Ahead of the expiration of government funding on March 14, the House March 11 approved 217-213 a mostly clean continuing resolution (CR) to fund the government through the end of the fiscal year on September 30. The vote was remarkable in that only one Republican, Rep. Thomas Massie (R-KY), voted "no" even though some conservatives traditionally oppose CRs, and most government funding bills rely on bipartisan support. One Democrat, Rep. Jared Golden (D-ME), voted in favor. The action puts preventing a potential government shutdown in the hands of Senate Democrats, who are generally opposed to a CR for the remainder of the fiscal year due to concerns about the Administration not adhering to spending levels. Still, some have indicated they would vote for the bill, and the support of at least eight Democrats is required to overcome the 60-vote filibuster threshold in the 53-47 Senate, with Republican Senator Rand Paul (R-KY) expected to oppose.

The CR includes another $20 billion rescission of IRS funding. On health issues, the CR extends through September 30 certain Medicare telehealth flexibilities, the Acute Hospital Care at Home waiver, funding for certain public health and hospital programs, and more. The CR also delays cuts to Medicaid disproportionate share hospitals through September 30 and includes some funding level and funding mechanism changes for the National Institutes of Health and the Centers for Disease Control and Prevention.

Budget reconciliation — House Ways & Means Committee Republicans are scheduled to meet again today (Wednesday, March 12) to continue the development of a budget reconciliation bill headlined by extensions of Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025, after meeting Monday with Treasury Secretary Scott Bessent. They are outpacing Republicans in the Senate, where Majority Leader John Thune (R-SD) previously said that any Senate vote related to the House budget wouldn't occur until at least March 24, after a congressional recess next week. That timeline could be extended as the two sides work out their differences, and House leaders have said the Senate might not vote in relation to the House budget for another month. While House leaders want a tax bill completed by Memorial Day, Senator Thom Tillis (R-NC) said in a Politico story that the August recess may be a more realistic deadline given there is "a lot more work to do." Senator John Cornyn (R-TX) said there is "no consensus" yet on among Senate Republicans.

One of the major outstanding questions is whether to use a current policy baseline that doesn't count the cost of tax cut extensions and may be the only realistic path to making expiring TCJA provisions permanent. Members who have previously expressed reservations are clarifying their concerns. In a Bloomberg story, House Budget Committee Chairman Jodey Arrington (R-TX) said some House Republicans are wary of the Senate avoiding the spending reforms called for under his budget resolution, but he is open to a current policy baseline if strictly for tax-cut permanency, and not to reduce the amount of required spending cuts. "If it keeps our framework of deficit neutrality, then I'm open to it," he said. Senate Finance Committee member Todd Young (R-IN) has expressed similar concerns, saying in a Politico story he has asked Republican leaders "how we're going to get to figure out some spending savings so that I'd be more comfortable with the current policy approach."

However, Punchbowl News this morning reported Chairman Arrington as saying the Senate should just accept the House budget, but that there are concerns not only with the use of a current law rather than current policy baseline but with the deep spending cuts required, including $880 billion from the Energy & Commerce panel with jurisdiction over Medicaid. Tax Notes suggested that Senate Republicans have acceded to the House approach of one big bill headlined by tax rather than border first and tax later, as was envisioned by the Senate-passed budget resolution. "We'll probably do a big reconciliation bill, try to be able to pull the two things together," said Senate Finance Committee member James Lankford (R-OK).

A March 7 letter to members from housing and real estate trade groups expressed "strong opposition to any proposal that would cap or eliminate the ability of a business to claim a federal tax deduction for its state and local property tax payments." And while the Inflation Reduction Act's (IRA) energy tax credits currently estimated at about $750 billion have been targeted as a source of revenue, more than 20 members said in a letter led by Rep. Andrew Garbarino (R-NY) that "any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments which will continue to increase domestic manufacturing, promote energy innovation, and keep utility costs down."

Personnel — Washington Council Ernst & Young's Rebecca Burch has been selected to be Deputy Assistant Secretary for International Tax Affairs at the Treasury Department. "In her new role, Burch will serve as top US delegate on tax matters at the Organization for Economic Cooperation and Development, representing the US in negotiations with other countries on global tax standards and, importantly, the international tax deal," the Daily Tax Report said regarding the expected announcement.

In other personnel news, Eric Ueland was nominated to be Deputy Director for Management at the Office of Management and Budget. Ueland served during the first Trump administration and was a former Senate Budget Committee Republican staff director and Chief of Staff to former Majority Leader Bill Frist (R-TN).

Congress — The Senate March 10 confirmed the nomination of Lori Chavez-DeRemer to be Secretary of Labor 67-32. The Senate Finance Committee is set to vote on Thursday (March 13) on the nomination of Michael Faulkender to be Deputy Treasury Secretary.

On March 10, Reps. Ron Estes (R-KS) and John Larson (D-CT) reintroduced the American Innovation and R&D Competitiveness Act (H.R. 1990) to permanently allow for immediate R&D expensing retroactive to 2022, when five-year R&D amortization took hold under the TCJA.

Also on March 10, Rep. Greg Steube (R-FL) introduced a bill (H.R. 2014) to, for purposes of the tax on private foundation excess business holdings, treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans.

The Senate Finance Committee has set a hearing to consider the nomination of Mehmet Oz to be Administrator of the Centers for Medicare and Medicaid Services for Friday, March 14 at 10 a.m.