This week (November 10-14)

Congress: There is a scheduled congressional recess this week, though there is the expectation that the Senate may be in session at least part of the week given the government shutdown.

Last week (November 3-7)

Government shutdown: The 38th day of the government shutdown brought the Senate no closer to an agreement to fund the government, as plans to vote on a new continuing resolution (CR) and possibly a minibus appropriations package faded and Democratic objections to a vote on legislation to pay federal workers during the shutdown further frayed relations between the parties. Senate Democrats stated their demand for providing the requisite votes for a CR to fund the government: a one-year extension of enhanced Affordable Care Act (ACA) premium tax credits. Democrats had previously sought a permanent extension of the credits. The proposal was dismissed by Republican leaders, who nonetheless said the softening of Democrats' demands was a sign of progress. "At some point, they've got to make a decision about whether or not they want to keep this going or they want to end it," Majority Leader John Thune (R-SD) said of Democrats in a Wall Street Journal story. He said the Senate would likely work into the weekend, something the chamber hasn't done since the shutdown began, but plans weren't clear. Punchbowl News reported this evening, "with no signs of a breakthrough, the chamber's weekend schedule is in flux. Senators have been told to remain available, but Thune said it wasn't clear whether there'd be anything to vote on." The Senate will convene at noon on Saturday, November 8, but no votes are scheduled.

The government funding debate has always focused on sequencing of legislative actions: Republicans won't discuss extending the enhanced premium credits until Democrats provide the necessary votes to reopen the government, while most Senate Democrats won't vote to reopen the government without an extension of the credits. That dynamic persists. While the promise of a vote on extending the enhanced credits appeared poised to break the logjam earlier this week, Democrats, with the wind at their backs following wins in gubernatorial and other state races November 4, said an ACA vote separate from the CR would amount to capitulation. And so, the shutdown is likely to go into a sixth week.

Looking ahead: The shutdown has obscured the outlook for potential follow-on legislation on health, trade, and tax issues later this year, and there is an apparent split among Republicans on the favored approach. Senate Budget Committee Chairman Lindsey Graham (R-SC) is advocating for a second reconciliation bill to focus on health care issues and "reportedly told the president that passing the party's legislation through budget reconciliation is a better alternative in the coming months" than ending the filibuster, the Washington Times reported. (The President has advocated eliminating the filibuster requiring 60 Senate votes for most bills.) "The Big, Beautiful Bill went through reconciliation. It [included] the largest tax cuts, largest spending cuts, replenished the military and [provided] money for border. I think it's a tool that can be used to put points on the board," Senator Graham said. "I want us to look at what a reconciliation package, a new one, would look like," he said in Politico. "We could do some things on health care. We can do some things on policy, taxes and spending." However, Bloomberg reported that Senate Finance Committee Chairman Mike Crapo (R-ID) said "he's not yet on board yet with a new fast-track reconciliation bill [and] is seeking [a] bipartisan health care plan."

It is unclear what tax items could be pursued, but a sampling of proposals on the tax side that could be addressed in a potential year-end package may include:

• Work Opportunity Tax Credit (WOTC) expiring at the end of 2025
• Seven-year recovery period for motor sports entertainment complexes expiring at the end of 2025
• IRC Section 181 expensing rules for film, television, and theater productions expiring at the end of 2025
• US-Taiwan tax relief
• Cryptocurrency tax provisions
• Deduction limit of 90% of gambling losses that takes effect in 2026 (restore 100% deduction)
• Retirement provisions

Global tax: Asked on Fox Business November 4 about the topic of France considering a proposal to increase its digital services tax (DST) from 3% to 6% (not 15%, as initially reported), House Ways and Means Committee member Rep. Ron Estes (R-KS) said, "President Trump has some tools like Section 301, and even Section 891, as ways to help out. I mean, we're more than willing in Congress, a lot of us, in terms of being able to stand up for U.S. businesses, and we can pass additional legislation to help address this." Section 301 allows the imposition of tariffs to enforce U.S. trade rights, while Section 891 allows for the doubling of rates of tax on citizens and corporations of countries who impose discriminatory or extraterritorial taxes on the US. There is also continued speculation that Republicans may revive the Section 899 reciprocal tax proposal, which was dropped from the One Big Beautiful Bill Act (OBBBA). Rep. Estes said of the DST: "We've been focusing and the U.S. Treasury has been working really well with OECD to fix some of the problems with this Pillar Two global minimum tax they've had out there. And so, now France is coming back and doubling their digital services tax, trying to attack any company that uses electronics, and they specifically, as you said, doubled it, but they also changed the definition of who would be liable for it. So, basically, it's targeting U.S.-based companies … "