After the Senate passed their FY2025 budget resolution Saturday morning, it's the House's turn to see if they can pass the same version this week and make further progress toward an eventual reconciliation bill with Tax Cuts & Jobs Act (TCJA) extensions and other provisions prior to the two-week recess scheduled to begin April 11. Both chambers must pass the same budget to unlock the reconciliation process and there are at least two main sources of intraparty conflict among Republicans:

• Some only want to vote in favor of tax cut extensions if they are accompanied by significant spending cuts, which other members oppose, especially if it involves significant Medicaid changes
• The Senate resolution relies on a current policy baseline that doesn't count the cost of TCJA extensions and provides for a $5.3 trillion deficit increase for tax cuts, compared to $4.5 trillion under the House version

The Senate resolution postpones decisions regarding potential spending cuts and the approach to taxes, and some House Republicans aren't sure they want to support it without more certainty on the parameters of a reconciliation bill. The resolution retains the House budget's 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 mandates nominal savings from Senate committees. House Budget Committee Chairman Budget Jodey Arrington (R-TX) criticized the Senate resolution for allowing a big potential deficit increase without mandating significant savings and said it may have a hard time passing the House.

Punchbowl News reported Saturday that Chairman Arrington said the Senate's reconciliation instructions are "unserious and disappointing," raised concerns about the impact on the debt, and said the current policy baseline that doesn't count the cost of the tax cuts "sets a dangerous precedent." The House ratio is now 220-213, with Republicans bolstering their majority with victories in two Florida special elections last week, and two Democratic seats still vacant. That means House Speaker Mike Johnson (R-LA) can only lose three votes and pass the resolution through the House.

Freedom Caucus members have expressed concern with the resolution, including Reps. Andy Harris (R-MD), Chip Roy (R-TX), Andy Ogles (R-TN), Josh Brecheen (R-OK), Keith Self (R-TX), and Andrew Clyde (R-GA). Harris posted on April 5, "I can't support House passage of the Senate changes to our budget resolution until I see the actual spending and deficit reduction plans to enact President Trump's America First agenda." Rep. Victoria Spartz (R-IN) has also criticized the Senate reconciliation instructions. Last week, Ways & Means members Reps. Greg Steube (R-FL) and Lloyd Smucker (R-PA) expressed concern about the $5.3 trillion total for tax cuts under the Senate version.

The resolution's $1.5 trillion Finance Committee deficit increase instruction would provide for tax cuts on top of TCJA extensions that Chairman Mike Crapo (R-ID) has suggested would cost $3.8 trillion, the cost of which would be disregarded under the current policy baseline. Extension of already expired TCJA provisions — 100% expensing (which is in the midst of a phasedown in 20% increments), five-year R&D amortization, and the calculation for interest expense deductions (EBITDA to EBIT) — could be $500 billion more in Crapo's estimate, and he said a tax bill may include Child Tax Credit changes and Trump tax proposals.

Punchbowl News said this morning that the spending cuts issue caused a close call in the Senate. Senator Josh Hawley (R-MO) cosponsored an amendment with Finance Committee Ranking Member Ron Wyden (D-OR) to remove Medicaid from the budget's instruction to the House Energy and Commerce Committee to find $880 billion in savings. That amendment also had the support of Republican Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK), but failed, 49-50. The report said if Senator Dan Sullivan (R-AK), whose support was in play, had voted in favor, leaders would have had to scramble to strike the amendment later in the process.

The focus this week is on President Trump pushing House members to vote in favor of the Senate-passed resolution. Politico reported April 5, "it remains to be seen whether the GOP rebellion will be able to stand up to Trump, who previously leaned on key holdouts to muscle through an earlier House budget vote. Trump this week demanded that '[e]very Republican, House and Senate, must UNIFY' behind the Senate plan." Morning Tax said, "The House could just not pass the Senate budget this week, and Republicans in two chambers could go to a conference committee or negotiate directly to reconcile the current differences."

A New York Times story on the current policy baseline in the Senate resolution and the promise it holds for tax cut permanency said, "Republicans do not want to go through a bipartisan negotiation in the future. They also believe that making the cuts permanent could help businesses plan their investments and grow the economy, even though corporate planning has been thrown into disarray by President Trump's tariffs."

Trade — Following President Trump's April 2 "Liberation Day" announcement of his Reciprocal Tariff Policy, this could be trade week in Congress with the traditional tax-writing committee hearings on the President's Trade Agenda with the United States Trade Representative and plenty to talk about. The Senate Finance Committee hearing on the trade agenda is Tuesday, April 8 at 10 a.m., with testimony from USTR Jamieson Greer, while the House Ways & Means Committee hearing with Greer is Wednesday, April 9 at 10 a.m.

Administration officials have stressed that the tariffs are already bringing other nations to the negotiating table. Asked on Meet the Press whether the tariffs are permanent or a negotiating tactic, Treasury Secretary Scott Bessent said, "I think that's going to be a decision for President Trump, but I can tell you that, as only he can do at this moment, he's created maximum leverage for himself, and more than 50 countries have approached the administration about lowering their non-territory barriers, lowering their tariffs, stopping currency manipulation … I think that we are going to have to see the path forward."

On CNN State of the Union, Agriculture Secretary Brooke Rollins said, "I think we will see in short order a really positive outcome from this. We already have 50 countries that have come to the table over the last few days, over the last weeks that are willing and desperate to talk to us."

But there is also the message that the tariffs aren't changing anytime soon. On Face the Nation, Commerce Secretary Howard Lutnick said of the tariffs, "There is no postponing. They are definitely going to stay in place for days and weeks … The president has made it crystal, crystal clear. This is the policy. We are going to protect the factories that come build in America — we are going to protect them."

Congress — The House is back in today with votes under the suspension calendar on Veterans' Affairs Committee bills and could vote on the Senate-passed FY2025 budget resolution as soon as Wednesday. The Senate is back in session today with a procedural vote at 5:30 p.m. related to the nomination of Elbridge Colby to be Under Secretary of Defense for Policy.

Treasury — The Senate Finance Committee has set a hearing to consider the nominations of William Kimmitt to be Under Secretary of Commerce for International Trade and Ken Kies to be an Assistant Secretary of the Treasury (Tax Policy) for Thursday, April 10 at 10 a.m.

Health care — Health hearings this week include:

• House Oversight and Government Reform Committee hearing on "Restoring Trust in FDA: Rooting Out Illicit Products," Thursday, April 9 at 10 a.m.
• House Ways and Means Health Subcommittee hearing on "Lowering Costs for Patients: The Health of the Biosimilar Market," Tuesday, April 8 at 10 a.m.

Friday, April 11 at 12 p.m. is the EY Webcast, "Tax in a time of transition."