House Republicans are racing to finalize an approach to extending Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025 in time for a Budget Committee markup of an FY2025 budget resolution on Thursday or Friday. Budget text could be released today. House Budget Committee Chairman Jodey Arrington (R-TX) has repeatedly said members are close to a deal, amid lingering tensions about topline numbers. Plans for $2.5 trillion in spending cuts and a $4.7 trillion instruction to the Ways & Means Committee for tax cuts, consistent with Congressional Budget Office estimates of TCJA extensions, may be dialed back to provide for $1.25 trillion-$1.5 trillion in spending cuts and a lower number for tax cuts.

Not everyone is pleased. "Let me just say that a ten-year extension of President Trump's expiring provisions is over $4.7 trillion, according to [the Congressional Budget Office]," Ways & Means Chairman Jason Smith (R-MO) said in Politico. "Anything less would be saying that President Trump is wrong on tax policy."

The difference between those two values — savings and tax cuts — is expected to be made up, at least rhetorically, with economic growth projections. A story in the February 11 Wall Street Journal noted that House Republicans have been talking about $2 trillion in spending cuts over a decade and about $5 trillion in tax cuts, "leaving a sizable hole to fill" with economic growth and other assumptions. "We have to figure out what's a credible and defensible number, and then we've got to move forward," said Chairman Arrington, suggesting Republicans won't rely solely on deficit estimates from CBO and the Joint Committee on Taxation. "We've got to look at other numbers, other scores and our past, our historic performances … "

The Hill reported that Speaker Mike Johnson (R-LA) said Monday three issues stood in the way of a deal:

• how to pay for the tax cut extensions, which is getting the most attention
• a higher state & local tax (SALT) deduction cap than the current $10,000
• the debt limit, amid the conundrum that some Republicans won't vote for an increase or suspension

Johnson and Majority Leader Steve Scalise (R-LA) have suggested Republicans would be proposing work requirements for Medicaid. Similar requirements could be proposed for other programs, but the entire slate of savings and revenue provisions isn't clear.

Meanwhile, the Senate Budget Committee under Chairman Lindsey Graham (R-SC) is set to mark up an FY2025 budget today and tomorrow (February 12-13), and senators are projecting that President Trump may support their two-bill plan for budget reconciliation that would provide border security funding sooner and push tax later. On the urgency of border funding, Chairman Graham told reporters following regular Senate lunches, "Tom Homan said, 'I am begging you for money.' Russ Vought said that we're running out of money for ICE. We can't rob other accounts any longer."

And the conservative House Freedom Caucus led by Rep. Andy Harris (R-MD) outlined a two-bill plan with border security funding first, aligned with Senate plans, and Harris said his group would soon release a proposal for a tax plan. "The big tax bill is what we're going to propose in our second step, and it's going to be coupled with enough deficit reduction to make sure that the financial markets realize we're serious about deficit reduction," he said.

Trade — President Trump February 10 signed an Executive Order on steel/aluminum tariffs. Key points:

• The tariffs are scheduled to go into effect on March 12.
• President Trump relied on his authority under Section 232 and the Commerce Department's 2018 investigation into the national security impact of steel and aluminum imports.
• The EO eliminates the country-specific exemptions and partial relief from steel and aluminum tariffs negotiated during the first Trump Administration and expanded by the Biden Administration — including Canada, Mexico, the EU, and others.
• Specifically, the EO states, "In my judgment, the arrangements with these countries have failed to provide effective, long-term alternative means to address these countries' contribution to the threatened impairment to the national security by restraining steel articles exports to the United States from each of them, limiting transshipment and surges and distorted pricing, and discouraging excess steel capacity and excess steel production."
• It is unclear how trading partners will respond, but early indications suggest that the EU and others are considering retaliatory tariffs.
• President Trump did mention a possible exemption for Australia, citing our goods trade surplus.

During the signing, President Trump said, "The failed American trade policies have led our once incredible United States steel and aluminum industries. Once incredible … I saved them because of my first term. Totally saved them. If I didn't do what I did, I put massive tariffs. Not the highest level, but pretty, pretty massive tariffs. We took in a lot of money, and we took in a lot of jobs … This is the first of many, and you know what I mean by that, we're going to be doing others on other subjects, topics, protecting our steel and aluminum industries is a must. And today I'm simplifying our tariffs and steel and aluminum so that everyone can understand exactly what it means. It's 25% without exceptions or exemptions. And that's all countries, no matter where it comes from, all countries … If it's made in the United States, there is no tariff."

Tax administration — Today (February 12), the Ways & Means Committee will hold a markup of:

• H.R. 997, the National Taxpayer Advocate Enhancement Act of 2025
• H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act
• H.R. 1152, the Electronic Filing and Payment Fairness Act
• H.R. 1155, the Recovery of Stolen Checks Act

During the February 11 House Ways and Means Oversight Subcommittee hearing on "IRS Return on Investment and the Need for Modernization," former National Taxpayer Advocate Nina Olson lauded service improvements from increased funding and suggested that experienced employees are needed. "Through 2024, using IRA funding, there has been significant improvements to taxpayer service on the phones and online account, to the fairness of the tax system by focusing on areas of complex noncompliance, and to efficiency and effectiveness through digitalization," she said. "Digitalization requires both the retention of employees who have institutional knowledge and hands-on experience in tax administration, and the hiring of new employees who bring new skills and outside the agency experience." Further, "The balance between seasoned employees and those with new skill sets will not be achieved if government services are vilified and current IRS employees are painted as inept or even worse, corrupt."

Pete Sepp of the National Taxpayers Union called for greater accountability. "If modernization is going to succeed, we have to have more itemized spending plans for the IRS going forward beyond the hundred-odd page budget justification that members of Congress see," he said.

Bill intros — Bills of interest introduced February 10-11 include:

• S. 492/H.R. 1177, the Improve and Enhance the Work Opportunity Tax Credit Act, to enhance WOTC to encourage longer-service employment and modernize the credit to make it more effective as a hiring incentive, Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH)/Rep. Lloyd Smucker (R-PA)
• H.R. 1157, the Affordable Care and Comprehensive Economic Support through Savings (ACCESS) Act, to allow individuals to elect to receive contributions to a health savings account in lieu of reduced cost-sharing under health insurance obtained through a health insurance Exchange, Rep. Greg Steube (R-FL)
• S. 510, to extend the publicly traded partnership ownership structure to energy power generation projects and transportation fuels, Senator Jerry Moran (R-KS)

Congress — The Senate Finance Committee executive session to vote on the nomination of Jamieson Greer to be United States Trade Representative (USTR) continues today, February 12. (There were no votes in the Senate on February 11, and executive session votes are typically held off the Senate floor.) Today, the Senate is scheduled to vote on the nomination of Tulsi Gabbard to be Director of National Intelligence and conduct a procedural vote on Robert F. Kennedy, Jr.'s nomination for HHS Secretary.