GOP Infighting Threatens to Derail Tax Bill

GOP Infighting Threatens to Derail Tax Bill

Johnson fielded complaints about the tax deal.
Sipa USA
By Yuval Rosenberg and Michael Rainey
Tuesday, January 30, 2024

Happy Tuesday! On this date 55 years ago, The Beatles performed their famous rooftop concert in London — their last public performance together.

Here’s your update for the day.

Republican Infighting Threatens to Derail Vote on Bipartisan Tax Bill

The top Republican on the tax-writing House Ways and Means Committee on Tuesday morning told CNBC that he expects a floor vote this week on the $78 billion bipartisan tax deal to temporarily expand the Child Tax Credit and revive some business tax breaks. But House Speaker Mike Johnson wouldn’t commit to that timing at a news conference, and heated Republican infighting could threaten any plans to pass the bill quickly.

“It's up to the speaker and the leader whenever it comes to the floor,” Ways and Means Chair Jason Smith of Missouri told CNBC, adding, “I expect it will be this week. I expect it will be in the next couple days, and whenever we have the vote, you’re going to see a very large number of Republicans and Democrats that will be voting for this pro-family, pro-worker, pro-business, pro-growth tax policy.”

Smith negotiated the deal with Senate Finance Committee Chair Ron Wyden, a Democrat from Oregon, and the package was passed out of the Ways and Means Committee by an overwhelming 40-3 vote. But while the bill has substantial support, Johnson has also been hearing complaints about the bill from a range of Republicans, including “incumbents in vulnerable districts demanding state and local tax relief and conservative Freedom Caucus members who are intent on bringing border politics into the tax debate,” as Politico’s Benjamin Guggenheim reports.

Blue state moderates have been pressing to boost the deductibility of state and local taxes (SALT), which was capped under the 2017 Republican tax law. A group of four New York Republicans on Tuesday threatened to derail a procedural vote on unrelated legislation, a protest tactic employed by conservatives in recent months to make known their displeasure with leadership. The moderates eventually backed off their threat and allowed the procedural vote to pass, claiming they had secured an agreement to continue discussions about the SALT deduction.

“For all of us in these districts, you know, that delivered the majority, this is the issue that matters, and we’re going to keep fighting to get it done,” Rep. Mike Lawler of New York said.

Conservatives, meanwhile, are against the expansion of the Child Tax Credit, which they deride as growing the “welfare state,” and are especially opposed to allowing parents who do not have Social Security numbers to claim the credit. And some GOP lawmakers are reportedly angry that the speaker is prepared to bring up the tax deal under a suspension of the rules and rely on Democratic support to pass it via a process that requires a two-thirds majority.

The bottom line: The outlook for the bill and timing of any vote remain unclear as Republicans try to hash out their differences and discuss changes. “We're having conversations about some of their concerns, some of our concerns and seeing if we can get a little kumbaya,” Rep. Chip Roy, a member of the House Freedom Caucus, told reporters. What is clear: Talk of passing the deal by the start of tax season — yesterday — was unrealistic given the policies in play and the bitter divisions among lawmakers.

Johnson Sees ‘No Way Forward’ on Border Deal

In case there was still any doubt on the matter, Speaker Mike Johnson said Tuesday that the border deal being negotiated by a bipartisan group of senators is a “nonstarter in the House.”

Johnson said last week that the bill — which has not yet been finalized or released — would be “dead on arrival” in the lower chamber, and he’s been hammering that message home this week.

“I just heard Speaker Johnson saying it’s absolutely dead, which is what I wanted to hear,” Rep. Marjorie Taylor Greene told CNN, describing comments made during a closed-door meeting of Republican lawmakers Tuesday. “As a matter of fact, he said so clear, ‘I don’t know why people keep asking me about it,’ because as it stands right now, there’s no way forward.”

Johnson said the emerging bill simply isn’t strong enough. “From what we've seen, clearly, what's been suggested in this bill is not enough to secure the border,” he told reporters. “And we have to insist – we have a responsibility, a duty, to the American people to insist that the border catastrophe is ended. And just trying to whitewash that or do something for political purposes that it appears that may be, is not going to cut it.”

Although Johnson blames Democrats for playing politics with the emerging bill, some critics say that Republicans aligned with Donald Trump are intentionally torpedoing the agreement to preserve the border as a hot-button issue during an election year. Asked if he was killing the bill to help Trump, Johnson said the idea was “absurd.”

At the same time, Johnson said he has talked to Trump “at length” about the issue and noted that the border was a long-standing focus for him. “President Trump is the one that talked about border security before anyone else did,” Johnson said. “He ran on, as you remember, building the wall.”

Ukraine aid could be split off: The seemingly doomed border deal has been yoked legislatively to a military aid package for Ukraine and Israel, among other things, and lawmakers’ failure to reach an agreement on border policy has threatened to upend billions of dollars in assistance for those war-torn countries. But Johnson reportedly told parliamentary leaders from the Baltic states Tuesday that foreign aid could be split from border security for legislative purposes, potentially opening the door for separate votes.

Semafor’s Morgan Chalfant, who reported the news, said Johnson’s spokesperson downplayed the comment, saying it was made in a hypothetical context. Even if Johnson were to hold a vote on a separate aid package for Ukraine and perhaps Israel and Taiwan, it’s not clear that House Republicans would back it.

Number of the Day: 9 Million

The number of job openings in the U.S. economy edged higher in December, according to federal data released Tuesday, with employers reporting more than 9 million available positions during the month.

As RSM economist Tuan Nguyen notes, the better-than-expected results pushed the ratio of job openings to unemployed workers to 1.44 — below the exceptionally high reading of 2 recorded in 2022, but still above the typical level of 1.2 seen before the pandemic.

“The labor market is strong but not hot,” said Elise Gould of the left-leaning Economic Policy Institute. “Job growth continues to be more than enough to keep up with working age population growth and layoffs remain historically low.”

Quote of the Day

“The global economy begins the final descent toward a soft landing, with inflation declining steadily and growth holding up. But the pace of expansion remains slow, and turbulence may lie ahead.”

Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund, in a blog post about the organization’s latest World Economic Outlook, which now forecasts global growth of 3.1% in 2024, up 0.2 percentage points from its October projections due to “greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.”

The global projections are below the 3.8% annual average from 2000 to 2019, and growth is the United States is forecast to fall from 2.5% in 2023 to 2.1% in 2024 and 1.7% in 2025. The outlook for the current year is up, however, from a previous projection of 1.5%.

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