House passes Israel aid tied to IRS cuts, triggering Biden clash

House Republicans, led by newly installed Speaker Mike Johnson, passed a $14.3 billion Israel aid package tied to cuts in IRS funding, triggering a clash with Democrats over tax law enforcement that risks delaying U.S. financial help. 

Lawmakers from both parties are largely united in supporting assistance for Israel in its war against Hamas. But approval of the aid is now wrapped up in fights over other emergencies such as Ukraine aid, conservative demands to cut domestic spending and partisan disagreements over taxation. 

The House passed the aid package 226 to 196 on Thursday, with most Democrats opposing the measure because of the cuts to the Internal Revenue Service. The White House threatened to veto the bill over the provision, which the nonpartisan Congressional Budget Office forecast would cost the federal government $27 billion in revenue lost to tax cheaters.

Johnson was able to keep fractious ultraconservatives in the GOP largely united behind the plan by including the IRS cuts. Just two Republicans voted no. Twelve Democrats voted in favor of the legislation.

Senate Majority Leader Chuck Schumer, a New York Democrat, vowed Thursday that the Senate won’t vote on the House bill and instead will produce a broader emergency package without cuts to the IRS.

“We will work together on our own bipartisan emergency aid package that includes aid to Israel, Ukraine, competition with the Chinese government, and humanitarian aid for Gaza,” Schumer said.

That risks a time-consuming impasse with the Republican-controlled House. 

Johnson told reporters before the House vote that he would insist on the IRS cuts because of the growing U.S. budget deficit. 

“We are in dire straits as a nation,” he said. “I’m ready to have that debate.”

The new speaker and his Republican allies disputed a CBO estimate that the IRS provisions would increase the deficit by $12.5 billion. 

They argued the IRS would unfairly target the middle class with funding for tax enforcement included in President Joe Biden’s signature Inflation Reduction Act. Treasury Secretary Janet Yellen last year ordered the agency not to use the money to increase audits on small businesses or taxpayers making less than $400,000 a year.

Yellen, in an interview on CNN Thursday night, said she considered the House measure “an irresponsible bill.”

“The only gainers from that are wealthy tax cheats and corporations that will pay fewer taxes that they owe, because the IRS will be deprived of $14 billion of money for tax enforcement,” Yellen added.

Swing-district Republicans, however, said the fight was good politics for them against the Democrats.

“If they want to choose the IRS over Israel, that’s their choice. I choose Israel,” said New York’s Marc Molinaro. 

The Biden administration last month requested a $106 billion emergency aid package that included the Israel assistance along with funding for Ukraine, Taiwan and humanitarian relief in Gaza and Israel. It also proposed $56 billion in emergency domestic funds that many Democrats want attached to the package.

Many House Republicans, including the new speaker, have previously opposed Ukraine aid.

Johnson said the House will vote on Ukraine aid as soon as next week in a separate package joining it to US border enforcement measures favored by Republicans. 

Senate Democrats and Republicans are preparing to release their own emergency spending bill as soon as next week. Senate Minority Leader Mitch McConnell, a Kentucky Republican who is a long-time supporter of assistance to Ukraine, said assisting the country’s counter-offensive against Russia is a critical national interest.

“We don’t have the luxury of closing our gates and hoping for evil to leave us alone,” he said. “Now is not the time for the leader of the free world to go to sleep.”