Speaker Mike Johnson Panders To Shutdown Caucus With Proposed IRS Funding Cut

Cutting IRS funding may make an aid bill easier to pass in the House, but it feeds the dynamic that nearly led to a government shutdown earlier in the year.

WASHINGTON ― If House Speaker Mike Johnson’s decision to pair Israel aid with IRS cuts foreshadows his future legislative strategy, then the odds of another government shutdown showdown next month are rising.

By pairing the aid with a targeted cut of IRS funding, Johnson may win support from Republicans but likely ensured the package is dead upon arrival in the Senate if it passes the House.

Johnson, in an interview Sunday on Fox News, denied the bill, which would provide about $14 billion in military aid to Israel in addition to the IRS cuts, was meant to score political points.

“My intention is not to use this for any partisan, political gamesmanship. This is a very serious matter,” he said.

But the proposal amounts to Johnson throwing a bone to the same extreme faction of House Republicans who threw out his predecessor in the speaker’s office, Rep. Kevin McCarthy (R-Calif.).

After winning the speaker’s gavel by placating his far-right flank in January, McCarthy’s first move was for the House to pass a symbolic bill slashing an IRS funding boost enacted last year by Democrats. Now, Johnson is following his lead.

It doesn’t matter that funding tax enforcement yields much more revenue down the line or that a Democratic-controlled Senate would never approve their bill; these Republicans operate in an alternate reality where higher tax revenue is forbidden, and Democrats have no rightful role in governing.

McCarthy pursued a Republican-only approach to a government funding deadline in September, only to abandon it at the last minute when he couldn’t get his own conference to agree on a bill. After McCarthy then allowed a vote on a funding measure that passed with bipartisan support, avoiding a government shutdown, Republicans knifed his speakership. Johnson now confronts essentially the same conundrum.

When Republicans passed their symbolic bill in January slashing $71 billion from the IRS budget, the Congressional Budget Office reported that if it actually became law, the government would lose $185 billion in tax revenue over a decade, for a net loss of about $114 billion.

That same dynamic would apply to the Israel bill, according to one budget group.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, praised Republicans for seeking offsets for new spending but said an IRS cut would be worse than no offset at all.

“Instead of costing $14 billion, the House bill will add upward of $30 billion to the debt,” MacGuineas said. “Instead of avoiding new borrowing, this plan doubles down on it.”

The extra IRS funds were part of a broader bill Democrats passed last year called the Inflation Reduction Act ― one of their proudest legislative achievements under President Joe Biden. Democrats have repeatedly touted the way extra funds for IRS enforcement, especially on complex cases involving business income, have forced “wealthy tax cheats” to pay their fair share.

“Thanks to the Inflation Reduction Act, the IRS has already recovered $160 million from 275 individuals who make more than $1 million a year and have $250,000 in recognized tax debt,” Ashley Schapitl, a spokeswoman for the U.S. Treasury Department, said in an email. “This legislation would put a stop to these efforts, allowing wealthy individuals and large corporations to continue to get away with not paying their fair share.”

The IRS estimates the annual tax gap — the difference between taxes owed and the amount paid on time — grew to $688 billion in 2021. For the sake of comparison, that’s almost as much as lawmakers agreed to as a limit on spending for all of government outside of national defense in 2024, $704 billion.

Johnson has said he would support a temporary government funding resolution if lawmakers can’t finish bills for individual federal agencies before a Nov. 17 deadline. But Johnson may attach other measures to the stopgap bill, such as budget cuts or immigration changes, that could make it more partisan and more complicated.

“There may be some conditions put on that,” Johnson said.

With Republicans holding only a five-seat majority, Johnson can afford only a few defections on the Israel bill. Being unable to pass a bill out of the House would hamper his negotiating position with the Senate and the White House, as happened to McCarthy in the spring over the debt limit.

And one Republican, Rep. Joe Wilson (R-S.C.), is already making noises about potentially opposing the bill. He signed on to a letter with three Democrats Monday night that said help for Israel should not be separated from aid to Ukraine and the Indo-Pacific region and that doing so would be more expensive in the long run.

They wrote, “The introduction of offsets, or the potential deferral of our commitments, threatens not only our national interest, but also our long-term fiscal health. It is far better and less costly in blood and treasure to ensure Russia, Iran, and Hamas are defeated in their current wars than it will be if they achieve strategic victories against Ukraine or Israel.”

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