President-elect Trump convened groups of Republican members at his Mar-a-Lago resort over the weekend, including the Freedom Caucus conservative group, House committee chairs, and representatives of high-tax states concerned about continuing the $10,000 state and local tax (SALT) deduction cap enacted under the Tax Cuts & Jobs Act (TCJA). These groups of members could stifle GOP tax reconciliation bill plans, and much of the weekend press was a readout from the meetings. Rep. Mike Lawler (R-NY), who January 7 introduced his bill (H.R. 232) to increase the SALT deduction cap to $100,000 for single filers and $200,000 for married couples, said Saturday that no exact level or approach was determined or agreed upon, Bloomberg reported. "The president wants us to come back with a number," he said.

"We're going to negotiate in good faith with our colleagues and with the president to come up with a number on SALT that works. The fact is that, if you lift it to, say, $60,000 for an individual, it covers most everybody," Lawler said on Fox Sunday Morning Futures. "So, we're working through this. We will come up with the numbers and come back for an honest negotiation with our colleagues. But we need a tax bill that works for the American people and that provides real tax relief, coupled with border security, coupled with increasing domestic production of energy, dealing with our debt and long-term spending, and really getting America on the right track."

Rep. Nicole Malliotakis (R-NY) posted on social media: "A productive meeting with President @realDonaldTrump about ending the illegal immigration crisis, providing SALT relief … " She said in Punchbowl News, "We have a little homework to do in terms of figuring out what the magic number will be that would benefit the majority of our constituents and provide relief for the middle class." The report cited Ways & Means Chairman Jason Smith (R-MO) as saying SALT may be one of the easier issues to figure out in the tax debate.

"At the meeting on Saturday, House Republicans from New York, New Jersey and California offered a variety of ideas to Mr. Trump about how to address the issue … Among the concepts discussed was the possibility of persuading local leaders to hold off on tax increases in return for a higher deduction for their residents," the New York Times reported. "Mr. Trump largely listened to the House Republicans … and asked the group to reach a consensus."

The Freedom Caucus met with the President-elect Friday night, after some members clashed with House Speaker Mike Johnson (R-LA) during the December 2024 continuing resolution (CR) deliberations and January 3 speakership vote. Politico reported the meeting as focused on team building, with some discussion of the debt limit. "Several Freedom Caucus members also said during the dinner that they prefer a two-track reconciliation strategy, citing urgency to tackle border security," the report said.

The debate continues between Senators who want two separate reconciliation packages, with border security first and extensions of TCJA provisions later, and House Republicans that favor an all-in-one approach with tax moving in a first, big bill. A Semafor article this morning said, "GOP lawmakers estimated it would take months to craft a tax bill, which could easily slide close to the December deadline. That's because there are so many unanswered questions, ranging from the state and local deduction to the debt ceiling to how to pay for it all — and how much even should be paid for. 'The process of negotiating the details will take many months,' Sen. Ted Cruz, R-Texas, told Semafor. 'It will be a long, extended process.'"

Spending cuts — A story in the January 11 Washington Post said the Department of Government Efficiency (DOGE) to be headed by Elon Musk and Vivek Ramaswamy has already staffed up and begun speaking with federal agency staff, including Treasury and IRS, about its efforts to cut federal spending. The story said: "Numerous party officials, meanwhile, are quietly wary of approving big spending cuts at the same time they are working to extend the expiring provisions of Trump's 2017 tax legislation, which would reduce revenue by trillions of dollars. And it's not clear how much weight Musk's star power will carry on Capitol Hill, where federal spending is often prized for its benefits to hometown constituents."

Debt limit — While the focus has been on tax, the federal debt limit that must be addressed by midyear could play a role in a reconciliation bill. Speaker Johnson has touted the process as enabling Republicans to address the debt limit on their own, without negotiating with Democrats. However, some Republicans refuse to vote in favor of increasing or suspending the debt limit, which could be problematic with the narrow 219-215 House majority that may soon drop to 217-215. The current debt limit suspension ended January 1 and Treasury Department extraordinary measures are expected to last through sometime midyear.

During the CR negotiations in December, House Republicans reportedly discussed an agreement to increase the debt limit by $1.5 trillion alongside a promise to cut $2.5 trillion in "net mandatory spending in the reconciliation process." A January 12 Huffington Post story cited outside observers who project that a $1.5 trillion boost in the limit might only be enough to get Republicans through the first half of 2026, not past the mid-term elections, and noted, "It's been almost 20 years since Republicans passed a debt limit bill by themselves, in April 2005. Since then, when the debt limit has been hiked or suspended - 17 times in all - Democrats have either passed it or Republicans have relied on Democratic votes to help them do it."

A January 12 CNN story said Rep. Tim Burchett (R-TN) and other Republicans say a reconciliation bill that raises the nation's debt limit in addition to spending on border security, energy projects and tax extensions "must be fully paid for, and not with accounting gimmicks that even Republicans have used in the past." Conversely, deep spending cuts are likely to cause revolt among "Republican moderates and appropriators who have long protected certain cherished" domestic programs. "I've never voted for a debt ceiling increase before, and I would like to make sure that we're paying for that," said Rep. Andy Biggs (R-AZ), a Freedom Caucus member. The story said: "Conservatives in Congress say they will insist that the full package — including any extension of Trump's 2017 tax cuts — are fully paid for, unlike the first time around."

Congress — The Senate is back in at 3 p.m. today (January 13) and will resume consideration of the Laken Riley Act (S. 5), with a 5:30 p.m. procedural vote.

The House is set to return today with legislative business at 2 p.m. and votes beginning at 6:30 p.m. on bills under the jurisdiction of the Transportation & Infrastructure Committee, including the Federal Disaster Assistance Coordination Act (H.R. 152), to require the Federal Emergency Management Agency (FEMA) to convene a working group with other federal agencies to improve preliminary damage assessments following disasters, and the Post-Disaster Assistance Online Accountability Act (H.R. 153), to establish a centralized location to publish information on disaster assistance provided by federal agencies.

There is scheduled to be a vote as early as Tuesday on the United States-Taiwan Expedited Double-Tax Relief Act (H.R. 33) introduced by Ways & Means Chairman Smith and Ranking Member Richard Neal (D-MA). The bill, to be considered under an expedited process provided for under the House rules package, would provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States. It enjoys broad support but was stalled in a broader tax bill in 2024.

The House Ways & Means Committee has scheduled a hearing on "The Need to Make Permanent the Trump Tax Cuts for Working Families," for Tuesday, January 14 at 10 a.m. Witnesses:

• Michelle Gallagher, Partner, Adamy Valuation and Gallagher, Flintoff and Klein
• Margaret Marple, Mother, Lynchburg, Virginia
• Alison Couch, Owner, Ignite Accounting and Business Advisors
• Courtney Silver, President, Ketchie Incorporated
• Brendan Duke, Senior Director for Economic Policy, Center for American Progress

Nomination hearings for President-elect Trump's cabinet nominees are set to get underway this 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.

The Senate Veterans' Affairs Committee will hold a hearing on the nomination of Douglas Collins to be Secretary of Veterans Affairs on Tuesday, January 14 at 9 a.m.

The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the Nomination of Russell Vought to be Director, Office of Management and Budget, on Wednesday, January 15 at 1 p.m.

Health — The Supreme Court January 10 announced that it would consider an appeal of a lower court ruling related to the Affordable Care Act's requirement for group health plans to cover preventive services recommended by the U.S. Preventive Services Task Force at no out-of-pocket cost. The Court will consider whether the task force's members are considered constitutionally appointed, requiring a presidential nomination and Senate confirmation.