Johnson downplays debt cliff risks with one-track reconciliation push
Trying to raise the debt limit in a massive reconciliation bill could completely derail an already messy process. Speaker Mike Johnson is insisting it’s still his plan.
Republicans were already worried that passing new policies on the border, energy and taxes via the budget reconciliation process — which they can use to pass bills on a party-line basis — was going to be difficult. Johnson then promised incoming President Donald Trump in December that he would also use a reconciliation bill to raise the debt ceiling, adding another layer of complexity. Conservatives are generally opposed to raising the debt limit and have demanded huge spending cuts in exchange for their support.
Asked about the potential risks to the nation’s credit rating if the package is delayed, Johnson indicated in a brief interview Tuesday that he’s still pushing for the measure and reiterated his optimistic timeline for passage.
“We're gonna get the debt limit handled well before the June deadline. So we're not concerned about that,” Johnson said, referring to a tentative estimate for when the nation could be risking default unless Congress acts.
GOP leaders have been privately discussing several options for the debt limit, including dealing with it via the budget reconciliation process as part of a deal with hardliners to pair it with deep spending cuts. They’ve also raised the option of incorporating a debt ceiling hike in the upcoming federal funding talks — though Johnson acknowledged in a press conference earlier Tuesday that such a move would require bipartisan negotiations, meaning Democrats could make spending demands in exchange for their support.
In the Tuesday press conference, Johnson reiterated to reporters that “the intention is to handle the debt limit in reconciliation.” He added: “That way, as the Republican Party, the party in charge of both chambers, we then get to determine the details of that.”
Not all Republicans are fully settled on a strategy yet, however.
“How we deal with the debt limit is currently unresolved,” Sen. John Cornyn (R-Texas) said. “We’re going to be looking to see what the House is capable of passing.”
Republicans on the Senate Intelligence Committee are racing to schedule confirmation hearings next week for Tulsi Gabbard and John Ratcliffe — though panel Democrats and winter weather are complicating those plans.
Sen. Tom Cotton, the new chair of the committee, wants to convene hearings for President-elect Donald Trump’s two top spy picks before his inauguration on Jan. 20, his spokesperson, Patrick McCann, said in a statement Tuesday.
Trump has nominated Ratcliffe to be head of the CIA and Gabbard as Director of National Intelligence.
“The Intelligence Committee, the nominees, and the transition are diligently working toward that goal,” McCann said.
But reaching that goal might be a challenge.
Committee rules stipulate that vetting paperwork for the nominees must be received by the panel at least one week before the confirmation hearings. But snow and office closures at the Office of Governmental Ethics have slowed civil servants from processing some of the necessary vetting paperwork for the two candidates.
Panel Democrats are unwilling to waive those rules in order to make an exception for the two candidates, a person familiar with the confirmation process told POLITICO. Gabbard’s nomination has drawn sharp scrutiny for her lack of intelligence experience, sympathetic comments about Russia and for once taking a secret trip to meet with Syrian dictator Bashar Al-Assad.
The committee has not yet received Gabbard’s pre-hearing questionnaire, her ethics disclosure or FBI background check, the person said.
Some of that paperwork wasn’t due until Thursday.
Alexa Henning, a spokesperson for Gabbard in the confirmation, said they are “working in lockstep” with Cotton to wrap the hearing before inauguration day.
Ratcliffe, a former member of Congress from Texas who served as DNI during Trump’s first term, is “hopeful his hearing will happen next week,” said a person familiar working on his confirmation who spoke on condition of anonymity to discuss the process.
Cotton could seek a full committee vote to override the vetting rules. But it would be a tight vote on the narrowly divided committee — which has nine Republicans and eight Democrats — and one that could cast a harsh spotlight on GOP lawmakers wary about one of Trump’s picks.
The panel would still be on track to hold the confirmation hearings late next week if the vetting documents for the nominees come through in the next three days.
The incoming Trump administration plans to offer an expansion of the state and local tax deduction to Republican lawmakers from New York, New Jersey and California who are heading to Mar-a-Lago on Saturday for a sit-down with the president-elect.
While exact details weren't available, one proposal being discussed would allow married couples to deduct $20,000 of their state and local taxes from their federal income taxes. Under current law, married couples can deduct only $10,000, which is the same for single taxpayers.
In return, the so-called SALT Republicans will be expected to fall in line behind a sweeping tax bill the GOP hopes to enact later this year, two sources familiar with the new administration’s thinking told POLITICO, who were granted anonymity to discuss the internal strategizing.
The lawmakers — who represent politically competitive, high-tax districts where constituents have been dinged by the SALT cap — haven't ruled out pushing for other changes, though.
The talks will be just one part of a broader set of discussions President-elect Donald Trump plans to hold in Florida this weekend that will also include members of the House Freedom Caucus and the chairs of important House committees.
However, the outcome of the conversations with SALT Republicans promises to be particularly important for the GOP’s plans to pass an extension of expiring provisions of the tax cuts enacted during Trump's first administration.
Members of the coalition stalled tax legislation in the 118th Congress several times over their demands for SALT relief, which is otherwise widely unpopular in the Republican conference. And, in the GOP’s slim two-seat majority, the group now wields tremendous leverage again — and House leadership knows it.
The issue “will definitely come up. I think that’s a big sticking point for the members that will be there,” said Rep. Nicole Malliotakis (R-N.Y.), who is part of the SALT caucus and also a member of the tax-writing House Ways and Means Committee.
Malliotakis said that New York Republicans would be meeting on Wednesday to go over their strategy ahead of the meetings in Florida.
“We’re going to go over the impact SALT has had in each of our districts, how many people take SALT versus the standard deduction, what are the income levels that are affected,” said Malliotakis.
Rep. Mike Lawler (R-N.Y.) confirmed to POLITICO on Tuesday that he would also be part of the group of lawmakers making the pilgrimage to Mar-a-Lago.
We’re going to “have broad discussions but obviously SALT will be part of it,” Lawler said.
It’s possible that the group will push for something more than doubling the deduction for married couples, which the lawmakers call a "marriage penalty." The New Yorkers are quick to point out that Trump himself pledged at a campaign rally in Long Island to expand SALT relief — and that the blue districts they represent are some of the most competitive in the country.
Former New York Republican Rep. Marc Molinaro, who lost his reelection last year, told POLITICO in December that voters might have returned him to Congress if Republicans had achieved something on SALT.
“I think the logical way to do it is to, at a minimum, double it and get rid of the marriage penalty elements of it,” said Molinaro. “What I would say is that’s the floor, I think, from a constituent’s perspective, from a voter’s perspective.”
Malliotakis said that changes in the alternative minimum taxes for upper-income taxpayers, which would further erode the value of the SALT deduction and were repealed in 2017, "cannot come back."
"That's a red line for me," she said.
House Ways and Means Chair Jason Smith (R-Mo.), who will lead the charge on tax policies this year, has acknowledged Trump's desire to address the SALT cap. Yet, Smith has also asserted that Republicans cannot fully repeal the limit, which they put in place in 2017 to help pay for their Tax Cuts and Jobs Act in 2017.
The non-partisan Committee for a Responsible Federal Budget estimated in 2021 that a full repeal of the cap would cost $900 billion.
“That’s how [Trump] does things differently,” Smith told POLITICO, referring to the meetings scheduled for Mar-a-Lago. “He’s going to have all the committee chairmen down there on Saturday, too, the Freedom Caucus, so being there to listen to him.”
The Senate panel overseeing the confirmation of President-elect Donald Trump’s pick to lead the Education Department is waiting on documents from the transition team to proceed further, likely punting the hearing to after Inauguration Day.
Sen. Bill Cassidy, chair of the Senate HELP Committee, said the timeline for Linda McMahon’s confirmation hearing is dependent on getting paperwork. Cabinet nominees have to submit documentation like financial disclosures and conflict of interest forms to the Office of Government Ethics.
“It really depends on us getting paperwork,” Cassidy told POLITICO when asked about the timeline for the confirmation hearing. “Right now the hold seems to be on their side.”
Senate committees have set up a string of confirmation hearings for Trump’s national security and energy-related cabinet picks next week. Education Secretary Miguel Cardona’s confirmation hearing was held Feb. 3, 2021, 14 days after Joe Biden's inauguration, and former Education Secretary Betsy DeVos’ hearing was held on Jan. 17, 2017, three days before Trump's first........
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