Nomination hearings for President-elect Trump's cabinet nominees are set to get underway next week, with a Senate Finance Committee hearing on the nomination of Scott Bessent to be Treasury Secretary set for Thursday, January 16 at 10:30 a.m. Meanwhile, plans to act through the budget reconciliation process to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025, act on border issues, and possibly address the federal debt limit continue to be debated among Republicans in Congress.

President-elect Trump met with Republican Senators Wednesday night on Capitol Hill and his message seemed to be that a tax bill is going to get done and the process makes no difference. He has sided with House leaders in aiming for an all-in-one reconciliation bill with tax early on but is also open to the preferred Senate approach of two bills with border first and tax second. In remarks following the meeting, Trump said, "Whether it's one bill or two bills, it's going to get done one way or the other. I think there's a lot of talk about two and there's a lot of talk about one, but it doesn't matter. The end result is the same. We're going to get something done that's going to be reducing taxes and creating a lot of jobs … "

Semafor reported, "Trump made a 'big pitch' for a single border and tax bill, but said he remains open to senators' pitches to notch a quick border win and then move onto tax policy. There's also discussion of starting with one bill and potentially splitting it in two … " Punchbowl News reported, "Near the end of the meeting, [Majority Leader] Thune asked Trump if he'd consider splitting his agenda into two bills if significant roadblocks emerge with one mega-bill. Trump said yes but maintained that he wants Republicans to aim for one comprehensive bill." Senator Rand Paul (R-KY) cited Trump as saying revenue for the reconciliation package would come from tariffs.

While there were some indications that Republicans hoped to settle on a way forward this week, the House and Senate may continue along separate paths that meet up at some point, as is required under the reconciliation rules: both the House and Senate must pass the same budget resolution to unlock the process, then pass the same reconciliation bill.

Politico reported that Senate Republicans led by Budget Committee Chairman Lindsey Graham (R-SC) are discussing plans to move forward with drafting a budget reflecting their preferred two-bill approach to reconciliation that may end up being a back-up plan if House one-bill efforts falter. "We are proceeding in a way that it keeps optionality," Senate Majority Leader John Thune (R-SD) said. "Obviously in the end, we want to get a result and we want to walk closely with our House counterparts … but we've got some folks who are itching to go and, I think, a good proposal out there."

The Bloomberg Daily Tax Report (DTR) said House Republicans could take the first procedural vote in the reconciliation process by the end of next month, which isn't far off from House Speaker Mike Johnson's (R-LA) goal stated earlier this week to pass a budget resolution with reconciliation instructions in early February. "Our goal is to do it very quickly, and potentially as early as the last week in February," House Budget Committee Chair Jodey Arrington (R-TX) said. "That's breaking news."

While there is a focus on tax-writing committees with TCJA provisions expiring, the focus on the budget chairmen in the House and Senate reflects the power they have to set the parameters for the reconciliation process. Chairman Arrington was cited by the Washington Post this week as calling for the federal debt limit — the suspension of which expired January 1, with required action postponed until roughly midyear by Treasury extraordinary measures — to be addressed in a reconciliation bill. "With all that we're doing to restore fiscal health and prosperity, we ought to put the debt ceiling in there, as well, because those are the fiscal reforms that I think should be required to do it," he said. "Trump's committed to it, we're committed to it, I don't know why we wouldn't do it."

He has also long been eyeing spending cuts. Punchbowl News this morning reported on an Arrington presentation on ways to raise revenue in the tax code, including rolling back Inflation Reduction Act (IRA) green energy tax credits and a state and local tax (SALT) deduction cap for corporations. "There's some frustration in GOP circles brewing with Arrington over his ambitious plans for cost savings, which include ideas under other committees' jurisdictions … " the story said. "Beyond the tax arena, Arrington is pushing for trillions of dollars in cuts to Medicaid and discretionary spending over the next decade, as well as controversial changes to food stamps and federal welfare programs."

This morning's DTR said, "House Budget Committee Republicans are circulating a menu of policy options including clawing back clean energy tax credits and making changes to programs like Medicare that would yield savings totaling $5.3 trillion to $5.7 trillion over 10 years." The roster of potential changes is mostly compiled from proposals included in recent House budget resolutions "and identifies $2.8 trillion over a decade in Medicaid and Medicare policy changes, like shifting to a per capita cap financing model on reimbursements. It also sets out hundreds of billions in potential savings with what it calls a 'reimagining' of the Affordable Care Act."

Ahead of a planned Saturday meeting hosted by President-elect Trump at his Mar-a-Lago resort with representatives of high-tax states concerned about continuing the $10,000 SALT deduction cap, Rep. Mike Lawler (R-NY) January 7 introduced his bill (H.R. 232) to increase the limitation on the amount individuals can deduct for certain state and local taxes to $100,000 for single filers and, by way of eliminating the marriage penalty, up to $200,000 for married couples.

The staff of the Joint Committee on Taxation has prepared a document listing Federal tax provisions that expired in 2024 or are scheduled to expire in the future.

Energy tax — New this morning: Proposed regulations on the IRA credit for Qualified Commercial Clean Vehicles (IRC Section 45W).