The House and Senate are now out of session for a recess that is planned to last through the holidays and into the new year, meaning enhanced Affordable Care Act (ACA) premium tax credits (PTCs) are likely to expire at the end of the month. Lawmakers also did not make significant measurable progress on appropriations bills prior to the break, and, upon returning to session, they will face a January 30 deadline for nine of 12 annual appropriations bills (with the other three having received full-year funding with the November continuing resolution).

The House December 17 approved a Republican health care package, the Lower Health Care Premiums for All Americans Act (H.R. 6703), that would allow employers to offer workers tax-advantaged funds to pay for individual health insurance through custom health option and individual care expense (CHOICE) arrangements; fund cost-sharing reduction payments; enable small employers to form association health plans to offer coverage; and increase transparency for pharmacy benefit managers. The bill doesn't address enhanced ACA credits — the expiration of which has been a focal point of attention in Congress for at least the past three months — and would be expected to be blocked from Senate passage by Democrats, whose support would be necessary to meet the 60-vote threshold.

Meanwhile, four Republicans — Reps. Brian Fitzpatrick (R-PA), Mike Lawler (R-NY), Ryan Mackenzie (R-PA) and Rob Bresnahan (R-PA) — bucked GOP leadership and signed on to a discharge petition by Democratic leader Hakeem Jeffries (D-NY) to force a vote on extending the enhanced ACA credits, which is expected to be held in January. The development was seen as fraying relations between those members and GOP leadership in the House, where a group of Republicans — including the aforementioned signatories and other members including Jen Kiggans (R-VA), Nick LaLota (R-NY), and David Valadao (R-CA) — have been calling for action on the ACA credits issue. A story in today's Washington Post said, "For the fourth time in recent weeks, a group of frustrated Republicans banded with Democrats to try to force a vote on legislation that Johnson fought to keep from reaching the House floor. Tensions boiled over Wednesday" after the members signed the petition.

The same dynamic of each party challenging the other to relent on the ACA credits, which helped compel a government shutdown in October and into November, continues. "I think the Democrats are going to have to come to the table and realize that a straight extension of Obamacare subsidies is not a sustainable future for the American people," Senate Majority Leader John Thune (R-SD) said of the impasse on Fox News December 18. "You know, the Democrats talk about affordability. The least affordable thing that the American people have on there — in front of them today — is the cost of health care."

Regarding the House discharge petition, Leader Thune said, "They will send over to us, if they are successful with this discharge petition, it will come to the Senate. It will be a straight three-year extension of unsustainable, unaffordable program. So, yes, it will have to be reformed."

Asked during an unrelated Executive Order signing December 18 whether he wants Congress to extend the ACA subsidies, President Trump said, "I'd like not to be able to do it. I'd like to get right into this … This could be done rapidly if the Democrats would come along. We have a problem … And they're going to have to decide, do they want to do the right thing, or do they want to be beholden to insurance companies? They're making a fortune. I want the money to go to the people."

IRS — New this morning is guidance for taxpayers claiming the tax credit for carbon capture and sequestration: Notice 2026-1 provides a safe harbor for taxpayers that wish to claim the credit for qualified carbon oxide captured and disposed of in secure geological storage occurring during calendar year 2025.

Appropriations — The Senate did not consider before the break a minibus appropriations package encompassing the Labor-HHS-Education, Defense, Transportation-HUD, Interior-EPA and Commerce-Justice-Science appropriations bills. The package had been facing holds from both Republican and Democratic Senators. Punchbowl News reported that Republican appropriators were hoping to reach a time agreement to allow the Senate to pass the minibus in early January.

Nominations — Aside from pro forma sessions, the Senate is expected to next convene at 3 p.m. on Monday, January 5, 2026. The Senate approved December 18 en bloc nominations provided for under the provisions of S. Res. 532, which included Derek Theurer to be Deputy Under Secretary of the Treasury for Legislative Affairs.

Global tax — Estonia, Poland, and the Czech Republic have reportedly dropped their objections to a potential international agreement on a side-by-side system that would exempt US multinationals from most Pillar 2 global minimum tax rules. Information about a potential agreement has been awaited since at least last week. "The EU seems ready to move forward with the OECD's pillar 2 plan after its three most resistant member states" lifted their reservations to the side-by-side package system, Tax Notes said in a December 18 report that cited Estonia and a Czech official as confirming their objections have been dropped.

Financial services - The Senate Banking Committee's Financial Institutions and Consumer Protection Subcommittee hearing on Tuesday (December 16), "Ensuring Fair Access to Banking: Policy Levers and Legislative Solutions," focused on allegations of "debanking" of disfavored industries like fossil fuels and cannabis, with Subcommittee Chairman Thom Tillis (R-NC) frequently pointing to the Obama administration's Operation Choke Point as an example of overreach, and highlighting his discussion draft of the Ensuring Fair Access to Banking Act.

Presidential address — President Trump addressed the nation on December 17 and highlighted among upcoming agenda items, "In the new year, I will announce some of the most aggressive housing reform plans in American history."

What to Expect in Washington won't be published while Congress is out of session for the holidays, but other Alerts will be issued as events warrant.