There was a "Big Six" meeting March 25 — the top Republican leaders in each chamber, tax committee chairmen, Treasury Secretary Scott Bessent, and National Economic Council Director Kevin Hassett — on issues surrounding the budget reconciliation process and the tax bill that Republicans want to pass. Senate Majority Leader John Thune (R-SD) said he wants the Senate to vote on a compromise budget resolution in the three weeks prior to the start of the next congressional recess on April 11, aligning with other reporting that meetings with the Senate parliamentarian are underway to get at least an informal read on whether the use of a current policy baseline is a viable option.

Thune's comments also align with the wishes of House leaders for the two chambers to get on the same page quickly. Speaker Mike Johnson (R-LA) and others issued a statement March 24 calling on the Senate to act as quickly as possible on a budget resolution that can unlock the reconciliation process for "one big, beautiful bill" with tax cut extensions, but stopping short of demanding the other chamber pass the House version as-is. Both the House and Senate will need to pass the same budget resolution to use reconciliation.

Whether a current policy baseline that doesn't require paying for tax cut extensions will be permitted under reconciliation rules is probably the biggest tax issue standing in the way of a unified resolution right now. Senate Finance Committee member Bill Cassidy (R-LA) reiterated his concerns with the approach during Tuesday's party lunch. On the House side, Ways & Means members Dave Schweikert (R-AZ) and Greg Murphy (R-NC) are skeptical of a current policy baseline and are pushing for revenue offsets. There are also concerns from House and Senate Republicans that the $880 billion in mandatory spending cuts the House budget resolution would require from the Energy & Commerce Committee will target Medicaid.

Members are wary over how that level of savings can be achieved without benefit cuts, and instead only by combatting waste and fraud, as President Trump has prescribed. "To make their targeted budget numbers, Republicans will likely need to carve hundreds of billions of dollars in spending out of the health program that serves lower-income people," a story in the March 25 Wall Street Journal said. "But Medicaid is a political flashpoint because of the core role it plays in the lives of millions of Americans — many of whom vote for Republicans — as well as state budgets and the healthcare economy." Senator Josh Hawley (R-MO) opposes Medicaid cuts, and Punchbowl News said other Republicans with concerns include Senators Jim Justice (R-WV), Shelley Moore Capito (R-WV), Susan Collins (R-ME), and Lisa Murkowski (R-AK).

But House Energy & Commerce Committee Chairman Brett Guthrie (R-KY) said in a March 25 Politico report that the Committee could meet its reconciliation instruction through rollbacks of Biden-era climate initiatives and savings from Medicaid's growth.

Leaders were upbeat after the Big Six meeting. House Speaker Mike Johnson (R-LA) said "it sounds like we will not be far apart, and that's a good thing, so we'll be able to move," according to the Bloomberg Daily Tax Report. Secretary Bessent said the "meeting gives me confidence that a swift timeframe is achievable." Still, Republicans from both chambers continue to push for a unified resolution that bends to their respective views.

Even under a current policy baseline, revenue offsets will be required for tax cuts beyond TCJA extensions. Another WSJ story said, "Congressional Republicans may consider capping corporations' ability to deduct state and local taxes from federal taxable income, and business lobbyists are rallying to fight the potential change, which would raise hundreds of billions of dollars over a decade." The story said, "An income-tax deduction limit would be less far-reaching than one that also applies to property taxes," and also, "Congress would also need to consider state taxes on particular industries, such as severance taxes on oil, gas and mineral extraction and premium taxes on insurance policies."

An updated WCEY Alert, "Pathways to budget reconciliation in 2025," is attached below and available here.

Debt limit — The Bipartisan Policy Center said March 24 that the federal debt limit X Date, when Treasury will no longer be able to meet its financial obligations in full and on time, will likely arrive between mid-July and early October. The debt limit issue has been in and out of the budget reconciliation debate after a $4 trillion increase was included in the House budget resolution. It was reported March 12 that Leader Thune doesn't think addressing the debt limit can be accomplished in a tax reconciliation bill and others worried it might jeopardize the tax bill. Some House Republicans would also likely oppose an increase. However, Politico reported March 25 that President Trump wants the debt limit addressed in the reconciliation bill and Thune now hopes to include the issue.

If the GOP-only approach for the debt limit isn't successful, Democratic votes will be needed to address the issue in a non-reconciliation bill. As Semafor reported this morning, Democrats would need to decide whether to use that leverage to extract some concessions from the other party. Even some Republicans are eyeing that approach. Punchbowl News reported Sen. Ron Johnson (R-WI) as saying he wants to use the debt limit as leverage to enact spending cuts.

Trade — Ahead of an announcement on reciprocal tariffs planned for April 2, President Trump said March 24 he may allow for exceptions: "I may give a lot of countries breaks, but it's reciprocal."

The House Ways & Means Trade Subcommittee held a hearing March 25 on "American Trade Negotiation Priorities," despite free trade agreements being deemphasized by the current Administration thus far. In an opening statement, Chairman Adrian Smith (R-NE) said he is "confident we will build upon the historic trade negotiation successes of President Trump's first term," including the United States-Mexico-Canada Agreement (USMCA). Ranking Member Linda Sanchez (D-CA) said she wants to "see new trade arrangements with partners committed to advancing worker rights, protecting the environment, providing access to medicines, defending human rights, safeguarding intellectual property rights, fighting against corruption, and creating conditions for fair competition." Witnesses included Harley-Davidson's CFO, who said the brand "is being discriminated against and politically targeted by the EU and Canada," both of which apply steep tariffs to imported motorcycles.

Congress — The Senate March 25 confirmed 56-44 Dr. Marty Makary as Food and Drug Administration (FDA) Commissioner. Minority Whip Dick Durbin (D-IL) Senators Maggie Hassan (D-NH) and Jeanne Shaheen (D-NH) joined all Republicans in voting yes. The Senate also confirmed Jay Bhattacharya to be Director of the National Institutes of Health (NIH) on a party-line 53-47 vote.