Spending deal that helped sink McCarthy sees new hope as conservatives ease up

After months of infighting, bruising failed floor votes and the historic ouster of their leader, House Republicans could end up falling back on a bipartisan debt ceiling deal struck by former Speaker Kevin McCarthy (R-Calif.) earlier this year that helped lead to his undoing.  

The agreement, brokered by the White House and GOP leadership, appears to be seeing the greatest glimmers of hope since its passage in the spring, as hard-line conservatives soften demands for cuts steeper than those laid out in the compromise.  

“Basically, they agreed to what we had said all along, that the numbers that the Speaker agreed to with the president were the numbers that are set and the numbers we should live by,” Rep. David Joyce (R-Ohio), a spending cardinal on the House Appropriations Committee, told The Hill. 

House Republicans have repeatedly clashed this year over spending, as the right flank pressured GOP leadership to take a more aggressive stance on spending levels in the conference’s 12 annual government funding bills. 

The strategy was to achieve the most conservative starting position possible ahead of eventual negotiations with Senate Democrats. But as the House GOP struggles to unify behind its five remaining funding bills, some in the right flank are letting up on their push for significantly lower funding levels, which they acknowledge is no longer achievable.  

Rep. Scott Perry (R-Pa.), head of the ultraconservative House Freedom Caucus, said last week that the $1.59 trillion discretionary spending level set as part of the Fiscal Responsibility Act (FRA) for fiscal 2024 needed to be accepted as “the limit” in bicameral spending negotiations. 

While he said the number is still “too high” for the caucus, his comments come as the group is pressing for both chambers to begin to conference their drastically different batch of funding bills as soon as possible, particularly as Congress stares down another government shutdown deadline in January. 

“We never agreed to this number, but we understand that, right now, we’re in peril of actually being at like $1.8 [trillion] as opposed to $1.59 [trillion],” he argued Friday, while taking aim at the Senate over “additional packages” the upper chamber could pass in the weeks ahead as it considers aid for Israel and Ukraine. 

“So, we’re just saying, look, you already voted for $1.59 [trillion] in FRA. That’s the limit,” Perry said. 

While the caucus’s shift on the issue has drawn attention in the past week, some in the conference view the change in tone as a long time coming.  

“This is where I always thought we would end up,” Rep. Tom Cole (R-Okla.), another spending cardinal, said. “So, I’m not surprised that they understood that something that both houses had passed and the president signed was probably going to be the deal.” 

The House Freedom Caucus had pushed for a top line of $1.47 trillion for the conference’s starting position ahead of bipartisan talks with the Senate, while sharply criticizing the budget deal struck by McCarthy as part of a larger agreement to raise the debt ceiling.

Members of the caucus repeatedly used hard-line tactics on the floor to pressure leadership for steeper cuts to the party’s funding bills, before some in the right flank touted an internal agreement from leadership in September to craft the party’s spending bills to a top-line level of about $1.526 trillion. 

But tensions hit a fever pitch later that month, just as government funding was also set to run out, as McCarthy struggled to pass legislation to keep the lights on amid internal disagreements on spending.  

Despite the add-ons to the GOP-proposed stopgap bill that called for immediate cuts and border policy changes intended to sweeten the pot for conservatives, the measure failed to gain adequate support from the conference.

That led McCarthy to bring up a bipartisan stopgap in the eleventh hour that averted a shutdown — but also helped cost him his job. 

The conference eventually passed several more of its annual spending bills under the leadership of Speaker Mike Johnson (R-La.).

But Republicans face serious hurdles to passing their remaining spending bills, which include some of the party’s biggest proposed cuts to nondefense programs, amid divisions over spending and thorny policy riders on issues such as abortion.  

At the same time, senators have also been held up passing their government funding bills as lawmakers have been working to strike an ambitious deal on a supplemental funding package that could include aid for Israel and Ukraine, as well as what Republicans hope are changes to border policy.  

As the annual appropriations work stalls in both chambers, lawmakers are hoping for a bicameral top-line agreement soon to kickstart bipartisan spending talks. 

Cole, who heads the subcommittee that oversees funding for the Department of Transportation, said Friday that he’s expecting to hear from GOP leadership this week on what top lines could look like in talks, as well as other issues such as rescissions. 

Earlier this year, Biden administration officials said the bipartisan debt limit agreement reached in May also included a handshake deal to pull back $20 billion in IRS funding that Democrats approved in the last Congress, with the purpose of reinvesting those funds into discretionary funding for nondefense programs. 

While hard-line conservatives have let up in their demands for spending below the budget caps agreed to by McCarthy and President Biden, Perry and others have already spoken out against rescissions to yank back old funding to offset spending elsewhere. 

“It’s still spending. When you add it up, the dollars that go out, have got to equal some number,” Rep. Ralph Norman (R-S.C.) said. “You can’t plus it back up. That includes the supplementals and the rescissions.” 

While Cole called rescissions a “normal tool” in Congress, he also said “whatever agreement was had was the agreement with Speaker McCarthy” and that he doesn’t see the current Speaker as “bound by it.” 

“It’s up to him, but we’ll work with whatever number and with whatever tools the current Speaker thinks is more appropriate,” Cole said.