The House and Senate have now passed the same FY2025 budget resolution, clearing the path for using the reconciliation process to pass a bill to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025 with only Republican votes, without negotiating with Democrats. Agreement between the chambers on the budget resolution marks a major step toward a tax bill as Congress heads into a two-week recess. Several House Republicans were opposed to the Senate-passed FY2025 budget resolution until Thursday morning, when Senate Majority Leader John Thune (R-SD) offered public assurances that GOP Senators are on board with the spending cut targets House Republicans set when they passed their version February 25.

"We are aligned with the House in terms of what their budget resolution outlined in terms of savings. The Speaker's talked about $1.5 trillion. We have a lot of United States senators who believe that is a minimum," Thune said during a joint news conference with House Speaker Mike Johnson (R-LA). "And we're certainly going to do everything we can to be as aggressive as possible to see that we are serious about the matter not only of, you know, making our federal government more fiscally sustainable but also deficit reduction, which is critical to a lot of our members in the Senate." The House passed the resolution 216-214 shortly thereafter, with GOP Reps. Thomas Massie (R-KY) and Victoria Spartz (R-IN) opposed.

Most of the dozen or so previously opposed members had objected to the Senate-passed resolution because it doesn't require significant spending cuts. It leaves the House reconciliation instructions unchanged — for $2 trillion in deficit reduction as a condition for a full $4.5 trillion in tax cuts, including to Energy & Commerce for at least $880 billion in spending cuts — but mandates only nominal savings ($4 billion) from Senate committees. Prior to Leader Thune's comments, some House Republicans doubted that significant deficit reduction would be pursued by the Senate. President Trump also pledged support for spending cuts.

As numerous press stories have stated, what lies ahead are decisions about how to achieve the desired level of spending cuts and any number of issues regarding the tax provisions, including what additional proposals to include, how to pay for them, and relief from the $10,000 state and local tax (SALT) deduction cap.

After the recess, Republicans will "begin the even-heavier lift of writing — and then whipping support for — the behemoth package of tax cuts, military spending, energy policy, border security investments and more," Politico reported. "That process will pit fiscal hawks against moderate Republicans as GOP leaders try to square their conflicting demands to protect safety-net programs like Medicaid while cutting trillions of dollars from that slice of the federal budget."

Semafor reported, "there are huge disagreements to sort through on taxes, spending cuts, and Medicaid in order to finalize President Donald Trump's agenda — and there's still a lot of heartburn about Trump's remaining tariffs," and some are still "second-guessing" the reconciliation strategy. "Now you've got to actually write these bills," Sen. Lindsey Graham (R-SC) said. "If this gets to be a long, drawn out and never-ending process, then everything we worried about with the 'big beautiful bill' comes true."

Punchbowl News: "Thune didn't commit to $1.5 trillion in spending cuts, no matter what Johnson or the [House Freedom Caucus] assert … So don't be shocked if Senate Republicans don't reach that target. What's next? After months of preliminary jockeying, now comes the really hard part — drafting a bill. Johnson's challenges in juggling concerns from the center and right of his conference over spending cuts this morning underscored just how difficult it's going to be. Then throw in the tax portion of the package and you have an enormously complex Rubik's Cube to solve."

The spending cuts and tax cuts puzzle will be difficult to solve, and some members are warning that the goal of some in Congress to include President Trump's tax proposals — which include no tax on tips, overtime, and Social Security benefits, plus cutting taxes on "domestic production and all manufacturing" — may be an overreach. During a Senate Finance Committee hearing on nominations, Senator Thom Tillis (R-NC) questioned the wisdom of trying to find a half-trillion dollars to fund the additional tax cut proposals and making extending the TCJA much more complicated. "What is the case other than fulfilling a political promise for including all that non-pro-growth tax policy in this first tranche?" he asked.

Treasury — The April 10 hearing to consider the nomination of Ken Kies to be Assistant Treasury Secretary for Tax Policy didn't wade too far in to the Trump administration's views on tax policy, which Kies said he couldn't necessarily speak to as a nominee. Chairman Mike Crapo (R-ID) asked about permanent extensions of TCJA provisions, and Kies spoke about the importance of the standard deduction and Child Tax Credit, and later about the 20% passthrough deduction. Chairman Crapo further asked about a current policy baseline. Kies said the current policy baseline is a path to achieving permanency, which is an important outcome, and consistent with how CBO has scored spending decisions. He said the current policy baseline highlights the effect that if a tax policy expires, it has the effect of being a tax increase.

Ranking Member Ron Wyden (D-OR) asked about the tax issue of roundtripping (or US MNCs booking US profits through subsidiaries in low-tax jurisdictions) and asked generally about pursuing tax policies that would make it more attractive to do business in the United States. Kies said the reduction in the corporate rate made the US an attractive place to do business and there haven't been any significant inversions since the 2017 enactment. Other members raised international tax issues. As she has previously, Senator Marsha Blackburn (R-TN) spoke out against Pillar Two of the OECD-led global tax agreement and said US companies pay an outsize portion of the global minimum tax. "This is something the prior Administration got us into, it is something we need this Administration to get us out of," she said. Kies noted the international tax executive order signed by the President.

Senator Tillis asked about the foreign-derived intangible income (FDII) deduction and whether it is worth maintaining. Kies said that provision and the lowering of the corporate rate were designed to encourage companies to stay in the US and bring their intellectual property (IP) to the US, and to stop inversions.

Trade — President Trump issued a 90-day pause on the additional country-specific tariff rates on countries with which the US has large trade deficits and trade barriers on April 9, the same day they took effect, but suggested 10% universal tariffs would remain in effect: "based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately."

The tariffs are expected to be paused until at least July 9.

President Trump's Reciprocal Tariff Policy continues to be a focus on Capitol Hill, Wall Street, and across the world. The news of the pause came hours into the House Ways & Means Committee hearing on the President's trade agenda with United States Trade Representative Jamieson Greer, who said it was his understanding that the pause was attributable to the fact that "so many countries have decided not to retaliate." Rep. Steven Horsford (D-NV) heatedly confronted Ambassador Greer over the President announcing the pause on social media seemingly without coordination with his top trade official. "If you came here knowing that you were going to be turned off, that these tariffs were going to be turned off. Why didn't you include that in your opening statement? Why didn't you reference that as part of your testimony?" he asked.

Health care - On April 8, the House Ways and Means Health Subcommittee held a hearing on "Lowering Costs for Patients: The Health of the Biosimilar Market." During the hearing, members heard from a panel representing health care providers, advocates, and researchers who spoke about the need to address barriers to biosimilar entry and use, including addressing pharmacy benefit manager (PBM) rebates and Medicare physician reimbursement for biosimilars. Witnesses were divided on the impact of the Inflation Reduction Act's (IRA) drug price negotiation program on biosimilar innovation.

Bill intros — Bill introductions of interest in recent days include a pair of bills from Senator Tillis:

• S. 1334, to increase the percentage limitation on assets of real estate investment trusts which may be held in taxable REIT subsidiaries
• S. 1335, to exclude debt held by certain insurance companies from capital assets and to extend capital loss carryovers for such companies from 5 years to 10 years

A Tillis press release on S. 1335 said it would "repeal the outdated capital tax treatment of debt investments held by life insurers, such as bonds, and apply ordinary tax treatment to them."

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

What to Expect in Washington won't be published while Congress is away.