House Speaker Mike Johnson (R-LA) said February 26 that he hopes to use a current policy baseline that doesn't count the cost of tax cut extensions in the eventual budget reconciliation bill to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025. "The Senate wants it. I think the House wants it as well," he said. Top Senate Republicans, including Majority Leader John Thune (R-SD) and Finance Committee Chairman Mike Crapo (R-ID), want to make the expiring TCJA provisions permanent by using a current policy baseline, rather than the current law baseline under the House budget resolution. Ways & Means Committee Chairman Jason Smith (R-MO) supports the approach but yesterday expressed concern about whether it would be accepted by the Senate parliamentarian.

Leader Thune said that conversations with the parliamentarian were already underway. "We believe that the chairman of the Budget Committee makes that call, but obviously it's something that we will be discussing and having conversations with the parliamentarian," he said. There has long been the expectation that, under a current policy baseline, each of the provisions would need to be modified in some respect to meet the budget reconciliation requirement that proposals have some revenue impact. A current policy baseline hasn't been used in reconciliation in recent memory, and Senator Crapo and others mostly point to the practical example of using the approach for the extension of the Bush tax cuts at the end of 2012. Beyond the Senate rules, deficit-conscious members will likely insist that tax cut extensions be offset.

House leaders must now negotiate a compromise budget resolution with the Senate and then turn to crafting the actual reconciliation legislation, which under the House FY2025 budget resolution passed February 25 must include deep mandatory spending cuts as a condition of extending TCJA provisions. Republican Senators have prioritized TCJA permanency using a current policy baseline and are concerned the House resolution doesn't provide sufficient space to achieve that. "Unless it's permanent, we're not going to support it," Senate Finance Committee member Ron Johnson (R-WI) said in a Bloomberg report.

Both chambers need to pass the same budget to unlock the reconciliation process. But making changes to the House resolution threatens to upset the delicate balance Republican leaders struck to get it through the chamber by the narrowest margin possible, 217-215. "We have a very small needle to thread, and we kind of reached an equilibrium point," Speaker Johnson said in Punchbowl News. "And if you begin to meddle with that too much, it makes it more complicated to get it done." On CNN February 26, Speaker Johnson said regarding crafting a reconciliation bill based on parameters that are eventually agreed to, "It's going to take us five or six weeks, probably, to dig through all those details and come up with the final proposal."

Beyond tax issues, Senator Josh Hawley (R-MO) and maybe others are concerned about Medicaid changes. The resolution requires at least $2 trillion in deficit reduction from other committees to avail the Ways & Means Committee a full $4.5 trillion net deficit increase for tax cuts.

In the CNN interview on Wednesday, Speaker Johnson said Republicans would not include per-capita caps on Medicaid in a budget reconciliation bill. "We're not going to cut into those programs that way," Johnson said when asked if he would cap federal funding or reduce match rates. "We're talking about finding efficiencies in every program, not cutting benefits for people who rightly deserve them." The House Energy and Commerce Committee, which has jurisdiction over Medicaid, is tasked with an $880 billion reduction under the House-passed budget resolution instructions.

Government funding — With the expiration of government funding looming March 14, President Trump posted on social media last night, "We are working very hard with the House and Senate to pass a clean, temporary government funding bill ('CR') to the end of September." Senate Appropriations Committee Ranking Member Patty Murray (D-WA) said Congress will need to pass a short-term CR to avoid a government shutdown without providing a target date, but she previously said a full-year continuing resolution is a nonstarter that could allow the "administration to adjust spending priorities and potentially eliminate longstanding programs."

Trade — The Senate February 26 confirmed the nomination of Jamieson Greer to be US Trade Representative 56-43. Four Democrats joined most Republicans in supporting the nomination — Senators John Fetterman (D-PA), John Hickenlooper (D-CO), Gary Peters (D-MI), and Sheldon Whitehouse (D-RI) — while Republican Senator Rand Paul (R-KY) opposed.

President Trump said February 27 there hasn't been adequate progress in the talks with Canada and Mexico that forestalled for one month the 25% tariffs (10% on Canada energy resources) that were announced on February 1 citing "the tide of illicit drugs" coming into the US from the countries as the impetus. "I don't see it at all. No, not on drugs," the president said. "The drugs continue to pour into our country, killing hundreds of thousands of people. I think you're going to see — eventually, you're going to see drugs stopping because the country should not be allowing those drugs to come into the United States of America. And we're not going to allow it to happen. So, that goes on the 4th of March." He posted on social media, "the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled."

The February 28 Washington Post reported: "In recent days, Trump has given conflicting signals about his plans, appearing to suggest as recently as Wednesday that the Canada and Mexico tariffs might be delayed again until early April. But while talks continue with Canadian and Mexican diplomats, a White House official reiterated that Trump is set on imposing the new import taxes. 'This is locked in,' said the official … "

Asked February 26 what level of tariffs he will seek to impose on the European Union, President Trump said: "We'll be announcing it very soon. And it will be 25%, generally speaking. And that will be on cars and all of the things. And European Union is a different case than Canada, different kind of case. They've really taken advantage of us in a different way. They don't accept our cars. They don't accept, essentially, our farm products. They use all sorts of reasons why not. And we accept everything of them. And we have about a $300 billion deficit with the European Union."

On February 26, the Ways & Means Committee approved:

• H.R. 1491, the Disaster Related Extension of Deadlines Act, by a 44-0 vote
• H.R. 517, the Filing Relief for Natural Disasters Act, 42-0
• H. J. Res. 25, Disapproving the rule submitted by the Internal Revenue Service related to Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales, by a 26-16 vote

The disapproval, under the Congressional Review Act process, addresses December 2024 final regulations (TD 10021) for digital asset brokers under IRC Section 6045 that require certain decentralized finance (DeFi) industry participants to file and provide information returns as brokers. The 2021 Infrastructure Investment and Jobs Act clarified the definition of broker for transfers of digital assets, expanded the categories of assets for which basis reporting is required to include all digital assets, and provided a definition for the term digital assets. The December 2024 Regulations generally apply to sales of digital assets occurring on or after January 1, 2027, and under the resolution the regulations would immediately cease to have effect and be treated as though they had never taken effect and could never be reissued in any substantially similar form.

Bill intros — Bills introduced February 25-26 include:

• S. 711, to establish an enhanced deduction for wages paid to automobile manufacturing workers, Senator Bernie Moreno (R-OH)
• S. 729, to enhance compliance with hospital price transparency requirements, Senator John N. Kennedy (R-LA)
• H.R. 1582, to equalize the charitable mileage rate with the business travel rate, Rep. Pete Stauber (R-MN)
• H.R. 1583, to remove private or commercial golf courses and country clubs from the list of uses for which certain proceeds cannot be used, Rep. Claudia Tenney (R-NY)
• S. 756, to treat certain postsecondary credentialing expenses as qualified higher education expenses for purposes of 529 accounts, Senator Amy Klobuchar (D-MN)
• S. 750, to prohibit Health and Human Services from implementing or enforcing a final rule regarding minimum staffing for nursing facilities, and to establish an advisory panel on the nursing home workforce, Senator Deb Fischer (R-NE)
• S. 760, to renew the application of the Medicare payment rate floor to primary care services furnished under the Medicaid program, Senator Patty Murray (D-WA)
• H.R. 1614, to expand practitioners eligible to furnish telehealth services under the Medicare program, Rep. Mike Kelly (R-PA)
• H.R. 1616, to permit nurse practitioners and physician assistants to satisfy the documentation requirement under the Medicare program for coverage of certain shoes for individuals with diabetes, Rep. Darin LaHood (R-IL)