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IN THIS EDITION

Thune’s ‘survive and advance’ strategy

House GOP hasn’t forgotten the DC budget

GOP keeps Florida House seats while Dems prevail in Wisconsin

Tax Talk at the Punchbowl News Townhouse

THE TOP

Thune’s ‘survive and advance’ strategy

Happy Wednesday morning.

The House has left town for the week after Rep. Anna Paulina Luna (R-Fla.), eight GOP colleagues and 213 House Democrats bested Speaker Mike Johnson on the floor Tuesday afternoon. Luna and her allies defeated a GOP leadership-drafted rule that sought to overturn an effort to install proxy voting for new mothers and fathers. Johnson will try again to stop Luna’s proxy-voting effort next week – with two new House Republicans from Florida elected Tuesday night. More on that here.

Senate Majority Leader John Thune and Senate Budget Committee Republicans will meet today with President Donald Trump as the chamber prepares to vote on a compromise budget resolution later this week.

That it’s coming the same day Trump is unveiling his latest wave of tariffs — “Liberation Day,” as the president calls it — shows how vital Trump’s personal involvement is in every phase of reconciliation.

We have news: GOP leaders are considering giving the Senate Finance Committee and House Ways and Means Committee each around a $1.5 trillion ceiling for spending within their jurisdictions in the compromise budget resolution they’re working to finalize, though the number has been in flux. We scooped this last night. That would be alongside the current policy baseline, which would zero out the cost of extending about $3.8 trillion of the 2017 Trump tax cuts.

The instructions aren’t final yet, but this would provide the tax committees a good amount of room to work with in order to cut taxes.

They’d need a few hundred billion dollars to extend a trio of business tax breaks that expired during the last few years, yet the instructions would still leave space for Trump’s tax-cut priorities or other additions tax writers want to make. Republicans have been planning to offset the cost of any new tax cuts, but they’re going for maximum flexibility here just in case things don’t go according to plan.

What’s unresolved. Senate Republicans are rolling the dice on Trump’s legislative agenda, putting off even more big decisions — and relying on Trump to help bail them out later.

Senate Republicans have made no secret about their desire to punt on addressing the most complicated — and consequential — elements of the budget reconciliation package.

First, it was on spending cuts. House and Senate Republicans haven’t yet agreed to the same final number on spending cuts, with the two sides hundreds of billions of dollars apart. Second, there are serious disagreements over potential reductions to Medicaid and other social safety net programs.

And on Tuesday, Thune signaled he’s adding another item to that list — a Senate parliamentarian ruling on whether Republicans can use the current policy baseline to satisfy their goal of making the 2017 Trump tax cuts permanent.

Taken together, it’s a “survive-and-advance” strategy in keeping with Thune’s public and private messaging. Thune keeps pushing his GOP colleagues to embrace a basic budget resolution so they can get to work ASAP on the actual law-making phase of what the South Dakota Republican has deemed an “arduous” process. The specifics can wait for another day, Thune insists. Now is the time to show some progress.

Yet by telling Senate Republicans he doesn’t immediately need a parliamentarian ruling on a make-or-break tax policy question, Thune is taking a big risk on an issue that could come back to haunt Republicans later.

What Thune said: The majority leader signaled a strategic shift on Tuesday when, as we scooped, he told GOP senators that they don’t actually need to hear from the parliamentarian on the current policy baseline tactic. Senate Republicans had been saying for days that a parliamentarian ruling would reassure their House GOP counterparts about the path forward as well.

Instead, Thune declared that it’s actually Senate Budget Committee Chair Lindsey Graham (R-S.C.) who gets to set the baseline based on an interpretation of the 1974 Congressional Budget and Impoundment Control Act. So when Democrats inevitably challenge this on the floor, Republicans can defeat the effort with just a simple majority vote.

It’s worth noting that Republicans haven’t completely ruled out the idea of getting a parliamentarian ruling before bringing up the compromise budget resolution, which they still plan on doing at the end of this week.

Yet by saying they could move forward without it, Thune was suggesting — and said as much during the lunch meeting — that he doesn’t yet have the 50 requisite votes for the budget resolution.

Perhaps more importantly, it raises the stakes even higher for the next, more complicated phase of reconciliation.

If the parliamentarian tells Republicans they can’t use the untested scoring tactic to zero-out the cost of making the Trump tax cuts permanent, or finds that tax-cut extensions under the baseline run afoul of Senate reconciliation rules, it would be a disaster for the GOP. They’d then have to find extra savings elsewhere in order to offset the higher cost of the tax cuts — after they’ve already adopted a budget resolution.

It could also put Thune in a truly unenviable position. Thune has already said he isn’t in favor of voting to overrule the parliamentarian, which he believes would amount to gutting the filibuster. This is a red line for Thune. But some GOP senators could very well push for this, as could Trump.

Text of the Senate’s budget resolution could come out as soon as today. In the meantime, Treasury Secretary Scott Bessent will be at Senate Republicans’ lunch this afternoon, as we scooped.

History in the Senate: Sen. Cory Booker (D-N.J.) now holds the record for the longest-ever Senate floor speech. For 25 hours and five minutes, Booker held the floor in a bid to highlight what he said were Trump’s “reckless” actions on everything from DOGE to tariffs to foreign policy.

— Andrew Desiderio, Laura Weiss and John Bresnahan

Happening tomorrow at 8:30 a.m. ET: Punchbowl News founder Jake Sherman and Rep. French Hill (R-Ark.) will discuss the news of the day, digital payments and small business. There’s still time to RSVP!

DISTRICT OF COLUMBIA

House GOP hasn’t forgotten the DC budget

Immediately after Congress passed the stopgap government funding bill last month, the Senate approved a separate measure to give the D.C. government flexibility to spend its budget how it sees fit.

Without that, D.C. officials warned they’d need to immediately cut $1 billion from their budget, a huge blow to a city already reeling from tens of thousands of DOGE-related layoffs under President Donald Trump.

The House, however, is getting ready to load up the Senate-passed measure with Republican policy prerogatives, complicating its path in Congress and clouding D.C.’s financial outlook.

Rep. David Joyce (R-Ohio), who chairs the House Appropriations subcommittee that has purview over the District, said he’s sent feedback to House GOP leadership about the changes Republicans are seeking.

The Senate legislation didn’t include legacy policy riders dealing with abortion and marijuana.

“If they’re going to fix it, then that has to come legislatively,” Joyce said, in a bid to protect his committee’s jurisdiction.

But the House GOP leadership is also facing intense pressure to not bring the fix up at all.

The hardline House Freedom Caucus has urged Speaker Mike Johnson to set the bill aside for the time being as they consider how they’d like to amend the measure. Conservatives have discussed not only marijuana and abortion policies, but also forcing the District to allow concealed carry licenses for handguns.

Remember: the HFC has immense sway over Johnson on almost everything that comes to the floor.

HFC Chair Andy Harris (R-Md.) said he asked GOP leadership to delay the bill until they can revise the budget resolution and then impose policy requirements on the District.

“If it’s clean, I’m not voting for it. We will fight against it,” Harris told us.

Other HFC members went further and said they wanted to see more congressional control over the District. Rep. Andy Ogles (R-Tenn.) highlighted his bill, the BOWSER Act, which would repeal home rule and reassert congressional authority over the city.

Rep. Josh Brecheen (R-Okla.) added that he felt Congress was “too hands off” about its authority over D.C. Brecheen signaled he wouldn’t vote for the budget fix unless significant changes are made to what the D.C. government can do.

“I’m not happy with the governance,” Brecheen said. “Washington, D.C. has very limited congressional control. The founders never intended it that way.”

We already scooped that House GOP leadership was considering amending the Senate’s bill to include language to ensure that no D.C. government funding can be used to pay for abortions. Senate Appropriations Chair Susan Collins (R-Maine) has said the riders apply without additional congressional action.

House Appropriations Committee Chair Tom Cole (R-Okla.) added that the issue needs to be hashed out at the House Oversight and Government Reform Committee, which has jurisdiction over the funding bill.

“I want to make sure that – not new restrictions – but things that we’ve had on traditionally, remain on,” Cole said. “Evidently the Senate thinks you don’t need to do anything else. Somebody else will sort that out.”

– Mica Soellner and Samantha Handler

THE CAMPAIGN

GOP keeps Florida House seats while Dems prevail in Wisconsin

The first special elections of President Donald Trump’s second term saw voters move toward Democrats. Republicans held two safe-red seats in Florida, but by far smaller margins than just five months ago.

And in Wisconsin, Democrats won a state Supreme Court race that could reshape the 2026 House map. Here’s what we learned:

House Republicans filled two open seats to expand their tight margins. In two open seats vacated by former Reps. Matt Gaetz (R-Fla.) and Michael Waltz (R-Fla.), GOP Reps.-elect Jimmy Patronis and Randy Fine prevailed over their Democratic opponents.

Republicans were always the overwhelming favorites to win both seats, which both voted for Trump in November by more than 30 points. Patronis won by 15 points and Fine won by 14 points. This is a clear sign of momentum shifting toward Democrats.

House GOP leaders had raised concerns about Fine’s race and worried that his lackluster fundraising could open the door for a huge upset. But even though Democrat Josh Weil massively outraised Fine, the overwhelming GOP lean of the 6th District meant he never got close to flipping the seat.

It’s important to note that in the buildup to Tuesday, Republicans blamed Fine for being a uniquely poor candidate. But Patronis, who didn’t receive any similar criticism, won by a similar margin as Fine.

NRCC spokesperson Mike Marinella trolled House Democrats for “setting their cash ablaze.” On the Democratic side, House Majority PAC released a memo arguing the results showed “that the political headwinds are firmly at our backs heading into 2026.”

House Minority Leader Hakeem Jeffries took a victory lap on MSNBC and declared that 60 House Republicans in seats Trump won by 16 points or under are now Democratic targets. That’s a very ambitious goal.

Democrats win critical Wisconsin contest. Democratic-aligned candidate Susan Crawford defeated former GOP Attorney General Brad Schimel to win an open seat on the Wisconsin Supreme Court.

Elon Musk dumped $25 million into an unsuccessful bid to elect Schimel.

Republicans had warned in the buildup to the race that a Crawford victory could lead to the court hearing a case that could draw new House maps in the state. A potential challenge to Wisconsin’s House maps could spell trouble for Reps. Derrick Van Orden (R-Wis.) and Bryan Steil (R-Wis.).

— Max Cohen

PUNCHBOWL NEWS EVENTS

Tax Talk at the Punchbowl News Townhouse

On Tuesday night, we hosted Tax Talk at the Punchbowl News townhouse, featuring a fireside chat followed by light bites and drinks. Punchbowl News Founder & CEO Anna Palmer sat down with Rep. Rudy Yakym (R-Ind.) to discuss tax policy, Republican priorities for the 119th Congress, and the Trump administration. Arnold Ventures President & CEO Kelli Rhee and EVP of Public Finance George Callas gave opening remarks. Thank you to Arnold Ventures for partnering with us on this event.

Raising a glass: Katherine Robbins from Rep. Carol Miller’s (R-W.Va.) office; Richard DiSalvo of the Congressional Joint Economic Committee; Lee Kane of the Embassy of Canada; Marta Jimenez-Blanco of the Embassy of Spain; Michael Levin of the Department of Health and Human Services; Hana Greenberg and Andrew Moylan of Arnold Ventures; Jeff Wasden of State Business Executives; Kodiak Hill-Davis of the Niskanen Center; Kent Knutson of SHEIN; Joey Connor of the American Bankers Association; Steve Hartell of Amazon; Meredith Singer of GE Vernova; Bijan Mehryar of Block, Inc.; and David O’Brien of the Bipartisan Policy Center.

AND THERE’S MORE

Money game: Freshman Rep. Sam Liccardo (D-Calif.) raised an impressive $1.4 million in Q1.

The California Democrat also gave $110,000 to frontline members. Here’s the list of members Liccardo has funneled money to: California Reps. Josh Harder, Adam Gray, George Whitesides, Derek Tran and Dave Min, plus Frank Mrvan (Ind.) Kristen McDonald Rivet (Mich.), Don Davis (N.C.), Nellie Pou (N.J.), Gabe Vasquez (N.M.), Susie Lee (Nev.), Steven Horsford (Nev.), Marcy Kaptur (Ohio), Emilia Sykes (Ohio), Janelle Bynum (Ore.), Vicente Gonzalez (Texas), Eugene Vindman (Va.), Marie Gluesenkamp Perez (Wash.) and New York Reps. Tom Suozzi, Laura Gillen, Josh Riley and John Mannion.

Liccardo has $1.1 million cash-on-hand.

Housing scoop. Sens. Tina Smith (D-Minn.) and Mike Rounds (R-S.D.) are reintroducing a bill today to reform the United States’ rural housing ecosystem. Read the bill here.

This bill is a bipartisan darling. In the last Congress, the measure boasted support from a majority of both sides of the Senate Banking Committee. Now, the Rural Housing Service Reform Act is considered a strong contender for a broad housing markup currently being planned by the committee’s leadership.

– Mica Soellner and Brendan Pedersen

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