There are still many questions surrounding plans for tax cut extensions in budget reconciliation, including: whether Republicans can hold sufficient support for the $2 trillion in mandatory spending cuts target with only one vote to spare in the 218-215 GOP-led House; whether the resolution's instruction to the Ways & Means Committee for up to a $4.5 trillion net deficit increase primarily to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025 allows sufficient room for the GOP tax-cutting agenda; and how both of these elements would be received in the Senate if the one-bill strategy were to prevail. The Senate overnight passed its FY2025 budget resolution to provide for a border-focused reconciliation bill.

Concerns with the level of spending cuts under the House resolution have started to become formalized. Congressional Hispanic Conference Chairman Rep. Tony Gonzales (R-TX) led a letter with Ways & Means member Nicole Malliotakis (R-NY) and Reps. Monica De La Cruz (R-TX), David Valadao (R-CA), Juan Ciscomani (R-AZ), and Rob Bresnahan (R-PA) stating concerns about Medicaid cuts that may result from the reconciliation instruction to Energy and Commerce for $880 billion in savings, as well as education program cuts from the Education & the Workforce Committee and nutrition program cuts from the Agriculture panel.

Scrambling the outlook for spending cuts is President Trump's February 18 comments suggesting spending cuts sought by Republicans would not reduce benefits from programs for deserving beneficiaries, but target waste, fraud, abuse. "Social Security won't be touched, other than if there's fraud or something," he said. "We're going to find it. It's going to be strengthened, but it won't be touched. Medicare, Medicaid, none of that stuff is going to be touched."

The $4.5 trillion tax cut figure is intended to accommodate an extension of TCJA provisions for 10 years, Budget Chairman Jodey Arrington (R-TX) has said, adding that there are plenty of tax provisions that could be undone to pay for more, including IRA energy tax credits. President Trump has proposed additional tax cuts on tip income, overtime income, and Social Security benefits, plus a lower tax rate for domestic manufacturing, but also tax increases related to carried interest and sports team owners.

The President said in Miami February 19: "We're going to dramatically cut taxes for families and for workers and for companies, including no tax on tips and hopefully no tax on social security and no tax on overtime. And that overtime one is a sleeper because I think a lot of people are going to be spurred on to do a lot of extra work when they hear that. A lot of companies really like it, and a lot of people really like it. The new Trump Tax Cuts will also include 100% expensing for new factory construction in the United States and anything else that you're going to buy with capital."

Punchbowl News reported Speaker Mike Johnson (R-LA) as saying he's waiting on a few developments "that might have a big effect" on the reconciliation bill, including the Congressional Budget Office's score of the tariffs Trump has instituted and formally quantifying any savings from DOGE. While the resolution is set to be on the floor when House members return, Johnson said it may take "a few more days" after next week.

The Senate overnight adopted its FY2025 budget — which provides only for reconciliation for border, energy, and defense issues — 52-48 with a vote-a-rama rapid-fire consideration of amendments. Senator Rand Paul (R-KY) and all Democrats voted 'no.' The resolution, reflecting a two-bill strategy that would have Republicans notch a win on consensus issues before what some anticipate will be a difficult path toward consensus on a tax bill later, would give President Trump an option for moving his agenda and a backup plan if House efforts for one bill falter. However, the President more forcefully this week called for "one big, beautiful bill" and for "both Chambers to pass the House Budget to 'kickstart' the Reconciliation process."

Senate Majority Leader John Thune (R-SD) said of the President Wednesday, "I think he's made it clear for a long time that he would prefer a one big, beautiful bill, and we're fine with that, too. If the House can produce one big, beautiful bill, we're prepared to work with them to get that across the finish line. But we believe that the president also likes optionality … " In a Semafor report that suggested the House spending cuts and claw-back to lower the level of tax cuts if the spending cut target can't be met are causing concern in the Senate, Thune said, "There's a lot of stuff in it that makes it really, really complicated over here."

During the vote-a-rama, Democrats sought to highlight Republican plans to continue tax cuts and slash programs like Medicaid to pay for them. Those amendments were ruled out of order to the budget resolution and votes on the amendments were on motions to waive the Budget Act with respect to specific amendments, with a 60-vote threshold. Amendment votes included:

• Schumer — no tax cuts for billionaires, motion to waive the budget point of order not agreed to 47-52
• Klobuchar — no tax cuts for the wealthy without lowering food prices for American families, motion to waive the budget point of order not agreed to 48-52
• Merkley — establish a deficit-neutral reserve fund relating to the impacts of hedge fund ownership of single-family homes and rent prices, not agreed to 48-52
• Hickenlooper — create a point of order against legislation that would raise energy costs, including monthly electric bills, building materials, and transportation, not agreed to 47-53
• Sullivan — to establish a deficit-neutral reserve fund relating to protecting Medicare and Medicaid, agreed to 51-49 (but deemed insufficient by Democrats to be supported)
• Schumer — prevent tax cuts for the wealthy if a single dollar of Medicaid funding is cut, motion to waive the budget point of order not agreed to 49-51
• Ossoff — establish a deficit-neutral reserve fund relating to protecting access to maternal and pediatric health care through Medicaid, not agreed to 49-51
• Wyden — "prevent millions of Americans from being kicked off their health coverage," motion to waive the budget point of order not agreed to 47-53
• Shaheen — establish a deficit-neutral reserve fund to extend Affordable Care Act premium tax credits for millions of Americans, not agreed to 48-52

(As the Congressional Research Service explained, "Reserve funds authorize the specified chair of the Budget Committee to subsequently revise the budgetary levels agreed to in the budget resolution in order to accommodate certain policies or legislation.")

Trump administration — President Trump signed an executive order late Wednesday directing federal agencies to "initiate a process to review all regulations subject to their sole or joint jurisdiction for consistency with law and Administration policy," and within 60 days identify those that are unconstitutional, are "based on unlawful delegations of legislative power," etc.

Congress - The House Ways & Means Trade Subcommittee is holding a hearing on American Trade Enforcement Priorities on Tuesday, February 25 (10 a.m.).

Today, February 21 (12 p.m.) is the EY Webcast, Tax in a time of transition: legislative, economic, regulatory and IRS developments.