Senate Republicans may not seek the parliamentarian's guidance on whether a current policy baseline that doesn't count the cost of Tax Cuts & Jobs Act (TCJA) extensions can pass muster under reconciliation rules and instead may rely on the argument Majority Leader John Thune (R-SD) made in late February that Budget Committee Chairman Lindsey Graham (R-SC) has authority to determine the baseline. Republican leaders ended last week saying they would seek a ruling by the parliamentarian before voting on an FY2025 budget resolution to unlock the reconciliation process for tax cut extensions this week. A joint meeting with the parliamentarian and Republican and Democratic aides, who have been making the case for and against a current policy baseline separately to the parliamentarian, was expected to be scheduled soon.

Asked April 1 if he would accept a parliamentarian ruling that a current policy baseline cannot be used to score a reconciliation bill, Leader Thune said, "The Budget Committee Chairman makes that determination, but obviously we are consulting regularly with the Parliamentarian on the best way to achieve the desired outcome here in the end, and that is to pass a reconciliation bill that accomplishes all of [our] objectives … " Thune and Senate Budget Committee Republicans are meeting with President Trump today.

Politico March 31 reported Senate Finance Committee member John Cornyn (R-TX) as saying Chairman Graham can "basically say under his authority what the baseline is," and his understanding is that the parliamentarian may not need to render a formal opinion, but talks are ongoing. The report cited a GOP aide who said the parliamentarian would likely need to rule on the question of whether a baseline determination can be made by the Budget Chair. Use of a current policy baseline, which hasn't previously been used in reconciliation, is viewed as the best opportunity to make TCJA provisions permanent. The Senate had been seeking to vote on a budget resolution as soon as this week, or at least before a two-week recess set to begin April 11, to show progress toward an eventual tax bill that has produced intraparty conflicts for months.

Meanwhile, the plan for the forthcoming resolution to be voted on by the Senate to not change House reconciliation instructions to House committees — including to Ways & Means for a $4.5 trillion net deficit increase to cover TCJA extensions that is reduced if total savings falls short of $2 trillion, and to Energy & Commerce for at least $880 billion in spending cuts — but only mandate nominal savings from Senate committees is drawing criticism from the House. Such an approach would follow the style of the Senate-passed FY2025 resolution that has now been set aside — it was intended for a narrower border-focused bill, with tax to come later- that set only a $1 billion deficit reduction floor from each of five Senate committees.

"But that's not because we don't have a shared commitment to cutting wasteful government spending and saving taxpayer dollars; that's simply a function of Senate rules," Thune said in an April 1 Tax Notes story.

The dynamic reflects a difference of opinion between the chambers over whether spending cut decisions should be made at the level of the budget resolution or later, in the resulting reconciliation bill, and between some Republicans who only want to vote in favor of tax cut extensions if they are accompanied by significant spending cuts and others who don't want to pursue deep spending cuts. In a story in the April 1 Wall Street Journal, House Budget Committee Chairman Jodey Arrington (R-TX) said in part, "The Senate's got to lock themselves in and tie themselves to the mast like we did in the House." And Reps. Ralph Norman (R-SC) and Dave Schweikert (R-AZ) say they won't vote for a budget with spending reduction goals lower than the House resolution.

But Senate Budget Chairman Graham dismissed further talk of spending cuts at this stage in the process and said it should come later. "Those who want to cut spending, there will be a process where you can make your case before the authorizing committee," he said.

House Republican leaders seem to be backing their Senate counterparts, stressing to their own members that senators need to come around to supporting a budget resolution to allow the reconciliation process to begin. But Leader Thune told members a budget resolution to provide for a tax bill doesn't yet have the requisite votes to pass, Punchbowl News reported April 1, adding "Thune and other top Senate Republicans have been warning that the chamber could stay through the weekend if necessary." Senate consideration of a budget resolution is capped by a vote-a-rama process of multiple amendment votes, which is usually overnight with a weekend or a recess on the other side.

Assuming agreement on and passage of a budget resolution, there are also high-profile differences among Republicans that must be resolved in the development of the reconciliation bill, including revenue offsets and the long-running debate over relief from the TCJA $10,000 state and local tax (SALT) deduction cap that GOP members from high-tax states are seeking. The Daily Tax Report (DTR) said April 1, "Republicans are in the process of drafting a tax bill behind closed doors that includes an increase of the state and local tax deduction to as high as $25,000 for an individual … "

An April 1 WSJ editorial said of rumblings in the press that a tax bill could raise corporate and individual income tax rates: "That rate hikes are now possible shows how confused today's GOP is about economics. It's bizarre enough that the Trump Administration is selling tariffs as tax cuts. It also makes no sense that the party is putting tariffs first while delaying the tax bill for months. But if rate hikes are in the bill, it will also mean the party has lost the plot about the pro-growth rationale for tax reform."

International tax — During a March 31 Fox Business interview, Rep. Ron Estes (R-KS) was asked about the Unfair Tax Prevention Act (H.R. 2423), his bill cosponsored by every Ways and Means Republican to ensure that if a country moves forward with an Undertaxed Profits Rule (UTPR) under Pillar 2 of the OECD-led tax agreement, the United States will impose a reciprocal tax measure. The bill strengthens anti-avoidance rules in the base erosion and anti-abuse tax (BEAT), revokes the ability of newly identified foreign-owned extraterritorial tax regime (FETR) entities to disregard certain service payments and payments subject to withholding taxes, and treats 50% of cost of goods sold as a base erosion tax benefit.

Estes said the Biden Treasury allowed other nations "to raise taxes on American businesses so that they can get more taxes in their country. And, basically, what they were doing was looking at and saying that each big business — they call it big business, but really it was targeted towards American businesses — they were going to raise taxes on them and not take into account the U.S. tax code, and we have the responsibility for U.S. tax code in the United States." He said "the UTPR tax that was part of their pillar two version, is completely unworkable. The administrative burdens are so huge on U.S. businesses, and it will raise taxes on them and actually reduce the taxes going into the U.S. Treasury. So, we want to make sure that if any country tries to unfairly tax U.S. businesses, that we'd also tax them."

Trade — April 2 is the day President Trump has deemed "Liberation Day," and he is expected to make an announcement at 4 p.m. on the expected Reciprocal Tariff Policy. Reviews that were due April 1 under the America First Trade Policy memo haven't been made public and aren't expected to be until at least after today's announcement.

The Senate Finance Committee has set a hearing on The President's 2025 Trade Policy Agenda for Tuesday, April 8 at 10 a.m., with testimony from United States Trade Representative Jamieson Greer. Politico said, "The annual hearing carries additional significance this year because of Trump's determination to reverse decades of U.S. trade liberalization in favor of a new tariff-heavy tax regime aimed at boosting manufacturing and raising government revenue."

Bill introductions — Bills of interest introduced on March 31 include:

• S. 1205/H.R. 2501, Senate Finance Committee member James Lankford (R-OK) and Rep. Mark Harris (R-NC), to allow charitable organizations to make statements relating to political campaigns if such statements are made in the ordinary course of carrying out its tax-exempt purpose
• S. 1210/H.R. 2507, Senate Democratic Whip Dick Durbin (D-IL) and Rep. Robin Kelly (D-IL), to modify the work opportunity credit for certain youth employees

Congress — There were two special elections in Florida April 1, to replace Rep. Matt Gaetz (R-FL), who resigned before the 119th Congress, and Rep. Mike Waltz (R-FL), who joined the Administration as National Security Advisor. Republicans are projected to win both seats, bringing the House ratio to 220-213. There are two other vacancies for seats previously held by Democrats.