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With Republicans in Congress planning to act early in 2025 on a budget reconciliation bill focused on extensions of TCJA end-of-2025 expiring provisions and other issues, Majority Leader Steve Scalise (R-LA) said during a November 19 press conference that he “assembled all of the committee chairs last week to go through what we will be doing in budget reconciliation starting in January. This is going to be a busy process next year.” He continued, “We laid out a very aggressive first 100-day agenda addressing the things that would get our country moving again, that would focus on lowering costs and getting our economy moving, making sure there is no tax hike next year. If Congress takes no action, the Tax Cuts and Jobs Act under President Trump, many of those provisions from 2017 would expire, leading to a large tax hike on families.”

House leaders continue to suggest they will move in lockstep with the new Administration. At the press conference, Speaker Mike Johnson (R-LA) said he met last weekend with the incoming President, “talking about the legislative plan, talking about the agenda going forward, lots of substantive discussions … I met with President-elect Trump and Vice President-elect JD Vance and their senior policy leaders. And there’s no daylight between their agenda and what they envision and what we envision for the House.”

What they envision could include new requirements for public assistance programs. The Washington Post reported November 18, “President-elect Donald Trump’s economic advisers and congressional Republicans have begun preliminary discussions about making significant changes to Medicaid, food stamps and other federal safety net programs to offset the enormous cost of extending Trump’s 2017 tax cuts next year. Among the options under discussion by GOP lawmakers and aides are new work requirements and spending caps for the programs.”

Meanwhile, other Republican leaders are confirming that two separate budget reconciliation bills will be available for enacting GOP-only proposals with a simple majority vote in the Senate in the next Congress — they will hold a 53-vote majority next year — rather than the 60-vote filibuster threshold that would apply to a tax bill considered under divided government. “We’ll have two bites at the reconciliation apple in the next calendar year,” Representative Jodey Arrington, a Texas Republican and the chairman of the House Budget Committee, said in a November 19 New York Times story. “And so we’ll have plenty of opportunity to reignite growth through pro-growth policies and include fiscal reforms.” Congress didn’t pass a budget for FY2025, and that resolution can provide for one reconciliation bill, with another for FY2026.

The story said: “Republicans are still figuring out how they could split their ambitions into distinct packages of legislation. One option under discussion is to focus an initial bill on extending the expiring tax cuts. Without an extension, popular provisions like lower marginal income rates and a larger standard deduction would end next year, amounting to a tax increase on Mr. Trump’s watch. Once those provisions are extended, lawmakers could turn to Mr. Trump’s campaign tax promises, like a lower corporate tax rate for American manufacturers as well as broader topics like immigration and spending cuts, and fold those into a second piece of legislation later in the year.”

Disaster funding — President Biden wrote to Speaker Johnson November 18 calling for nearly $100 billion in disaster relief funding for an “expeditious and meaningful Federal response to Hurricanes Helene and Milton and other natural disasters” — Including fires in Maui, tornados in Mississippi, Iowa, and Oklahoma, and rebuilding bridges, including in Maryland — plus funding for the Small Business Administration’s (SBA) disaster loan program, which has been completely exhausted.

With the Tax Relief for American Families and Workers Act (H.R. 7024) — addressing the IRC Sections 174 and 163(j), and bonus depreciation, along with Child Tax Credit (CTC) changes and a Taiwan tax bill — having stalled in the Senate, the House in May approved disaster tax relief provisions as a separate bill, and there are now efforts to attach that measure to a broader disaster bill. The Federal Disaster Tax Relief Act (H.R. 5863) by Rep. Greg Steube (R-FL) would allow losses from federally declared disasters that occur from January 1, 2020, through the date of enactment to be deducted from income taxes without itemizing and without a reduction based on adjusted gross income, and exclude compensation for losses from some wildfire disasters and the East Palestine, Ohio, train derailment from gross income. It passed 382-7.

Morning Tax November 19 said: “There are still discussions to be had about potentially pairing the funding request and the tax bill, which would offer special deductions for losses stemming from disasters and an exclusion for wildfire payments. There already has been some chatter about the disaster tax bill getting attached to a year-end funding measure.” Tax Notes reported Senate Finance Committee Chair Ron Wyden (D-OR) as saying senators have been engaged in conversations about disaster tax relief and that he hopes they will be as eager as he is to address emergency disaster recovery funding in the coming weeks.

Government funding — Disaster relief could get attached to an appropriations package, and the legislative wheels have begun turning for lame-duck legislation as Congress prepares to break for Thanksgiving at the end of this week and return in December with a pre-holiday deadline for a government funding bill. Speaker Johnson suggested over the weekend that he may prefer a temporary rather than full-year measure because, “December 20 is the deadline … and I think that would be ultimately a good move, because the country would benefit from it, because then you’d have Republican control, and we’d have a little more say in what those spending bills are.” That may be an unpopular opinion as some Republicans want to “clear the decks” with an omnibus spending bill through the end of FY2025 (September 30), rather than a continuing resolution (CR) until sometime earlier next year when Republicans plan to be considering TCJA extensions.

On another lame-duck matter, Punchbowl reported November 19 Speaker Johnson told Republicans in their closed-door conference meeting Tuesday that he wants a one-year extension of the farm bill, though there are members of both chambers that want the traditional five-year bill rather than a patch. Senate Agriculture, Nutrition, and Forestry Committee Chairwoman Debbie Stabenow (D-MI) November 18 introduced the Rural Prosperity and Food Security Act, a five-year Farm Bill with $39 billion in new resources for farmers, rural communities, and low-income family nutrition assistance. The bill adds to her May proposal, “ensures that the Supplemental Nutrition Assistance Program (SNAP) keeps up with the realities of American life and brings the historic investments in climate-smart conservation practices into the Farm Bill,” a release said.

Tax — During the November 19 Joint Economic Committee hearing on “Building on the Success of TCJA: The 2025 Tax Policy Debate,” Ways & Means Committee member Rep. Nicole Malliotakis (R-NY) asked about proposals similar to the one put forward by President-elect Trump to provide a lower (15%) tax rate for domestic manufacturing to bring the supply chain back to the US. Witness and former Ways & Means Chairman Kevin Brady (R-TX) said the TCJA corporate rate reduction, modern international rate, and incentives for innovation “produced real results.” He cautioned against singling out industries and, instead, recommended broad-based incentives.

Today (Wednesday, November 20) at 2:00 PM, the Senate Banking Economic Policy Subcommittee chaired by Elizabeth Warren (D-MA) holds a hearing, “Tax Policy in 2025: Implications for the American Economy.”

Energy tax — Treasury and the IRS November 19 released final regulations (Election to Exclude Certain Unincorporated Organizations Owned by Applicable Entities from Application of the Rules on Partners and Partnerships, TD 10012) for direct pay eligible entities that want to jointly invest in clean energy projects. The regulations address the ability of unincorporated organizations owned by applicable entities to be excluded from subchapter K restrictions, thus allowing one or more members of the organization to make elective payment elections under IRC Section 6417. They mostly adopt the proposed regulations with some modifications.

Health care — President-elect Donald Trump’s return to the White House on January 20, 2025, and Republican control of both the House and Senate increase opportunities for larger packages to advance via the budget reconciliation process, but Republicans will still need to maneuver around narrow margins in both chambers, limiting some legislation. A WCEY brief explores the health care policies congressional Republicans may look to advance in 2025 and how they align with President-elect Trump’s health policy agenda.

Next administration — While President-elect Trump’s economic team is taking shape with a Commerce Secretary nominee in Howard Lutnick, still awaited are his selections for Treasury Secretary, National Economic Council Director, USTR, and Chair of the Council of Economic Advisors. Treasury candidates include hedge fund manager Scott Bessent, former Federal Reserve governor Kevin Warsh, investor Marc Rowan, and Senator Bill Hagerty (R-TN), who “visited Mar-a-Lago over the weekend to interview for a variety of roles, and two sources said he remains in the mix for Treasury,” CNN reported.