A bipartisan deal that would reduce business taxes while expanding the child tax credit has set up a political dilemma for Speaker Mike Johnson (R-La.) as he weighs whether to bypass objections from within his own ranks to bring it to the floor as soon as next week.
Pushback to the tax bill from hard-line conservatives and Northeastern moderates — two factions that have long complicated the slim GOP majority’s ability to move legislation — means Johnson and GOP leadership have to choose between pushing through a bipartisan win for business or minimizing intraparty turmoil.
On the one end, swing-district Republicans from blue states who have long pushed to increase the state and local tax (SALT) credit have expressed frustration that their top priority — which is also opposed by many Republicans who argue it incentivizes high state taxes — was not included in the bill.
Johnson and Ways and Means Committee Chair Jason Smith (R-Mo.) held a call with half a dozen SALT Caucus members Thursday night to discuss their concerns.
A source familiar with the call said there was “lots of yelling,” mostly directed at Smith, with Johnson “trying and failing to keep the peace.” Other sources on the call, though, said that Rep. Nick LaLota (R-N.Y.) was the only member yelling.
The call ended with the bill expected to come up under a fast-track process next week, with most of the SALT Caucus members on the call expected to vote against it if so.
“There is real anger about the process,” one of those GOP lawmakers told The Hill, saying they have felt ignored.
On the other end, the hard-liners who are growing increasingly frustrated with leadership over issues including government spending are knocking the compromise for keeping migrants in the country illegally eligible for child tax credits and for not going far enough in other areas. They are also irked that the tax package could advance as other priorities remain stuck
“I’m sick of these gutless cowards in Washington. You know what we’re going to put on the floor next week?” Rep. Chip Roy (R-Texas) told Fox radio host Jimmy Failla on Thursday. “A tax cut bill for corporations, because Republicans are whores for endless wars and corporations. That’s it. That’s what they stand for.”
The Speaker has not yet publicly weighed in on the tax bill.
Senate Majority Leader Chuck Schumer (D-N.Y.) and the White House, though, have given their stamps of approval. The Democratic support could be another political risk for Republicans, who are reluctant to give President Biden any wins in an election year.
There may be little that the hard-line conservatives or the SALT Caucus Republicans can do to stop the package.
The compromise measure struck between Smith and Senate Finance Committee Chairman Ron Wyden (D-Ore.) was reported out of the House panel in a resounding 40-3 vote last week, with all three “no” votes coming from Democrats.
Asked about calls from Republicans to raise the SALT cap in a Bloomberg News interview last week, Smith said that additional changes like that will “sink the bill.”
“There hasn’t been a bipartisan tax package in years. This will break that barrier, and then we can do additional measures,” Smith said in the interview.
House Democrats expect the bill to come up for a floor vote next week under a fast-track suspension of the rules process, requiring a two-thirds majority for passage. While Democrats do not expect to whip the bill, they do expect it to pass with wide bipartisan support. Republican leaders have not yet confirmed that schedule.
The suspension process gets around having to pass a procedural rule to consider the bill, a typically party-line vote that GOP rebels in this Congress have used to block legislation as a form of protest.
That tactic is more favored by members of the House Freedom Caucus and their allies, but a handful of swing-district New York moderates had also voted against a rule to protest policy in November.
With one of the smallest House majorities in history, House GOP leaders have utilized the suspension process to pass two stopgap government funding bills since Johnson became Speaker.
LaLota told reporters earlier this month that if the tax bill is brought up under suspension without the SALT tax deduction increase, “a lot of us, especially from high-tax blue states, will be tremendously disappointed.”
And that process itself has frustrated hard-line conservatives.
“We shouldn’t be a majority that just rules by suspension, you know, so that Boeing can get more tax credits,” said Rep. Scott Perry (R-Pa.), the former chair of the House Freedom Caucus.
“I think the Speaker is trying to reflect the will of this conference and the Congress and call the balls and strikes,” Perry said. “I’m hoping he will see this for what it is and send it to the Rules Committee.”
Perry was skeptical that expansion of research and development tax credits would help small businesses and criticized the bill’s expansion of the child tax credit, and that it allows migrants who are in the country illegally to keep claiming the child tax credit.
“It’s just the swamp as usual,” Perry said.
Some of those complaints were also discussed in a talking points sheet Wednesday by Advancing American Freedom, an advocacy group launched by former Vice President Mike Pence. While it praised the bill for “cutting taxes on R&D & pro-growth investments” and “ending double taxation on businesses that operate in both the United States and Taiwan,” the organization charged that the bill “transforms the Child Tax Credit into yet another welfare program” and decried it for not addressing “anchor baby bonuses.”
But Americans for Tax Reform, another right-wing organization, went to bat for the bill by rebutting much of the criticism about the child tax credit provisions.
“There is absolutely no change from the Trump policy enacted in the 2017 tax cuts. There are no ‘anchor baby bonuses’ in this bill as one organization alleged,” the group said, adding that the requirement for a Social Security number imposed in the Tax Cuts and Jobs Act passed during the Trump-Pence administration “remains untouched in this bill.”
“To oppose this legislation for failing to change current law is to oppose the Trump Administration’s CTC policy imposed in the Trump Tax Cuts,” the group said.
The House Ways and Means Committee says that the bill has “pro-growth, pro-worker, pro-America tax provisions,” saying it will give $185 billion in tax incentives over two years and, if made permanent, $600 billion over a decade — compared with child tax credit changes of $33 billion over two years and $110 billion over a decade.
But months of internal gridlock over government spending and culture war policy riders have shown that there is little appetite for compromise, with some Republicans including Rep. Marjorie Taylor Greene (R-Ga.) even floating a move to force a vote on ousting Johnson from the Speakership if he supports certain measures.
“It’s a Christmas tree full of bad stuff with a few good things. It’s the way Washington, D.C., always does stuff. It’s a bad way to do business,” said Rep. Andy Biggs (R-Ariz.), a former chair of the Freedom Caucus.
“Democrats are Marxists, and we have to beat them. But I am not going to pretend that Republicans aren’t just as guilty because of their absolute absurd adherence to this dogma of, oh, let’s put some corporate taxes on the floor,” Roy said on the Fox radio program Thursday.
Mike Lillis and Mychael Schnell contributed.
