Johnson Defies Hardliners, Defends His Spending Deal

Johnson Defies Hardliners, Defends His Spending Deal

House Speaker Mike Johnson on Friday defended the $1.66 trillion spending deal he reached with Senate Majority Leader Chuck Schumer and said that the agreement “remains” despite intense pressure from a group of right-wing Republicans calling for him to abandon the pact he made less than a week ago.

“After weeks of hard-fought negotiations, we achieved a strong topline agreement that allows our Appropriations Committee and all those who work on this to complete the appropriations process,” Johnson told reporters. “It’s an important part of keeping the government running.”

Johnson made his statement to the media a day after angry ultraconservatives demanded that he walk away from the spending deal and told reporters that the speaker was at least open to the idea. His comments also came shortly after he was reportedly “chewed out” on the House floor Friday by members of the conservative House Freedom Caucus.

Hardliners in the GOP conference say that Johnson should not have agreed to abide by a $69 billion handshake agreement initially made last year by former speaker Kevin McCarthy. They have been pushing for steeper spending cuts and immigration restrictions — and their pressure has reportedly weighed on the speaker. “During a House GOP leadership meeting on Tuesday, Johnson got visibly frustrated with House Freedom Caucus Chairman Bob Good, according to sources in the room, and pressed the Virginia Republican on what his strategy would be to get out of a government shutdown if that’s where they end up,” CNN reports.

More moderate Republicans, meanwhile, continue to back Johnson and the deal he struck — a deal he said Friday he would be upholding.

“In keeping with my commitment to bring members into the legislative process, I’ve spoken and received feedback this week from many members all across the Republican conference. That’s a very important part of this,” Johnson told reporters, adding, “Our topline agreement remains. We are getting our next steps together, and we are working toward a robust appropriations process, so stay tuned for all of that to develop.”

Those next steps are still unclear at the moment, even as the deadline to avert a partial government shutdown is now just a week away. Bipartisan efforts to fund the government continue, and the Senate is moving forward with a plan to pass a stopgap spending bill next week. That bill will reportedly last until early- or mid-March.

But while it’s clear that a stopgap spending bill will be necessary, Johnson has yet to lay out how he wants to structure that measure and set the next deadline.

He reportedly told his members Thursday that his own preference would be to pass a clean year-long continuing resolution, which would be different than the deal he cut and would spur across-the-board spending cuts that many lawmakers oppose. Republican defense hawks balk at the idea of freezing military spending, while Democrats object to the non-defense reductions. He reportedly also floated a February 9 date in a Friday morning meeting with some appropriators and vulnerable Republicans but the idea met with pushback from lawmakers who said it would not allow enough time for the spending bills to be completed.

The bottom line: Johnson is relatively new to all this, and his approach — lots of listening, cautious communication and decision-making — has left both conservatives and moderates frustrated and left some questioning his leadership. Congress has a week to pass a short-term spending bill, so the drama is likely to escalate in the days ahead. At this point, a stopgap lasting until March may be most likely, but, like Johnson said, stay tuned.

IRS Recovers $520 Million in Unpaid Taxes From Millionaires

A crackdown on cheating by high-income households and complex businesses is paying off, the IRS said Friday as it announced that it has now recovered more than $520 million from 1,600 millionaires who were behind on their taxes.

The IRS said it recovered $360 million from high-income individuals who owe at least $250,000 in back taxes. That’s on top of the roughly $160 million the agency said it had recovered as of last October.

IRS Commissioner Danny Werfel said the additional funding provided by the Inflation Reduction Act was helping the agency in its effort to recover more unpaid taxes owed by the rich.

“The IRS continues to increase scrutiny on high-income taxpayers as we work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act,” Werfel said. “We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law.”

Signed into law in 2022, the IRA provided $80 billion in additional funding for the IRS over 10 years, with the goal of improving customer service and enhancing enforcement, especially against high-income households and businesses. Republicans in Congress have pushed to repeal that funding and with the latest budget deal, they will have clawed back $20 billion of the money intended to ramp up enforcement.

Despite the success in recovering unpaid taxes so far, Republicans reportedly plan to continue to target enforcement funding. “In little more than a year since Democrats’ [Inflation Reduction Act] was enacted, Republicans have now repealed roughly half of the funding Democrats handed the IRS to ramp up audits on taxpayers,” anti-tax crusader Grover Norquist told The Washington Post. “More cuts to the IRS will come.”

Chart of the Day: Democrats Drop to a Record Low

The percentage of U.S. adults who identify as Democrats has fallen to a record low of 27%, matching the share of Republicans, according to Gallup. Independents continue to be the largest political bloc, with an average 43% of the public identifying that way in 2023, tying a record.

“Independents first outnumbered supporters of both major political parties in 1991 and have continued to do so since then, except in several years between 2004 and 2008,” Gallup’s Jeffrey M. Jones writes. “Over time, the increase in the percentage of independents has come more at the expense of Democrats than Republicans, which might be expected since Democrats were previously the largest political group.”

The share of people identifying as Democrats has fallen by one percentage point for each of the past three years.

Asked about their political views, 36% of adults described themselves as conservative, 36% as moderate and 25% as liberal. That breakdown is roughly matches the averages over the past decade, Jones writes.

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Fiscal News Roundup

• Speaker Mike Johnson Says Spending Deal Remains in Place – CNN
• Speaker Johnson Defies GOP Hardliners, Stands by Spending Deal – Bloomberg
• House Republican Revolt Scrambles Plan to Prevent Government Shutdown – Washington Post
• Democrats Reject Johnson’s Border Demands as Part of Ukraine Aid Package – The Hill
• Some Democrats Hate It, but ‘Bidenomics’ Isn’t Going Anywhere – CNN
• More Money Is Helping the IRS. Republicans Still Want to Cut Its Budget – Washington Post
• Behind Closed Doors, Trump Eyes Second Round of Corporate Tax Cuts – Washington Post
• Chief Tax Writers Working to Broaden Appeal of Tentative Accord – Roll Call
• Biden to Cancel More Student Loan Debt in Latest Round of Relief – Bloomberg

Views and Analysis

• Republican Disarray May Prevent a Government Shutdown – Ed Kilgore, New York
• A Fiscal Commission on the National Debt? Good Luck With That – Jeb Hensarling and Mike Solon, Wall Street Journal
• Ten Percent of the Way to a Deal on the Child Tax Credit – David Dayen, American Prospect
• Trump Dreams of Economic Disaster – Paul Krugman, New York Times