It could be a pivotal week for decisions in the House related to a budget reconciliation bill to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025, with outstanding issues including relief from the $10,000 state and local tax (SALT) deduction cap, potential tax revenue offsets, and Medicaid changes. The two committees with jurisdiction over taxes and key spending cuts, the House Ways and Means Committee and Energy and Commerce Committee, are expected to hold their reconciliation markups next week (the week of May 12). The plan is for the House Budget Committee to stitch the 11 committee reconciliation bills together as one and for the House to vote the week of May 19 before the Memorial Day recess.

Ways and Means is responsible for TCJA extensions plus President Trump's tax cut proposals and potential tax increases that would pay for some or all of those tax cuts. Energy and Commerce is charged with coming up with $880 billion of the $2 trillion in total deficit reduction required as a condition for a full $4.5 trillion deficit increase for tax cuts under the Ways & Means instruction. On Fox News last night, Speaker Mike Johnson (R-LA) said SALT relief and Medicaid changes "are big parts" of the reconciliation bill, along with "the various components of the tax piece of this." He said using the reconciliation process to avoid the 60-vote Senate filibuster threshold is "why all of these various components of the bill are put together, complex pieces of the bill. But we're going to solve this equation … "

Politico reported on Saturday, regarding the reconciliation effort generally: "Competing factions are drawing fresh red lines that could be impossible for House leaders to reconcile, and that is all before their counterparts across the Senate start making their own changes to the emerging plan. Meanwhile, the clock is ticking on Speaker Mike Johnson's self-imposed deadline to get a bill through the House by Memorial Day — a deadline that is looking increasingly unrealistic. 'I don't think we're on the same page — even inside the House, much less between the House and the Senate,' said Rep. Chip Roy (R-Texas), a leader of the hard-right bloc pushing for deep spending cuts."

Regarding SALT cap relief, there is continued attention on a $25,000 per individual cap and ending the current marriage penalty, though some high-tax state Republicans suggest that is inadequate. Additionally, it was reported last week that House Republicans had yet to reach agreement on an approach to rolling back Inflation Reduction Act (IRA) energy tax credits to raise revenue for the reconciliation bill, and that this week would be critical for the negotiations. "Nothing is decided on the IRA," said Rep. Vern Buchanan (R-FL). "The chips are on the table and a lot of that is going to happen next week."

On Fox News Sunday, Ways and Means Chairman Jason Smith (R-MO) said of revenue sources, "We can eliminate bad tax policy and replace it with tax relief for working families. For example, the green new tax scam that the Biden administration moved forward, there's hundreds of billions of dollars to eliminate there that could pay for no tax on tips, no tax on overtime, tax relief for seniors. And we're going to deliver on that." He said "there are some bumps in the road" for House consideration, but "I've said all along my goal is for the president to sign this one big beautiful bill on July 4th."

Regarding spending cut deliberations, Punchbowl News said Friday: "The White House is seeking to change the trajectory of debate around some policies, namely how House Republicans are handling Medicaid work requirements, drug pricing and the provider tax. White House officials are also intent on notching a victory on lowering drug prices and see the inclusion of this policy in the reconciliation package as a political priority."

Also on Fox, House Budget Committee Chairman Jodey Arrington (R-TX) said regarding Medicaid, "there is no work requirement for able-bodied adults like there is in every other means-tested welfare program" and a higher federal match to the able-bodied, "the Obamacare expansion population," hurts access to more vulnerable populations. "We can save over $1.5 trillion without touching a dime of the benefit funding," he said. Chairman Smith said the President has expressed an "openness to work requirements."

The Senate's current policy baseline won't count the $4 trillion cost of TCJA extensions, and the Finance Committee has reconciliation instructions for up to a $1.5 trillion deficit increase for additional tax cuts that could include Child Tax Credit changes, no tax on tips, overtime, and Social Security benefits, and cutting taxes on domestic manufacturing. The House tax reconciliation instructions are different, with a current law baseline and little room for deficit increases for tax cuts beyond TCJA extensions, creating the expectation that revenue offsets will be required for the Trump proposals. Chairman Smith said yesterday, when asked about potential tax increases on higher-income individuals, "there's no problem to eliminate loopholes that the wealthy have benefited from to make sure that working class Americans aren't paying taxes on tips."

A May 2 New York Times story said the Trump proposals may be limited to contain costs:

• the no tax on tips proposal may apply only to certain industries and workers below an income threshold
• the tax exemption for overtime pay is intended to be targeted toward middle-and-low income Americans
• a more general tax break may be proposed to apply to older Americans rather than exempting Social Security benefits from tax given that the program is off limits under reconciliation

Congress — The Senate is in session today with a vote at 5:30 p.m. related to Senator Tim Scott's (R-SC) Congressional Review Act (CRA) disapproval resolution (H. J. Res. 61) to nullify the Environmental Protection Agency rule titled National Emission Standards for Hazardous Air Pollutants: Rubber Tire Manufacturing (89 Fed. Reg. 94886) and published on November 29, 2024.

"Because resolutions of disapproval under the Congressional Review Act need only a majority vote, they are some of the only legislation that can avoid a filibuster in the Senate. This allows them to circumvent the partisan gridlock that stands in the way of most significant bills," the New York Times said in a May 3 story on use of the CRA. "So far this year, Mr. Trump has signed three such measures: one overturning Biden-era regulations on cryptocurrency brokers, another canceling fees on methane emissions and a third doing away with additional environmental assessments for prospective offshore oil and gas developers. Another five, including one that eliminates a $5 cap on bank overdraft fees, have cleared Congress and await Mr. Trump's signature."

The House is also back in today with suspension votes on bills under the jurisdiction of the Veterans' Affairs Committee and Foreign Affairs Committee. Later in the week is a planned vote on Rep. Marjorie Taylor Greene's (R-GA) bill (H.R. 276) to rename the Gulf of Mexico as the "Gulf of America."

The only hearing in the tax-writing committees is the Senate Finance Committee hearing to consider the nominations of James O'Neill to be Deputy Secretary of Health and Human Services and Gary Andres to be an Assistant Secretary of Health and Human Services set for Tuesday, May 6 (at 10 a.m.).