda — belies a quieter, deeper fear among some lawmakers: U.S. Treasuries may be at risk of losing their preeminent status as a “safe haven” for investors around the globe.

We’re not there yet, to be clear. A closely watched auction of 10-year Treasuries on Wednesday saw surprisingly strong demand right before Trump’s pause was announced. And yields retreated somewhat following the afternoon’s historic rally in the U.S. stock market.

But some lawmakers fear the still-elevated yields paid by the U.S. Treasuries signal a weakening faith in the world’s ability to park money safely in U.S. government bonds and, in general, invest in American markets.

“I think any of our trading partners would be guilty of malpractice if they don’t factor this in any kind of future business relationships.” Sen. Thom Tillis (R-N.C.) said Wednesday night.

Sen. Ron Johnson (R-Wis.), when asked about the bond market, was succinct. “Nobody likes seeing this level of disruption. Stability is good for business,” Johnson said.

Market watch: Multiple Republicans told us they were closely watching bond markets on Wednesday and were aware of the fears about what rising yields may have been saying about U.S. governance.

“I heard some of the theories this morning – more so than when the markets bounced back after the freeze,” Rep. Scott Fitzgerald (R-Wis.) said last night.

“We’ll see what happens to the 10-year Treasury,” Sen. John Kennedy (R-La.) said shortly after the pause was announced. “My guess is, this will be very much a positive. The only way you can judge investors’ sentiment is to watch what they do.”

Democrats’ feelings here will not come as a surprise. Trump has “proven that he is willing to make changes to the rules that make no economic sense at all. That undermines investor confidence at a core level,” Sen. Elizabeth Warren (D-Mass.) said.

“What Trump is doing, even if he’s stopped at this minute, has done incalculable damage to our economy,” Warren added.

Make policy great again. Plenty of GOP lawmakers remain publicly upbeat on the president’s approach. Several said investors simply needed to see Trump’s economic agenda come to full fruition – a combination of tax and crypto reforms with a nice dollop of deregulation.

“Reconciliation and the budget resolution – obviously, passing that in the House and being able to move forward, I think, would give people even greater certainty about tax structure and other things moving forward,” Sen. Katie Britt (R-Ala.) said.

Other GOP lawmakers pointed to recent action in the House and Senate to advance stablecoin reforms, which proponents have said could shore up the role of the U.S. dollar abroad.

“The U.S. dollar is the world reserve currency,” Sen. Bernie Moreno (R-Ohio) said. “We’re gonna make that even more of a factor with our stablecoin bill. That’s a big part of solidifying the dollar as the world reserve currency.”

— Brendan Pedersen and Andrew Desiderio

NEXT IN SERIES

The Ones to Watch: Advancing with AI

Our fourth and final segment in The Ones to Watch: Advancing with AI series explores how artificial intelligence is driving economic investment in the United States.

The AI revolution has triggered a series of investments in semiconductor manufacturing and mega data centers used to train AI models. Communities across the country are set to see an economic boom due to AI, tech companies say.

So we spoke to Republican Rep. Ashley Hinson, who told us about the impact of AI in her home state of Iowa. She said big clean energy producers like Iowa are set to benefit as data centers drive significant power demands.

AI is also increasing efficiency in other industries like agriculture, which is seeing a boost in precision farming, Hinson said.

Hinson, who serves on the House Select Committee on China, also spoke of competition with Beijing over this technology and Congress’ role in boosting AI in the U.S.

You can read the final segment here and the full series here.

— Diego Areas Munhoz

PUNCHBOWL NEWS EVENTS

ICYMI: Pfluger on tariffs, budget, taxes and more

Did you miss our event with Rep. August Pfluger (R-Texas) on Wednesday?

Pfluger, chair of the Republican Study Committee, discussed his views on the Trump administration’s economic approach, the GOP budget plan, taxes and more.

You can watch the full interview here.

— Lillian Juarez

THE CAMPAIGN

News: House Majority Leader Steve Scalise raised $12 million in the first quarter of 2025, keeping up his brisk pace of fundraising for the party.

Scalise transferred $5 million, including $2 million to members and $3 million to the NRCC.

This is Scalise’s best off-year quarter and his fourth-highest quarter ever.

More fundraising news: Sen. Chris Murphy (D-Conn.) raised $8 million in the first quarter, a staggering sum for a senator in a safe seat who just won reelection in November. But as we’ve written, Murphy is emerging as a key Democratic messaging voice and recently started traveling the country.

Murphy’s latest moves have fueled speculation about potential presidential ambitions in 2028.

House fundraising scoop: Rep. Ken Calvert (R-Calif.) raised $1.3 million in the first quarter of 2025 and ended the quarter with nearly $1.4 million on hand. Calvert, who’s on the DCCC target list, beat back a well-funded challenge from Democrat Will Rollins in November.

Endorsement news: Former Sen. Al Franken (D-Minn.) is endorsing Minnesota Lt. Gov. Peggy Flanagan in the state’s Senate race. Flanagan also received Minnesota Attorney General Keith Ellison’s endorsement last week.

— Max Cohen, Jake Sherman and Andrew Desiderio

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