The Senate returns to session today (Monday, May 11) with votes beginning at 5:30 p.m. on a package of en bloc nominations (S. Res. 690), then a procedural vote related to the nomination of Kevin Warsh to be a Member of the Board of Governors of the Federal Reserve System (term of 14 years). A final vote on Warsh's four-year nomination to be Fed chairman is expected by Wednesday evening (May 13), with another vote on his separate 14-year term as a Board member likely on Friday unless all Senators agree to give time back. The House begins voting for the week on Tuesday (May 12), with a series of bills under the jurisdiction of the Financial Services Committee. It's National Police Week in Washington, and that is influencing the House floor agenda, with law enforcement and crime-focused bills on the floor later in the week.

Committee-level processing is set to begin this week on the Senate Homeland Security and Judiciary portions of a reconciliation bill to fund the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies of the Department of Homeland Security (DHS). The bill was released over the week-long congressional recess and totals $72 billion, including $1 billion for security enhancements around President Trump's proposed White House ballroom. A Senate floor vote may follow next week (week of May 18) as lawmakers move to meet President Trump's call to complete the reconciliation bill by June 1.

The budget resolution authorizing the bill does not include reconciliation instructions to either the Senate Finance or House Ways and Means Committees with jurisdiction over tax, trade, and health care, precluding those items from being added. That leaves as a remaining option to address affordability proposals and other economic issues a potential third Republicans-only reconciliation bill, considered perhaps as early as June/July, that could include provisions related to the SAVE America Act voter ID bill and defense funding.

A May 7 Politico story, "Republicans clash over policy wishlist as they seek to boost their midterm message," said many in the GOP are eyeing proposals for inclusion with the imperative that the "party needs to do more to address cost-of-living matters before voters go to the polls in the fall." They include:

• tackling "social service spending" to address fraud, though there's "wariness among more vulnerable Republican members who could be subject to a barrage of campaign attacks about safety-net cuts"
• benefits for first-time home buyers
• "allowing 'portable mortgages,' and other ideas aimed at addressing borrowing rates"
• unspecified measures to address rising health care costs
• unspecified additional tax provisions, a topic both Ways and Means Committee Chairman Jason Smith (R-MO) and Budget Committee Chairman Jodey Arrington (R-TX) said should be addressed

A May 7 Bloomberg story, "Benefit Cuts, Looming Midterms Make Next Budget Bill No Sure Bet," focused on the perils of social program cuts for vulnerable Republican members. "I'm not a fan of reconciliation," said Rep. Brian Fitzpatrick (R-PA), a Ways and Means member and co-chair of the Problem Solvers Caucus who voted against the "One Big, Beautiful Bill Act" (OBBBA) because of Medicaid cuts. "If they try to harm social safety nets one inch, I'm a hard no." The story said while the OBBBA included time-sensitive tax cut extensions and an increase in the state and local tax (SALT) deduction to appease moderates in wealthy districts, "it's unclear that lawmakers have found similar incentives for a package that would largely be targeted for cutting benefits" as opposed to expanding them. "If there's all pain and no sweeteners, I don't know where you get 218 votes," said Rep. Nick LaLota (R-NY).

If there are policy add-ons to a follow-on reconciliation bill, or a bipartisan bill after the elections, one new-starter tax issue that could evolve in time for inclusion is cryptocurrency tax legislation. Chairman Smith has been prepping a proposal but said he is holding out for Democratic support, and Ranking Member Richard Neal (D-MA) has said there is a knowledge gap on the issue in the House and a need for additional member education. Punchbowl News reported May 10 that there will be a "bipartisan, closed-door roundtable on Thursday on tax issues related to digital assets" with academics and private-sector tax experts.

Crypto — Months of waiting for the Senate Banking Committee to advance a bill establishing a market structure for digital assets may be at an end, as Chairman Tim Scott (R-SC) announced that the bill would be marked up this Thursday, May 14. A number of unresolved issues surrounding the bill, such as banks' opposition to crypto platforms paying yield-like "rewards" on stablecoin deposits, may not be worked out by the time of the markup, which would likely mean that Republicans would send the bill to the Senate floor on a party-line vote, similar to how the Senate Agriculture Committee processed its portion of the bill in January. Since a number of Democratic votes will be needed to get the bill to 60 votes on the floor, bipartisan negotiations on the bill text would then continue at the leadership level, and subsequent changes would be left for a manager's amendment on the floor.

Democrats have sought ethics language banning federal officials from sponsoring, endorsing or issuing digital assets, or profiting from crypto businesses while in office. Last week, committee Republicans reportedly said such a ban would fall outside the Banking Committee's jurisdiction and would have to be handled by another committee. Democrats have also said the bill needs stronger language on decentralized finance (DeFI) transactions, anti-money laundering safeguards and tokenization, but no agreement on those issues has been announced yet.

On the banks' problems with stablecoin rewards, the team of Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) released the text of compromise language before last week's recess, but a coalition of bank trade associations responded by calling their new approach inadequate and in need of significant changes. "The proposed language includes exceptions that will enable evasion of the intended prohibition and incentivize customers to hold and grow stablecoin balances at the expense of deposits," the coalition wrote in a letter to committee leaders. The banks are seeking new language cracking down on stablecoin rewards that are "substantially similar to the manner in which banking organizations pay interest or yield." But Tillis and Alsobrooks don't appear inclined to revisit their text, with Punchbowl reporting that the senators "openly defied banks' calls for changes last week."

Housing — As Republicans look for affordability measures to run on, another stalled big-ticket item that may get back on track in the next week or two is the bipartisan housing bill, different versions of which have been passed by overwhelming margins in the House and Senate. After the Senate passed its "21st Century ROAD to Housing Act" (HR 6644) on March 12, House Republicans criticized the inclusion of provisions restricting institutional investors from owning single-family homes, which the Banking Committee had inserted at the White House's request. Conservatives also faulted the temporary nature of the bill's ban on the Federal Reserve adopting a central bank digital currency (CBDC) through the end 2030 and the Senate's dropping of a package of House-passed community banking deregulatory items. After flirting with the idea of a rare House-Senate conference to reconcile the bills, bipartisan House Financial Services Committee leaders ultimately decided to amend the housing bill and send it back to the Senate, and spent weeks negotiating a series of changes. Their work appears to be completed, but the bill is not expected to come back to the House floor this week.

On May 8, Punchbowl News reported that "we expect the House to strengthen the CBDC prohibition from the Senate's roughly five-year ban, possibly by extending the horizon. But it's too early to say what form that language will take." Then on Saturday (May 9), based on a draft copy of the negotiated amendments it had obtained, Politico reported that the text "contains changes to a provision aimed at limiting the ability of large institutional investors to purchase housing by narrowing the definition of 'single-family home,' which could make it possible for private equity firms and other large companies to purchase more homes than the previous version allowed. The definition would now exclude manufactured housing and homes that have been renovated for sale, among others, according to the text."

Notably, Politico reported that the draft House changes "would also strip a controversial Senate provision that would require single-family homes built by large institutional investors as long-term rentals to be sold after seven years to individual homebuyers." That restriction on build-to-rent homes has been criticized by trade groups such as homebuilders, as well as an association representing professionals who work around Opportunity Zones, which provide tax benefits in certain low-income census tracts. Punchbowl reported that in a letter dated April 28, the Economic Innovation Group wrote that section 901 of the Senate-passed bill "threatens to undermine this work by severely limiting the production of built-to-rent (BTR) single-family homes," warning that the timed divestiture aspect of the Senate's bill could result in companies' losing significant amounts of money on home sales: Senate Banking Chairman Scott was one of the lead sponsors of language creating Opportunity Zones in the 2017 Tax Cuts and Jobs Act.

Elections — There have been several developments potentially tipping multistate redistricting efforts in Republicans' favor — a change from just a few weeks ago when the process, which began with Texas, was looking to essentially be a wash, with 10 congressional districts redrawn in Democrats' favor compared to 9 for Republicans. Now, as the May 9 Wall Street Journal reported, "Political analysts said Republicans now have a lead in the redistricting campaign, with net gains of as many as six or seven favorable seats, but that Democrats continue to have a good chance of taking control of the House in the race overall."

Following the April 29 Supreme Court decision concerning aspects of the Voting Rights Act, opening the door to additional redistricting efforts ahead of this year's midterms and the 2028 elections, Louisiana Gov. Jeff Landry (R) rescheduled the state's primary elections. The Supreme Court then ruled the current congressional map unconstitutional, likely unlocking a redistricting process that could result in Republicans gaining an additional seat in the delegation currently at four Republicans, two Democrats.

There are also redistricting efforts underway with special sessions in Tennessee and Alabama. One Democrat represents Tennessee in the House, Steve Cohen (D-TN), whose district was redrawn in a map approved last Thursday, potentially resulting in an all-GOP nine-member delegation. The Alabama delegation currently includes two Democrats, which could change to an all-GOP seven-member delegation. PBS News on May 4 reported about a previous order to use a court-selected map, "The proposal in Alabama hinges on the courts lifting the injunction in time to switch maps before the November election." The story said, "The candidate qualifying period in Tennessee ended in March, and the primary election is scheduled for Aug. 6. Democrats noted that in 2022, the state Supreme Court checked additional redistricting because it was too close to an election. They argued that the court is their best hope this time around, too."

There has also been reporting about Mississippi possibly acting to eliminate a Democratic seat — the state has already held a primary, so it may not take effect until 2028 — and conflicting reports about the prospects for redistricting in South Carolina, with the Republican governor in that state and Georgia having previously signaled that efforts would be unlikely in their states.

Also working against Democrats is the Virginia Supreme Court on May 8 nullifying the state's April 21 referendum vote to amend the state's Constitution to allow the General Assembly to temporarily adopt new congressional districts. The Court ruled that the constitutional amendment didn't meet the requirement that, "The General Assembly must twice vote in favor of a proposed amendment at two separate legislative sessions with an intervening election of the House of Delegates." Democrats currently hold six of the Virginia delegation's seats compared with five for Republicans. The redrawn districts could have resulted in Democrats winning 10 House seats.

Separately, a May 6 New York Times story reported on the Michigan Senate race for the seat of retiring Senator Gary Peters (D-MI), which is likely to feature former Rep. Mike Rogers (R-MI) versus the winner of a Democratic primary focused on three candidates: physician Abdul El-Sayed, State Senator Mallory McMorrow, and Rep. Haley Stevens (D-MI). Rep. Stevens is "a party establishment favorite," El-Sayed is a progressive former health official, and McMorrow occupies the middle ground between them. "Many of the fault lines running through the Democratic Party across the country are on clear display in the race," the story said. "It will test Democratic voters' hunger for new voices, their anger at party leaders," etc.

A Washington Post story about Democratic optimism for retaking the Senate after the elections, "Democrats see Senate control within reach — but some big hurdles remain," said Democratic leader Chuck Schumer (D-NY) "sees Democrats as increasingly competitive in Iowa, where Republican Sen. Joni Ernst is not seeking reelection, and Texas, where Republican Sen. John Cornyn could lose a bitter primary runoff this month to state Attorney General Ken Paxton. He is even talking about trying to oust Republican Sen. Cindy Hyde-Smith in Mississippi, where Democrats have not won a Senate race in more than four decades."

Tax — On May 6, the Internal Revenue Service announced updates to its Conservation Easement site, expanding information on abusive conservation easement transactions, recent court decisions, and warning signs for investors. The Service said it will soon release the terms of a time-limited settlement opportunity for eligible taxpayers involved in these transactions.

EY's Barbara Angus is the winner of Tax Analysts' 2026 Award of Distinction in Federal Taxation in recognition of her work in drafting the core elements of the Tax Cuts and Jobs Act.

Friday, May 15 at 12:00 p.m. is the EY Center for Tax Policy monthly update - May 2026. Register.