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GOP fractures over how much debt to run up for tax cuts

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Ultra-conservatives in the House are threatening to block a budget blueprint to kickstart tax cut negotiations, potentially delaying passage of President Donald Trump’s economic plan.

The lawmakers oppose a Senate-passed tax outline and are threatening to hold up a key vote this week over concerns it does not adequately address the deficit. Both the House and Senate must agree to the parameters of tax and spending cuts before they can advance the president’s signature economic plan.

“I would be surprised if it comes up for a vote. There are so many no votes,” Representative Andy Ogles, a Tennessee Republican, told reporters on Tuesday.

The opposition follows a White House meeting Trump held earlier Tuesday with some of the holdouts to urge them to support the measure. Republican House Speaker Mike Johnson joined the president in the session seeking to persuade the lawmakers to change their positions.  

Following the meeting, Trump said he reassured lawmakers that he was in favor of major spending cuts. He set a $1 trillion target — half of what conservative holdouts are seeking.  

“WE ARE GOING TO DO REDUCTIONS, hopefully in excess of $1 Trillion Dollars, all of which will go into ‘The One, Big, Beautiful Bill,'” Trump wrote. “I, along with House Members and Senators, will be pushing very hard to get these large scale Spending Cuts done, but we must get the Bill approved NOW.”

The message resonated with some. Representative Byron Donalds, a Florida Republican who had blasted the Senate budget, said after the Trump meeting he would vote for it.

But not all were won over.

“Totally appreciate where the president stands on this but at the end of the day the Senate needs to do its work,” Ogles said, suggesting that the Senate should instead adopt a budget plan more in line with the ultra-conservatives’ views. He estimated about 30 House members who oppose the budget outline.

The key dividing point is whether the tax plan should call for trillions — or mere billions — in spending cuts.

The Senate early Saturday passed a budget plan allowing $5.3 trillion in tax cuts and a $5 trillion debt ceiling increase that required just $4 billion in spending cuts. That differed sharply from an earlier House-passed budget allowing $4.5 trillion in tax cuts and a $4 trillion debt ceiling increase in exchange for $2 trillion in cuts.

Some Senate Republicans objected to provisions in the House budget targeting food assistance and Medicaid health coverage for the poor and disabled. 

Senate Republicans said they plan to find far more than $4 billion in cuts, but House spending hawks are skeptical. House ultra-conservatives were especially irked by a Senate decision to use a budget gimmick to assume that the $3.8 trillion price tag for extending Trump’s 2017 tax cuts costs nothing. 

“We won’t move something unless it’s hitting certain numbers” on spending cuts in line with the earlier House-approved budget, said Republican David Schweikert of Arizona, who added he was still planning to vote against the current budget plan after attending the White House meeting. 

House members including Marjorie Taylor Greene of Georgia and Scott Perry of Pennsylvania also have criticized the Senate outline for being far too lax in its directives for spending cuts.

“You don’t have to be a calculus major to know that the math isn’t adding up,” Perry said.

Johnson said on Tuesday that “time is of the essence” in passing the budget blueprint. Following the White House meeting, he predicted a vote would still occur this week. Lawmakers plan to leave Washington later this week for a two-week holiday break.

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Acting IRS commissioner reportedly replaced

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Gary Shapley, who was named only days ago as the acting commissioner of the Internal Revenue Service, is reportedly being replaced by Deputy Treasury Secretary Michael Faulkender amid a power struggle between Treasury Secretary Scott Bessent and Elon Musk.

The New York Times reported that Bessent was outraged that Shapley was named to head the IRS without his knowledge or approval and complained to President Trump about it. Shapley was installed as acting commissioner on Tuesday, only to be ousted on Friday. He first gained prominence as an IRS Criminal Investigation special agent and whistleblower who testified in 2023 before the House Oversight Committee that then-President Joe Biden’s son Hunter received preferential treatment during a tax-evasion investigation, and he and another special agent had been removed from the investigation after complaining to their supervisors in 2022. He was promoted last month to senior advisor to Bessent and made deputy chief of IRS Criminal Investigation. Shapley is expected to remain now as a senior official at IRS Criminal Investigation, according to the Wall Street Journal. The IRS and the Treasury Department press offices did not immediately respond to requests for comment.

Faulkender was confirmed last month as deputy secretary at the Treasury Department and formerly worked during the first Trump administration at the Treasury on the Paycheck Protection Program before leaving to teach finance at the University of Maryland.

Faulkender will be the fifth head of the IRS this year. Former IRS commissioner Danny Werfel departed in January, on Inauguration Day, after Trump announced in December he planned to name former Congressman Billy Long, R-Missouri, as the next IRS commissioner, even though Werfel’s term wasn’t scheduled to end until November 2027. The Senate has not yet scheduled a confirmation hearing for Long, amid questions from Senate Democrats about his work promoting the Employee Retention Credit and so-called “tribal tax credits.” The job of acting commissioner has since been filled by Douglas O’Donnell, who was deputy commissioner under Werfel. However, O’Donnell abruptly retired as the IRS came under pressure to lay off thousands of employees and share access to confidential taxpayer data. He was replaced by IRS chief operating officer Melanie Krause, who resigned last week after coming under similar pressure to provide taxpayer data to immigration authorities and employees of the Musk-led U.S. DOGE Service. 

Krause had planned to depart later this month under the deferred resignation program at the IRS, under which approximately 22,000 IRS employees have accepted the voluntary buyout offers. But Musk reportedly pushed to have Shapley installed on Tuesday, according to the Times, and he remained working in the commissioner’s office as recently as Friday morning. Meanwhile, plans are underway for further reductions in the IRS workforce of up to 40%, according to the Federal News Network, taking the IRS from approximately 102,000 employees at the beginning of the year to around 60,000 to 70,000 employees.

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Accounting

On the move: EY names San Antonio office MP

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Carr, Riggs & Ingram appoints CFO and chief legal officer; TSCPA hosts accounting bootcamp; and more news from across the profession.

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Accounting

Tech news: Certinia announces spring release

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Certinia announces spring release; Intuit acquires tech and experts from fintech Deserve; Paystand launches feature to navigate tariffs; and other accounting tech news and updates.

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