April 2024 Policy Pulse

It’s been a tumultuous start to the second session of the 118th Congress. When lawmakers return from a two-week recess next week, we expect legislating will continue to prove difficult, particularly as the focus shifts from policy to politics.

Government funding

After four continuing resolutions, Congress was finally able to pass the final six appropriations bills, funding the government for the remainder of the fiscal year. The $1.2 trillion “minibus” passed in the early hours of March 23, narrowly avoiding a government shutdown.

The funding bill didn’t contain any tax provisions but did provide annual funding for the IRS, holding steady from the previous fiscal year at $12.3 billion. In addition, the package clawed back $20.2 billion of the nearly $80 billion in additional IRS funding provided by the Inflation Reduction Act (IRA). This was an acceleration from the previous deal, struck by former Speaker Kevin McCarthy (R – CA) and Senate Majority Leader Chuck Schumer (D – NY), which called for $10 billion in funding decreases in both FY24 and FY25. The additional IRS funding provided by the IRA is earmarked for modernization and enforcement efforts.

Bipartisan tax bill

Not much hope remains for the Tax Relief for American Families and Workers Act, the bipartisan tax deal crafted by House Ways and Means Chair Jason Smith (R – MO) and Senate Finance Committee Chair Ron Wyden (D – OR). The bill, which passed the House by a wide margin in January, has stalled in the Senate. Sen. Mike Crapo (R – ID), ranking member of the Senate Finance Committee, has forcefully opposed the compromise in its current form. In recent weeks, Crapo has received support from several notable Republicans including Senate Majority Leader Mitch McConnell (R – KY), Minority Whip John Thune (R – SD) and Sen. John Cornyn (R – TX). Before leaving town, Crapo and Wyden traded offers to no avail.

Before leaving Washington, Schumer placed the bill on the Senate calendar, a move that would allow him to bypass the Senate Finance Committee and bring the bill to the floor for a vote. In order to accomplish this, Schumer needs 60 Senators to vote to invoke cloture, meaning Schumer would need at least nine Republicans to break with Crapo. With the growing Republican resistance and critical comments by Sen. Elizabeth Warren (D – MA), it appears unlikely Schumer will be able to reach the required three-fifths threshold to overcome a filibuster. However, simply holding a cloture vote could be seen as a political win for Democrats, as it would put Republicans on record as opposing the legislation.