Happy Tuesday! On this date 21 years ago, Michael Jordan played in his last NBA game, which was a loss by the Washington Wizards.
Here’s an update on today’s big game in Washington.
Facing Right-Wing Revolt, Johnson Says He Won't Resign
House Speaker Mike Johnson insisted Tuesday that he will not give up his gavel after a second member of his Republican conference called for his ouster, joining in a revolt by Georgia Rep. Marjorie Taylor Greene.
Rep. Thomas Massie, an iconoclastic right-wing hardliner from Kentucky, confronted Johnson at a private meeting of GOP members Tuesday morning — reportedly telling him, “you’re not going to be speaker much longer” — and then publicly announced that he would co-sponsor Greene’s “motion to vacate” the speakership and called on Johnson to step down so that Republicans could have an easier time choosing his replacement.
“I am not resigning,” the speaker told reporters Tuesday morning, adding that he thinks it is “an absurd notion” that someone would try to remove him. “It is not helpful to the cause. It is not helpful to the country. It has not helped the House Republicans advance our agenda.”
Massie’s move came after Johnson on Monday unveiled a plan to move ahead on a long-stalled foreign aid package by bringing up four separate bills covering assistance to Ukraine, Israel, and Taiwan along with other Republican foreign policy priorities, including turning some aid into loans, using seized Russian assets to help Ukraine, and requiring TikTok to be sold.
With many House Republicans opposed to providing further funding for Ukraine, Johnson has long resisted allowing a vote on a bipartisan $95 billion foreign aid plan passed by the Senate in February. But Iran’s attack on Israel over the weekend intensified the pressure on Johnson to push ahead with an aid plan, even if it threatened to trigger a Republican uprising and renewed House chaos. Greene has threatened to force a vote to remove Johnson if he puts forth a Ukraine aid bill.
Johnson is in a no-win situation politically. Splitting the aid into individual bills appeases some Republicans, but still leaves him vulnerable to angry conservatives while also raising uncertainty about the ultimate passage of each bill. The White House came out against separating the aid bills and President Joe Biden reportedly questioned the speaker’s strategy during a call Monday night. Johnson insisted that the House would have trouble with the Senate-passed bill and that his approach was “the only way forward,” according to Politico.
What’s next: It’s not clear when Greene will move to force a vote on Johnson’s job, but if or when she does, the speaker will likely need to rely on Democrats to help him keep his gavel. Many Republicans continue to support Johnson and oppose the idea of ousting him over the aid plan, but others could join Greene and Massie.
“The motion is going to get called, okay? Does anybody doubt that? The motion will get called, and then he’s going to lose more votes than Kevin McCarthy. And I have told him this in private, like weeks ago,” Massie said after the GOP meeting.
As for the aid package, Johnson’s plan is likely to lead to House votes on Friday, though lawmakers had been scheduled to leave the capital Thursday afternoon and be in recess next week. The first test will be getting the bills through the Rules Committee. Democratic votes may not be needed to clear that step but will more than likely be needed to get the bills through on the House floor, including procedural votes. “The text of the plan has not been released, so House Democrats are still weighing whether to bail out Johnson – or stand up against it and pressure Republicans to instead take up the $95 billion Senate package that Johnson has sidelined for two months,” CNN reports.
The bottom line: Johnson’s survival may now depend on Democrats. Johnson told reporters Tuesday that he knew when he took the job that it would not be easy and that he considers himself a wartime speaker. The war isn’t just in Ukraine or Israel. It’s within his own party as well.
Quote of the Day: Higher for Longer
“We’ve said at the FOMC that we’ll need greater confidence that inflation is moving sustainably toward 2% before it would be appropriate to ease policy. The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence.”
— Federal Reserve Chair Jerome Powell, speaking Tuesday at an event in Washington about how the Federal Open Market Committee is responding to recent economic data that point toward sticky inflation and stronger growth.
Analysts expect the Fed to cut interest rates multiple times this year, but estimates are being pared back. At the start of 2024, many analysts thought the Fed would cut rates four or more times, starting in late spring or early summer, but futures markets now indicate just one or two cuts are expected later in the year. For some analysts, even that seems like too many, and a handful of economists are talking about the possibility of the Fed raising rates in response to stubborn inflation and what could be accelerating growth.
Powell, as always, said the Fed will wait to see what the data says. If inflationary pressure persists, Fed officials can maintain the current relatively high interest rates “as long as needed.”
“Given the strength of the labor market and progress on inflation so far,” he said, “it is appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us.”
Biden Admin Releases Draft of Student Loan Forgiveness Plan
The Department of Education on Tuesday released a first set of draft rules for President Joe Biden’s proposed plan to provide billions of dollars in forgiveness of student loan debt.
The rules will be formally published in the Federal Register on Wednesday, April 17, and open to public comment for 30 days. A second draft will be released “in the coming months” after officials sift through the comments, with the goal of providing debt relief starting in the fall.
Secretary of Education Miguel Cardona said the proposal shows that the Biden administration is serious about fixing “a broken higher education system” that saddles students with debt. "Student loan forgiveness isn't only about relief for today's borrowers,” he said. “It's about social mobility, economic prosperity, and creating America that lives up to its highest ideals.”
The draft includes nine rules that permit waivers authorized by the Higher Education Act, the Department of Education said. The waivers focus on canceling accrued interest; eliminating debt for those making payments for 20 years; providing forgiveness for those who qualify but have not received relief due to “paperwork requirements, bad advice, or other obstacles”; and helping those who attended “low-financial-value programs or institutions.”
The administration is also working on a separate proposal to “help many other borrowers experiencing hardship related to student loans that creates a barrier to them fully repaying their loans or the cost of collection is not justified.” The rule for that proposal will be released in the next few months.
Estimating the cost: As we noted last week, analysts at the Penn Wharton Budget Model estimate that Biden’s proposal would cost about $84 billion and affect about 17 million people. Combined with an earlier debt forgiveness effort from the Biden administration that focuses on those in the income-driven repayment plan called SAVE, and the cost increases by $475 billion, for a total cost of $559 billion. The combined plans would affect about 28 million people.
On Tuesday, the Committee for a Responsible Federal Budget released an analysis that puts the estimated cost of Biden’s new proposed plan at $147 billion. The analysts say that if the administration also forgives student loan debt based on hardship or likely default, the cost could rise significantly to between $250 billion and $750 billion over a decade, though there is considerable uncertainty to how this type of forgiveness would play out.
“In total, our $250 billion to $750 billion estimate for the total cost of the plan would be in line with the cost of the Administration’s $400 billion blanket debt cancellation, which was ruled illegal by the Supreme Court,” CRFB said.
Fiscal News Roundup
- Momentum Builds to Oust Johnson From House Speakership – Washington Post
- Mike Johnson Says He Won’t Resign Amid Right-Wing Backlash Over Foreign Aid to Ukraine – CNN
- Conservatives Are Openly Threatening to Tank Johnson's Foreign Aid Plan – Politico
- Mike Johnson Tries to Thread a Foreign Aid Needle – Politico
- Biden Not Ruling Out Johnson’s Foreign Aid Gambit. But Not Embracing It Either – Politico
- Biden Visits His Pennsylvania Hometown to Call for More Taxes on the Rich and Cast Trump as Elitist – Associated Press
- Jay Powell Says US Inflation ‘Taking Longer Than Expected’ to Hit Target – Financial Times
- IMF Steps Up Its Warning to US Over Spending and Ballooning Debt – Bloomberg
- Global Economy Is Picking Up Steam, but Poorest Countries Are Falling Behind, IMF Says – Wall Street Journal
- US to Grow at Double the Rate of G7 Peers This Year, Says IMF – Financial Times
- Biden Moves to Finalize First Set of Alternative Student-Debt Rules – Bloomberg
- House Republicans Send Mayorkas Impeachment Articles to the Senate, Forcing a Trial—Associated Press
- Why Homeless People Are Losing Health Coverage in Medicaid Mix-Ups – NPR
Views and Analysis
- Johnson’s Foreign-Aid Plan Relies on Democrats Saving Him Repeatedly – Ed Kilgore, New York
- Mike Johnson Just Got One Vote Closer to Losing His Job – Ellie Quinlan Houghtaling, New Republic
- This Might Be Trump’s Most Inflationary, Economically Destructive Idea Yet – Catherine Rampell, Washinton Post
- While Biden Worries About the Left, the Voters He Needs Are in the Center – Molly Ball, Wall Street Journal
- The Federal Debt Is on the Table This Election. Candidates Have Differing Approaches – Ben Harris, The Hill
- Soaring Debt Levels Put Policymakers in a Tight Spot – Lori Heinel, Financial Times
- What If Fed Rate Hikes Are Actually Sparking US Economic Boom? – Ye Xie, Bloomberg
- Paul Krugman Is Right About the Economy, and the Polls Are Wrong – Jonathan Chait, New York
- A $1.7 Million Toilet and Liberalism’s Failure to Build – Ezra Klein, New York Times (podcast)
- North Carolina’s Tale of Two Tax Cuts – Wall Street Journal Editorial Board