This week (December 16 - 20)

Congress: The House and Senate are in session for the last week before the planned holiday break. The agenda includes an extension of government funding beyond the current December 20 expiration, potentially plus disaster relief beyond the previously approved $5 billion disaster tax package, and Senate passage of the House-passed National Defense Authorization Act (NDAA). It is unclear what else may be added to the CR. A one-year farm bill extension has been under discussion. A US-Taiwan tax relief bill, which was embedded in the 2024 House-passed tax bill (H.R. 7024) that won't move through the Senate, could potentially be peeled off to move separately yet this year as disaster tax relief was, and Senate leaders are reportedly querying members over whether there are any possible objections. Punchbowl News reported December 13, "Congressional negotiators are nearing a deal on a year-end health package to ride in the CR that could include a major overhaul for pharmacy benefit managers."

Last week (December 9 - 13)

New Ways & Means members: The House Republican Steering Committee December 13 recommended the following new members to the Ways and Means Committee for the 119th Congress:

• Rep. Aaron Bean (R-FL)
• Rep. Max Miller (R-OH)
• Rep. Nathaniel Moran (R-TX)
• Rep. Rudy Yakym (R-IN)

The recommendations are subject to approval by the House Republican Conference. Ways and Means Committee Chairman Jason Smith (R-MO) issued a statement welcoming the new Republican members to the Committee, saying in part, "We will advance solutions to provide relief from four years of Bidenomics and grow jobs and wages while lifting more Americans out of poverty. That starts with immediately building on the successes of the 2017 Trump tax cuts to give certainty and relief to American families and small businesses."

Reconciliation in 2025: Senate Republicans are coalescing around the two-bill approach to the reconciliation process outlined by incoming Senate Majority Leader John Thune (R-SD) that would put expiring Tax Cuts & Jobs Act (TCJA) provisions on the back burner for a second reconciliation bill later in the year, with border and energy issues addressed first. "In my view, it makes sense for us to move quickly on things we know we can do quickly — border, defense, energy," Thune said Tuesday. "And then come back with another package that would address some of the savings that can be achieved through reductions in costs in various agencies, and bureaucracies, and government and programs. And then also deal with the expiring Trump tax cuts in a package later this year." Ways & Means Chairman Jason Smith has expressed opposition to that approach, arguing the priorities should go as one and tax should be part of the process early on. President-elect Trump hasn't publicly weighed in on reconciliation plans, but incoming Trump Deputy Chief of Staff for Policy Stephen Miller said on Fox Business December 8, " … [A comprehensive tax reform package is] where you have to figure out SALT [state and local deductions]. That's where you're going to figure out different policy baselines that you're going to use for the tax cuts, about corporate tax reform, about trade reform, manufacturing reform, and all those tax policies." He continued, "With the two or three seat majority in the House, obviously that's going to take some time, but nobody, I repeat, nobody is even talking or considering delaying tax [reform]." Fox said he reiterated, "Tax reform will happen, and it will be the greatest tax bill that we've ever seen. Now, these are not final. These are ongoing discussions and negotiations, but I just want to be very clear that no one is talking about delaying tax reform."

Reconciliation will allow two packages — one using the FY2025 budget resolution, and another for FY2026 — to pass the Senate with a simple majority, meaning Republicans controlling the chamber 53-47 next year can sidestep negotiations with Democrats on these bills. Lending credence to the burgeoning Senate two-bill plan, incoming Budget Committee Chair and long-time Trump ally Lindsey Graham (R-SC) posted on social media December 9: "Stephen Miller was spot on when he said that the Senate and House should first pass a border security bill through the budget reconciliation process. While I support spending restrictions and tax cuts, my top priority — and the first order of business in the Senate Budget Committee — is to secure a broken border. The bill will be transformational, it will be paid for, and it will go first."

Senator Thune and Chairman Smith met December 11 to discuss plans for the budget reconciliation process in 2025, and, while there were no apparent breakthroughs reported from the meeting, there was some good discussion, nonetheless. It's recognized that President-elect Trump will be key to making the decision on how to proceed. A Wall Street Journal story (WSJ) cited Chairman Smith as saying he was just trying to provide the incoming Administration with all the requisite information about getting tax priorities passed out of the House. "If he wants to let [House members] continue to fight it, unless he feels super strong about it, there's no need for him to sign his voice to it," said Sen. Kevin Cramer (R., N.D.), who favors the two-bill approach, in the WSJ report. "But if he did, it would be over, assuming he agrees." In a December 12 interview with Hugh Hewitt, House Majority Leader Steve Scalise (R-LA) said he expressed "what are the pros and cons of one versus two reconciliation bills, because I do think there's some pitfalls with the two-bill approach. But I've laid out what those are. Ultimately, the President is going to decide." He said, "For most Americans, they don't care. Just 'go get it done.' So, our focus needs to be on making this decision. People are excited about Donald Trump coming into office. I think that first bill, everybody's going to want to be a part of. So put all of it in there. You know, that's an argument for one bill."

House Speaker Mike Johnson (R-LA) has not taken a firm position publicly. "There probably will be at least two reconciliation packages. So, the determination right now is where does the tax piece fit in? Do we do that first out of the gates, or do you wait a couple months to get all that done because it can be very complicated?" he said on Fox News December 10. Asked whether immigration would maybe go first, Johnson said, "Yes. I mean, it's no surprise the border is the top of everyone's priority list because it's the top of the list for the American people. We do that, we do energy policy. We ensure that we don't have the largest tax increase in U.S. history which is what would happen at the end of next year if we don't extend those tax cuts … "

The two-step approach espoused by Senate GOP leaders was endorsed by an editorial in the December 10 Wall Street Journal. "Passing anything in the GOP House will be difficult next year. But the question to ask Mr. Smith is why House Republicans think they can rally that sliver of a majority around a giant and complex tax reform in such short order. That's a recipe for division and delay, even as it risks the GOP getting nothing done at all if it collapses of its own great political weight … " the editorial said. "Mr. Trump is eager to show early progress, and a targeted bill would allow Congress to fund early executive orders on his border and energy promises. A focused bill is also an easier lift in the first months of Congress, when Speaker Mike Johnson's tiny majority will shrink even further as several Republicans resign once they are confirmed for Trump Administration posts."

Reconciliation mechanics: The Congressional Research Service says of the number of measures under a resolution, "If a committee is given more than one directive — for instance, both to increase revenues and to decrease spending — then the committee may respond with separate recommendations. Under current Senate practice, the language in Section 310(a) is interpreted to mean that no more than one measure of each type would be eligible to be considered under expedited procedures as a reconciliation bill. Under current practice, therefore, as many as three measures could qualify for consideration under expedited reconciliation procedures in the Senate — but no more than one each for spending, revenue, and the debt limit."

SALT: Of course, beyond the sequencing of the reconciliation bills is the substance of issues like how to address the current $10,000 state and local tax (SALT) deduction cap that Republicans (and Democrats) from high-tax states will want changed. "Economist Stephen Moore, a member of Trump's economic advisory transition team, told Bloomberg Thursday that the group has discussed expanding the cap on the deduction from $10,000 to $20,000," according to a report.

Tariffs: President-elect Trump said on Meet the Press (MTP) last weekend he does not believe that American consumers will ultimately pay the price of his proposed tariffs but couldn't guarantee that. "I'm a big believer in tariffs. I think tariffs are the most beautiful word. I think they're beautiful. It's going to make us rich. We're subsidizing Canada to the tune over $100 billion a year. We're subsidizing Mexico for almost $300 billion. We shouldn't be — why are we subsidizing these countries?" he said. "If we're going to subsidize them, let them become a state. We're subsidizing Mexico and we're subsidizing Canada and we're subsidizing many countries all over the world. And all I want to do is I want to have a level, fast, but fair playing field."

A December 11 Politico story said, "After years of seeing their complaints dismissed regarding a 15 percent global minimum tax that would apply to the world's largest companies, Republicans are now planning to wield their full control of the U.S. government to try to sink the international tax framework for good. They're eyeing tariffs on signatories as perhaps the most effective way to make that happen."