Senate Majority Leader John Thune (R-SD) June 15 punctuated a point made recently by some of his members: it will be difficult to reach even a simple-majority vote in favor of a third budget reconciliation bill, to follow last years' "One Big Beautiful Bill Act" (OBBBA) and the recent Secure America Act (S. 2) that funded the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies. Punchbowl News reported Thune as saying, "You've got to have something that gets 50 and 218, and I'm not sure exactly at this point what that is."

A third Republican-only bill, which some members envision could include affordability proposals possibly offset with provisions to combat waste/fraud/abuse in federal safety net programs, has been discussed by House Republican leaders and committee chairs but more coolly received in the Senate. President Trump was seen as boosting the effort last week by directly calling for such a bill to deliver higher defense funding.

The reliance on the budget reconciliation process as a means of providing funding for various federal departments and agencies is beleaguering the regular appropriations process — with the September 30 deadline on the horizon — because Democrats want a commensurate increase in non-defense funding. There has been years-long partisan tension between Republicans favoring defense spending and Democrats prioritizing non-defense funding, with the two sides in many instances reaching a bipartisan budget agreement out of necessity, to keep the government funded.

Leader Thune said following the regular Tuesday party luncheons: "It's pretty clear the Democrats don't want to play ball in a normal appropriations process. Susan Collins, the Chairman of the Appropriations Committee, has now, I think, made three offers to the Democrats on a top line — wants to move appropriations bills out of the committee — [and] is getting zero cooperation from the Democrats either with respect to what the topline numbers ought to be by subcommittee, or, for that matter, an agreement on poison pill amendments … It seems, to me at least, that what Chuck Schumer and the Democrats want more than anything else is another government shutdown. They shut it down twice in this last year, and they think it benefits them politically."

In post-luncheon remarks, Senate Appropriations Committee Ranking Member Patty Murray (D-WA) was critical of the Administration's foreign policy actions: "Let's talk about the cost of this war. American consumers are paying billions more in gas prices. There are families right now that are deciding whether they're going to be able to afford to send their kid to a summer program or fill their gas tank. We've had a dramatic spike in the number of farms who are declaring bankruptcy."

Senate Democratic Leader Chuck Schumer (D-NY) highlighted another source of partisan tension, with his June 16 unanimous consent request to consider a measure to formally abolish the Justice Department's anti-weaponization fund, which the Administration has said it has backed away from, and nullify the IRS immunity deal reached by the President. "I gave them a chance today to show who they stand for, American taxpayers or Donald Trump? … Republicans blocked it. All they had to do was let our resolution go through."

Democratic members' insistence on offering an amendment blocking the IRS immunity agreement is also holding up Senate Finance Committee plans to consider a bipartisan tax administration package, according to Chairman Mike Crapo (R-ID).

Only the Senate is in session this week. The House is out.

Elections — Rep. Mike Collins (R-GA) June 16 won the Georgia Senate primary runoff — after a June 14 endorsement from President Trump — and will challenge Senator Jon Ossoff (D-GA) in the November general election.

Tax — There have been multiple thought leadership events hosted by groups in Washington over the past week that featured discussions of recommended changes on corporate and international tax issues.

The American Enterprise Institute (AEI) hosted a two-day event June 15-16 on "The Future of International Tax Reform," with panels on general principles for reform, the foreign tax credit, and controlled foreign corporation (CFC) regimes. During a panel on "What is the Role of Minimum Taxes on Business?" EY's Barbara Angus noted that the base erosion and anti-abuse tax (BEAT) has been the subject of criticism and proposed revision in the years since its inception. (The Biden administration proposed to repeal the BEAT and replace it with an undertaxed profits rule (UTPR) consistent with the UTPR described in the Pillar Two Model Rules.)

The panel, which also included Andrew Lyon and the University of San Diego's Adam Kern, is preparing a paper that will look at the various minimum taxes affecting US businesses (CAMT, BEAT, GILTI/NCTI, and Pillar Two) and consider the extent to which they achieve the tax policy goals that cannot be accomplished through other means, whether they are complementary or duplicative, and potential reduction of the number of minimum taxes.

The Brookings Institution and the Hamilton Project on June 16 hosted an event, "Taking on Tax: The Future of Corporate Taxation," in conjunction with papers on topics such as international tax and taxing large pass-throughs as corporations. Former Biden Treasury official Kimberly Clausing, now at UCLA, authored the paper, "The future of US international corporate tax reform," that calls for a higher corporate rate of 27% for a small portion of corporations plus an additional surtax for some (98% of corporate taxpayers would have no increase). Additional elements of the plan described in the paper are a 15% deduction relative to the domestic rate, resulting in rates of approximately 23% or 25% on nearly all foreign income; various ideas proposed by the Biden administration Treasury; and Pillar Two reforms.

It was suggested that 2029 may be the time for reforms, given that a Pillar Two stock-take is supposed to conclude by then. At a third recent tax event, the Georgetown Law Institute of International Economic Law and International Tax Policy Forum conference on Friday, June 12, Treasury Assistant Secretary for Tax Policy Ken Kies acknowledged the stock-take but downplayed the need for concern that elements of the side-by-side system would be renegotiated, saying that no changes would be made without consensus.

Housing — After the House and Senate spent months sending different versions of a bipartisan housing affordability bill back and forth, the legislative text revealed in the Senate on Tuesday appears to be the final iteration, carrying the blessing of the chairmen and ranking Democrats on the Senate and House banking committees. House Republicans on Monday initially recoiled at some of the changes in the latest Senate version of the 21st Century ROAD to Housing Act, saying they had not been included in negotiations, but after some bicameral tweaking a modified version of the bill (H.R. 6644) was hailed as a product both chambers can pass with overwhelming majorities. The last-minute changes included sunsetting the bill's Community Development Block Grant Disaster Recovery (CDBG-DR) Grants after three years. Notably, nine of the 11 community banking deregulatory provisions in the House-passed bill, which were not part of the Senate's previous version, were included in the final text. By a vote of 87-8, the Senate on Tuesday agreed to begin consideration of the bill, which is likely to be passed by the chamber later this week and cleared for the President's signature on the House side next week.

In a joint statement with Ranking Member Elizabeth Warren (D-MA), as well as the chairman and ranking member of the House Financial Services Committee, Senate Banking Committee Chairman Tim Scott (R-SC) said, "This bill is the result of years of work to lower costs, expand housing supply, cut red tape, protect taxpayers, and help more Americans achieve the dream of homeownership."

Energy tax — An EY Tax Alert, "IRS updates guidance for energy communities on qualifying for bonus IRC Section 45 and 48 credits," is available here.