Prospects for a second budget reconciliation bill to follow the "One Big Beautiful Bill Act" (OBBBA) seemed greater than they have been since the OBBBA passed last summer. Republican Senators, following a meeting at the White House Monday, outlined a plan to use the reconciliation process to enact Immigration and Customs Enforcement (ICE) provisions, separate from the Homeland Security funding bill. Democrats had requested a vote on non-immigration-related parts of the DHS spending bill, such as funding for the Transportation Security Administration (TSA) and Federal Emergency Management Agency (FEMA), while postponing action on the controversial ICE provisions that are at the center of the DHS shutdown.

Still, Senate Minority Leader Chuck Schumer (D-NY) and other Democratic leaders say they will use their leverage, with their votes required for the DHS bill, to win ICE reforms. "Democrats have been very clear, we will immediately fund TSA, FEMA, Coast Guard, and CISA while talks continue on ICE and Border Patrol. But we've also made very clear that, if we are talking about funding any part of ICE or CBP, we absolutely must take some key steps to rein them in," Senate Appropriations Ranking Member Patty Murray (D-WA) said Tuesday. "The current Republican offer in front of us does not do that. We have made some progress and the White House has already agreed to some steps. Bottom line, reforms must make it into law."

The focus of the reconciliation effort was to be the ICE provisions and portions of the SAVE America Act voter ID bill — which President Trump insists be enacted as a precursor to signing any other legislation — though there may be efforts to attach some of the Pentagon's requested $200 billion war supplemental and perhaps other Republican priorities. "If we end up going down that route, we'll try and make the most of the opportunity," Senate Majority Leader John Thune (R-SD) said in a Politico report March 24. The voter ID provisions would need to be crafted to have a revenue effect to comply with reconciliation rules. Discretionary spending is typically off-limits in reconciliation, but the spending can sometimes be reclassified as mandatory to fit within the rules.

The day after the apparent breakthrough, skepticism emerged about the plan, however. Punchbowl reported that Senator Mike Lee (R-UT) expressed doubts that the SAVE America Act could pass in reconciliation, and Senate Appropriations Chair Susan Collins (R-ME) said using the process to pass the bill is "not a good approach." But, following the regular Tuesday party lunches, Majority Leader Thune said, "I think there is a lot of support for a budget reconciliation bill," and, facing questions about whether the SAVE Act can fit within the rules, said, "obviously the Parliamentarian has a role to play in that process."

Senator Thune had been more circumspect about a second reconciliation bill until now. He also said the two-week Easter recess set to begin after this week could be imperiled if DHS funding isn't enacted. Even before the White House meeting, when the thinking was that a war supplemental might be the impetus for a second bill, Budget Committee Republicans were planning to meet on the issue this week. "We need to do another one no matter what," Senate Budget Committee Chairman Lindsey Graham (R-SC) said of a second bill.

Chairman Graham released this statement this morning saying in part, "After consulting with President Trump and his team and Leader Thune, the Senate Budget Committee will expeditiously move toward creating a second budget reconciliation bill … The purpose of the second reconciliation bill is to make sure there is adequate funding to secure our homeland and to support our men and women in the military."

Tax - The House Ways and Means Committee is holding a markup today (Wednesday, March 25) of:

• H.R. 2347, the "Survivor Justice Tax Prevention Act," described in JCX-4-26 and JCX-10-26
• H.R. 5366, the "Federal Disaster Tax Relief Act of 2025," described in JCX-5-26, JCX-11-26
• H.R. 5334, the "Supporting Early-childhood Educators' Deductions Act of 2025," described in JCX-6-26, JCX-12-26
• H.R. 7971, the "Taxpayer Experience Improvement Act," described in JCX-7-26, JCX-13-26
• H.R. 7959, the "IRS Whistleblower Program Improvement Act," described in JCX-8-26, with a revenue estimate in JCX-9-26, JCX-14-26

The disaster relief measure, H.R. 5366, would be changed by a substitute amendment to be titled the "Doug LaMalfa Federal Disaster Tax Relief Certainty Act," and the definition of "qualified disaster area" would be changed so that the incident period of the disaster to which a declaration is made begins "on or after December 28, 2019," rather than "after July 4, 2025." Under the bill, "qualified net disaster losses" are deductible to the extent they exceed $500 per casualty and without regard to whether aggregate net personal casualty losses exceed 10% of a taxpayer's adjusted gross income.

Ways and Means Committee members Dave Schweikert (R-AZ) and Don Beyer (D-VA) on March 18 introduced the Taxpayer Experience Improvement Act (H.R. 7971), to provide for modernization and technological improvements of services provided by the Internal Revenue Service. Provisions include requiring IRS to "provide, through a website or a mobile application, individualized, specific, and up-to-date information to taxpayers regarding their tax returns and amended returns."

Senate Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) on February 26 introduced the "Taxpayer Assistance and Service Act," which includes an upgrade to the "where's my refund" tools so taxpayers know when to expect their refunds. There's continued speculation about whether the two chambers could come together on a compromise tax administration package.

IRS — In Notice 2026-23, the Internal Revenue Service solicited recommendations for the 2026—2027 Priority Guidance Plan.

Housing & Crypto — House Republicans have been unhappy about a bipartisan housing bill (HR 6644) that passed the Senate with 89 votes on March 12, arguing that too many provisions of a similar bill that passed the House by a similarly overwhelming margin in February were left on the cutting-room floor on the Senate side. While Senate sponsors had hoped to attract enough House support for their version that the House would simply accept the Senate-passed bill and clear it for the President's signature, House Financial Services Committee Republicans have pushed back against a ban on institutional investors owning single-family homes that was added to the Senate bill at the behest of the White House, and have also complained that a package of community banking deregulatory measures in the House bill was dropped. The Senate's eleventh-hour language temporarily banning the Federal Reserve from issuing a central bank digital currency (CBDC) until the end of 2030 also inflamed House conservatives who have demanded the ban be made permanent.

Financial Services Committee Ranking Member Maxine Waters (D-CA), far from supporting her Senate counterpart Elizabeth Warren (D-MA) in the dispute, has also criticized the Senate-passed bill for excluding provisions she had championed, sending a "Dear Colleague" letter to fellow Democrats on Monday (March 23) urging them to support reconciling the two bills in a rare House-Senate conference. A conference would likely plunge the housing bills into a weeks-long bicameral process with an uncertain outcome. This week, in a bid to satisfy some of the House's concerns, Senate Banking Committee Chairman Tim Scott (R-SC) and committee member Katie Britt (R-AL) proposed to shift the House's community banking package to the Senate's pending crypto market structure bill. But the gesture appears to have fallen flat with the other body, as Politico on Tuesday reported that House Financial Services Committee Vice Chair Bill Huizenga (R-MI) said, "So our good stuff for their bad stuff — not sure I buy that." Financial Services member Zach Nunn (R-IA) told Politico, "This needs to be part of a conversation. Simply throwing something over from the Senate and expecting everybody to get on board with a half-baked idea doesn't get us to where we need to be."

Meanwhile, the Senate's stalled crypto bill has shown signs of life this week, with Senate Banking Committee members Thom Tillis (R-NC), Angela Alsobrooks (D-MD) and the White House agreeing on language aimed at resolving a dispute between banks and the digital asset industry over whether some crypto platforms could continue to pay "rewards" on stablecoins held in custody. Banks are concerned that allowing crypto exchanges to pay yield could cause a flight of deposits from banks. Sen. Cynthia Lummis (R-WY), a crypto specialist on the Banking Committee, has said the breakthrough could finally allow a markup of the market structure bill in April after the Senate's scheduled two-week recess.

According to a summary obtained by Politico on Tuesday, the proposal would bar crypto firms from paying "any form of interest or yield to restricted recipients a) solely in connection to holding a payment stablecoin or b) in a manner that is economically or functionally equivalent to an interest-bearing bank." Politico reported that Blockchain Association CEO Summer Mersinger, who is testifying at a Financial Services Committee hearing today on digital "tokenization" of securities, wrote in a letter to her members: "The prohibition will not apply to rewards or incentives based on bona fide activity or transactions that are not functionally or economically equivalent to interest-bearing bank deposits or payment of interest or yield in connection with a loyalty, promotion, subscription, or incentive program that is not economically or functionally equivalent to interest-bearing bank deposits."