It could be a pivotal three-week stretch in the development of a budget reconciliation bill headlined by extensions of Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025. Senate Republicans must decide whether to vote on the House-passed budget resolution, which must at least be amended to provide reconciliation instructions to Senate committees, or demand modifications from House GOP leaders reluctant to make changes. Questions surrounding the potential tax package, particularly the use of a current law rather than current policy baseline, and the deep spending cuts required, including $880 billion from the Energy & Commerce panel with jurisdiction over Medicaid, are among the issues preventing members from arriving at a unified budget. House Republican leaders are growing impatient with the Senate's pace, and House Budget Committee Chairman Jodey Arrington (R-TX) has said the Senate should just accept the House resolution.

Punchbowl News reported March 18 that "Senate Budget Committee Republicans are planning to begin a series of meetings over the next few weeks with the Senate parliamentarian's office on budget reconciliation," with the goal of receiving guidance on the current policy baseline issue in early April. It is understood that the parliamentarian wouldn't necessarily rule on the issue this early in the process, but could provide some less formal guidance, perhaps in time for the House to consider a compromise budget resolution before the next congressional recess slated to begin April 11. A broad group of Republican Senators want to make the expiring TCJA provisions permanent by using a current policy baseline that doesn't count the cost of tax cut extensions, and they are concerned that the current law baseline assumed in the House budget resolution doesn't provide sufficient space to achieve that. House Speaker Mike Johnson (R-LA), Senate Majority Leader John Thune (R-SD), House Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Mike Crapo (R-ID) are set to meet Tuesday to discuss issues surrounding the tax bill.

Ways & Means Committee members met March 10-12 to discuss potential tax proposals but, despite digging in, there's only so much progress they can make before a budget agreement with the Senate is reached. Politico reported March 23 that Ways & Means Republicans don't intend to draft a bill before the Senate agrees on a budget, as members feel it is impossible without knowing agreed-upon parameters.

Regarding the numbers associated with the House FY2025 budget resolution:

• The reconciliation instruction to Ways & Means is for a $4.5 trillion net deficit increase to cover TCJA extensions for up to 10 years; including revenue offsets and/or spending cuts within the Committee's jurisdiction could allow for a higher level of tax cuts.
• Instructions to other committees add up to a floor of $1.5 trillion in spending cuts, but if they don't achieve $2 trillion in spending cuts, the leeway for tax cuts could be reduced to $4 trillion.
• According to the Congressional Budget Office (CBO), a 10-year extension of expiring TCJA tax provisions would cost $4 trillion over 10 years, not including interest costs.
• Bonus depreciation is included in that figure but addressing TCJA pre-cliffs on five-year R&D amortization and the calculation for interest expense deductions (EBITDA to EBIT) could be $200 billion more, leaving little room for other tax cuts.

Chairman Crapo has said there are a multitude of other tax proposals the package must accommodate, including a Child Tax Credit expansion for those earning under $400,000 annually and President Trump's tax proposals. The President March 4 again called for no tax on tips, overtime, and Social Security benefits, cutting taxes on "domestic production and all manufacturing" and an extension of 100% expensing retroactive to January 20, 2025.

There have been reports about potential tax increases that could pay for additional tax cuts.

A March 15 Financial Times story said: "Republicans in Congress are seeking to extract billions of dollars in taxes from the endowments of top private US universities by raising rates on investment returns amid a broader attack on elite academia. At least three bills proposed since January aim to raise the tax rate on investment returns to as much as 21 per cent, from 1.4 per cent currently. Two of the bills would also lower the threshold to universities with as little as $200,000 in assets per student, compared with the current level of $500,000. The increase could raise as much as $112bn over the next decade … "

Punchbowl News reported March 17: "House Republicans are zeroing in on hiking the 1.4% tax on university endowments — with proposals going all the way up to a dramatic increase to 21%. The idea here is to get universities to pay up on their multi-billion dollar endowments, playing on the general disdain Republicans have for higher education. The GOP set the current tax rate in their 2017 tax bill, so they'd be going back for more. Now, universities large and small are trying to get Congress to ease up." Chairman Smith was said to have floated a tax increase on university endowments during a January Ways & Means member meeting.

Bills addressing endowments include:

• the Endowment Tax Fairness Act (H.R. 446) by Rep. Troy Nehls (R-TX), to raise the excise tax levied on certain private university endowment profits from 1.4% to 21%
• the Endowment Accountability Act (H.R. 1128) by Rep. Mike Lawler (R-NY), to lower the per-student endowment threshold from $500,000 to $200,000 and raise the excise tax rate from 1.4% to 10% of endowment income
• the Higher Education Accountability Tax (HEAT) Act (H.R. 1006) by Reps. Dave Joyce (R-OH) and Nicole Malliotakis (R-NY), a Ways & Means member, to increase the 1.4% endowment excise tax to 10% for qualifying universities and revise the tax to apply to institutions with $250,000 or more in endowment assets per student (expanded from the current threshold of $500,000 per student)
• the Woke Endowment Security Tax (WEST) Act (S. 936) by Senator Tom Cotton (R-AR), to institute a 6% excise tax on the endowments of some universities

Trade — There is a great deal of attention on trade developments coming on April 2, which President Trump has deemed a "Liberation Day" featuring "the big one" in terms of tariff announcements, coming after completion of reviews due April 1 under the America First Trade Policy memo. The President intends to announce reciprocal tariffs that will go into effect on April 2, Reuters reported March 18. "Unless the tariff and non-tariff barriers are equalized, or the U.S. has higher tariffs, the tariffs will go into effect," an unnamed official said in the report. Axios reported March 21, "The tariffs unveiled on April 2 might take effect the same day, giving little time for U.S. importers to digest what could be a list of sprawling new levies." Separate auto and semiconductor chip tariffs are now not expected to be announced on April 2.

President Trump posted on social media March 21: "April 2nd is Liberation Day in America!!! For DECADES we have been ripped off and abused by every nation in the World, both friend and foe. Now it is finally time for the Good Ol' USA to get some of that MONEY, and RESPECT, BACK. GOD BLESS AMERICA!!!" President Trump signed a memorandum February 13 directing the Administration to conduct a review to calculate and ultimately impose reciprocal tariffs on a country-by-country basis, accounting for both tariff rates and non-tariff barriers, calling for a "Fair and Reciprocal Plan" to counter non-reciprocal arrangements with trading partners by determining the equivalent of a reciprocal tariff.

Treasury Secretary Scott Bessent said on Fox Business March 18, "What's going to happen on April 2nd, each country will receive a number that we believe that represents their tariffs. So, for some countries, it could be quite low. For some countries, it could be quite high." He said, "going into April 2nd, some of our worst trading partners, in terms of the way they treat us, have already come to President Trump offering substantial decreases in very unfair tariffs. So, I'm optimistic that April 2nd, some of the tariffs may not have to go on because a deal is pre-negotiated, or that once countries receive their reciprocal tariff number, that right after that they will come to us and want to negotiate it down."

The mechanics of the tariffs aren't clear. The Wall Street Journal reported that a tiered system, "to simplify the complex task of devising new tariff rates for hundreds of U.S. trading partners by instead sorting nations into one of three tariff tiers," had been considered but later ruled out. A story in the March 22 Washington Post said, "Exactly how such a plan would work in practice has consumed administration officials as they seek to carry out the president's ambitious vision. The U.S. trade representative is tasked with implementing the plan, but it is not clear whether the trade office has the staff or organizational capacity to impose exact retaliatory tariffs that match what other countries charge on specific goods … "

A March 15 WSJ analysis said: "The world may be unprepared for April 2, when administration officials are to report on the feasibility of reciprocity. That originally meant that U.S. tariffs would match those imposed on it by others, and could therefore go up or down. It was to be a more benign alternative to a universal tariff on everyone and everything. But Trump defines reciprocity to include everything he considers an unfair trade barrier, such as value-added taxes. It will likely be another pretext to simply raise tariffs a lot."

National Economic Council Director Kevin Hassett said March 19, "There are more than 100 countries that don't really have any tariffs on us and don't have any non-tariff barriers, and there are probably about 10 to 15 countries that account for the entire trillion-dollar trade deficit, and they have both non-tariff barriers and big tariffs. And so what we're doing, in a very analytical way, is we're studying that … "

Congress — The Senate is back in today (March 24), and, at 5:30 p.m., will proceed to two roll call votes: Confirmation of the nomination of John Phelan to be Secretary of the Navy, and confirmation of the nomination of Christopher Landau to be Deputy Secretary of State.

On Tuesday, March 25 (at 10:10 a.m.), the Senate Finance Committee will hold a hearing to consider the nomination of Frank Bisignano to be Commissioner of Social Security Administration. The hearing will be preceded by an Open Executive Session to consider the nomination of Mehmet Oz to be Administrator of the Centers for Medicare and Medicaid Services.

The House is also back in today (March 24), with suspension votes on bills under the jurisdiction of the Science, Space, and Technology Committee. Later in the week, votes are expected on:

• H.R. 1048 — DETERRENT Act (Sponsored by Rep. Baumgartner/Education and Workforce Committee) to reduce the foreign gift reporting threshold for colleges and universities from $250,000 to $50,000
• H.J. Res. 75 — Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of Energy Efficiency and Renewable Energy, Department of Energy relating to "Energy Conservation Program: Energy Conservation Standards for Commercial Refrigerators, Freezers, and Refrigerator-Freezers." (Sponsored by Rep. Goldman (TX)/Energy and Commerce Committee)
• H.J. Res. 24 — Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Department of Energy relating to "Energy Conservation Program: Energy Conservation Standards for Walk-In Coolers and Walk-In Freezers." (Sponsored by Rep. Bice/Energy and Commerce Committee)

On March 25 (at 2 p.m.), the House Ways & Means Trade Subcommittee will hold a hearing on American Trade Negotiation Priorities.