Happy Wednesday! A day after racking up a series of Super Tuesday primary wins, former president Donald Trump saw his status as the presumptive Republican presidential nominee reinforced today as rival Nikki Haley suspended her campaign. Though Haley did not endorse Trump today, Senate Minority Leader Mitch McConnell did, falling in line behind the former president despite previously having criticized him for the January 6, 2021, attack on the Capitol. The two men reportedly have not spoken since 2020, when McConnell declared Joe Biden the legitimate winner of that year’s election.
On the fiscal front, the House just passed a package of six spending bills ahead of another shutdown deadline Friday night. Here’s the latest.
House Passes $460 Billion Funding Bill Ahead of Shutdown Deadline
It looks like Congress will squeak past yet another shutdown deadline this year.
The House on Wednesday approved a package of six bills that will fund parts of the federal government that could shut down at midnight on Friday. The roughly $460 billion package now heads to the Senate, where it’s expected to pass before the deadline, though there could be hiccups along the way.
The House vote on the funding package was 339 to 85, reflecting robust support from Democrats, 207 of whom backed the legislation, with just two voting no. The Republican vote was more divided, 132 to 83, as dozens of hardliners opposed the bill due to its size and lack of conservative policy wins. Opposition from conservatives, along with the tight deadline, forced House Speaker Mike Johnson to use an expedited process for the legislation requiring a two-thirds majority to proceed.
Republican House leaders celebrated what they claimed was a major win. “With the odds stacked against us, House Republicans made progress in how we fund the government,” Appropriations Chair Kay Granger said. “We drafted the most conservative bills in history. Members submitted over one thousand amendments. We considered house bills individually on the floor, and we avoided a massive omnibus measure.”
Still, conservatives complained that the package, which holds spending largely at current levels, failed to make any significant cuts and jettisoned policy riders that would have restricted abortion and trans rights, among other things. And while it may have cut the typical 12-bill “omnibus” in half, a six-bill “minibus” is hardly the legislative product conservatives wanted to see when they demanded regular order for all legislation.
“Despite giving Democrats higher spending levels, the omnibus ... punts on nearly every single Republican policy priority,” the House Freedom Caucus said as it called on Republicans to oppose the package, which it insisted was really an omnibus after all. “Worst of all, the omnibus surrenders Republicans’ leverage to force radical Democrats to the table to truly secure the southern border and end the purposeful, dangerous mass release of illegal aliens into the United States.”
Democrats portrayed the vote as a win of sorts. “The bill certainly doesn’t have everything that we may have wanted, but I am very proud to say we successfully defeated the vast majority of the extreme cuts and hundreds of harmful policy riders proposed by the House Republicans,” said Rep. Rosa DeLauro, the senior Democrat on the Appropriations Committee.
What comes next: The minibus will be taken up by the Senate, where it will require an agreement by all 100 members to proceed on an expedited basis. Republicans are expected to demand votes on amendments, none of which are likely to pass.
Assuming the first minibus goes through, lawmakers must then turn to the second batch of spending bills, which could be more difficult to hammer out since they include contentious areas such as defense and homeland security.
Senate Majority Leader said he was confident that lawmakers could reach an agreement before the shutdown deadline for those parts of the government later this month. “Passing these bills will give us much-needed momentum to finish the next package of spending bills by the March 22 deadline,” he said. “But as I’ve said repeatedly, it will take bipartisan cooperation to finish the job.”
Powell Says Fed in No Rush to Cut Rates
Federal Reserve Chair Jerome Powell told lawmakers Wednesday that the continued strength of the U.S. economy means that central bank officials can afford to move carefully as they consider cutting interest rates later this year.
Appearing before the House Committee on Financial Services, Powell cited the “strong pace” of growth over the last year, which occurred even as inflation “eased notably.” Still, the inflation rate remains too high for the Fed’s comfort, and the central bank wants to be sure that the current trend remains in place before committing to any stimulative rate cuts.
“We want to see a little bit more data so that we can become confident,” Powell said. “We’re not looking for better inflation readings than we’ve had. We’re just looking for more of them.”
If the data continues to move in the right direction, Powell said “it will likely be appropriate to begin dialing back policy restraint at some point this year.”
Powell added that the Fed is trying to balance the risks of moving too slowly or too quickly. “Reducing policy restraint too soon or too much could ... ultimately require even tighter policy to get inflation back to 2%,” he said. “At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
Powell will appear before a Senate panel on Thursday.
House-Passed Tax Bill Still Languishing in the Senate
A bipartisan deal to boost the Child Tax Credit and revive a trio of business tax breaks easily passed the House in January but remains mired in uncertainty on the Senate side. Judging by the sniping coming from the Senate’s top Finance Committee leaders on Wednesday, there’s even uncertainty about the degree of uncertainty the bill faces.
As Politico’s Brian Faler reports, the top tax-writing Democrat and Republican clashed over the bill Wednesday in comments to reporters. Democratic Finance Chair Ron Wyden of Oregon reportedly complained to assembled media members that Senate Republicans haven’t clarified their demands for changes to the legislation and have put forth only an “amorphous smorgasbord” of ideas.
“We don’t have a list of what amendments they would like” and “we still don’t have a description of the process they would like,” Wyden said.
Sen. Mike Crapo of Idaho, the top Republican on the finance panel, reportedly responded to Wyden’s complaint by insisting that Democrats know exactly what he wants: “They know the issues — they know them very well. There’s nothing amorphous about it.”
Wyden then fired back: “If there is somewhere where there is a piece of paper with specifics, I’m very interested in seeing it.”
Crapo has raised some concerns about the $79 billion package, in particular a “lookback” provision that would allow families to use their earnings from the prior year to determine eligibility for the child credit. Crapo and other critics contend that this change would undermine the incentive to work.
Republicans also object to the quicker expiration of the employee retention credit to offset the cost of the new tax breaks and to the expansion of the low-income housing tax credit.
The bottom line: The bill’s backers had at one point hoped to have it become law in time for the beginning of tax season on January 29, or perhaps shortly thereafter. Instead, it has languished in the Senate and Wyden now reportedly hopes it can be sent to President Joe Biden’s desk by the end of filing season next month. Time is running out, especially as appropriators have set a March 22 deadline for the next round of government funding bills.
Tax Notes suggested recently that if a deal can’t be struck soon, Senate Majority Leader Chuck Schumer might bring the bill up for a vote anyway and dare Republicans to torpedo it. “At some point in this work period before March 22, Sen. Schumer will file cloture on a motion to proceed if a negotiated settlement doesn’t appear to be in the works,” Rohit Kumar of PwC predicted to Tax Notes.
Fiscal News Roundup
- House Clears Long-Delayed Spending Package Ahead of Shutdown Deadline – Politico
- LGBTQ-Related Earmark Dropped From Spending Package Amid Furor – Roll Call
- Senate Finance Leaders Squabble Over Tax Package Proposals – Politico
- Haley Won Over Billionaires and GOP’s Old Guard Cut Couldn’t Crack Trump’s Base – Bloomberg
- McConnell, Who Once Blamed Trump for Jan. 6 Attack, Endorses Him for President – Associated Press
- Dean Phillips Ends Long-Shot Primary Challenge to Biden – CNN
- Bernie Sanders’s Private Warning to Biden About the 2024 Campaign – Washington Post
- US Weighs Tapping Army Funds for Ukraine as Aid Bill Stalls – Bloomberg
- Bipartisan Group Pitches Border-Ukraine Bill as ‘Pressure Point’ on GOP Leaders – The Hill
- U.S. Floods Arms Into Israel Despite Mounting Alarm Over War’s Conduct – Washington Post
- GOP Leaders Demand Answers From Medicare on Alleged $2B Catheter Fraud – Washington Post
- Biden Has Canceled $138 Billion in Student Loans. Some Say It’s Not Enough – Washington Post
- US Economic Activity Increasing Slightly, Fed’s Beige Book Shows – Bloomberg
- The Fed Hates Politics. Now It’s Trying to Cut Rates in an Election Year – Washington Post
- A New IRS Program Is Helping Its First Users File Their Income Taxes Electronically. And It’s Free – Associated Press
Views and Analysis
- Nikki Haley and Other Trump Critics Are Overstating the Hurdle He Faces – Philip Bump, Washington Post
- After Super Tuesday, Trump Is Stronger Than He’s Ever Been – Ross Douthat, New York Times
- Physicians Beg for Relief Amid Change Healthcare Payment Crisis – Dan Diamond, Washington Post
- TurboTax and H&R Block Now Use AI for Tax Advice. It’s Awful – Geoffrey A. Fowler, Washington Post
- How Joe Biden Made the IRS Great Again – Timothy Noah, New Republic
- Jay Powell Is Good at Politics. Just Don’t Call Him Political – Victoria Guida, Politico