The House July 22 approved a FY2027 budget resolution (H. Con. Res. 113) that provides for a $95 billion GOP-only reconciliation bill focused on defense funding and with some voter ID and farm aid provisions (but not for tax), with reconciliation instructions provided only to the Agriculture, Armed Services, Intelligence and House Administration committees (not Ways and Means). The vote was 216-214, and Republicans overcame concerns from members about the lack of spending cut offsets and other issues.

But there is likely not a quick path toward a Reconciliation 3.0 bill in the Senate, where Majority Leader John Thune (R-SD) said on July 23 he does not currently have 50 votes for the budget resolution. At least one member, Senator Thom Tillis (R-NC), has been outspoken against addressing the voter ID issue. Leader Thune seemed to take a bigger step this week toward embracing another reconciliation bill, which has been viewed tepidly by the Senate GOP, by saying he would hold the budget resolution in case reconciliation is needed to avoid a government shutdown. Thune intends to hold a vote on a continuing resolution (CR) to fund regular operations of the federal government before the Senate leaves for the August recess in the coming weeks, but Senators are working on a version that differs from the House-passed measure.

Budget reconciliation is something of a double-edged sword in that it allows legislation meeting certain revenue parameters to pass the Senate with a simple-majority vote, rather than the 60 votes necessary to overcome a filibuster. But both the budget resolution and the reconciliation bill require Senate "vote-a-ramas" of limitless amendment votes on issues germane to the underlying measures. As has been hinted at in the press, Leader Thune may want to avoid tough votes for his members on Democratic-authored amendments ahead of the midterm elections.

While tax provisions were omitted from the House reconciliation plan, taking that issue off the table for a vote-a-rama, there are other perilous topics. Punchbowl News reported, "the House's budget resolution includes $12 billion in farm aid, a provision that could open the door to Democratic amendments targeting [Supplemental Nutrition Assistance Program] cuts, which would only need a simple majority to pass."

The House passed a flurry of bills and resolutions during this last scheduled session week before the chamber's August recess, with the chamber now out until August 31:

Tax — During a July 22 markup, the House Ways and Means Committee approved four nonprofit bills:

• Rep. Lloyd Smucker's (R-PA) Fiscal Sponsorship Transparency Act of 2026 (H.R. 9721), to require reporting by certain charitable organizations relating to fiscal sponsorship arrangements, which was approved on a 23-15 vote
• Rep. Blake Moore's (R-UT) Fair Treatment of Religious Organizations Act of 2026 (H.R. 9722), to ensure fair treatment of certain charitable organizations, approved 23-16
• Rep. Nicole Malliotakis' (R-NY) Stopping Foreign Influence in Elections Act (H.R. 9771), to impose penalties on political committees that accept foreign contributions, approved 23-16
• Rep. Dave Schweikert's (R-AZ) Foreign Funding Transparency Act (H.R. 9772), to require disclosure by certain tax-exempt organizations of information relating to foreign contributions, approved 23-18

In an opening statement, Chairman Jason Smith (R-MO) described rapid growth in tax-exempt organizations over the past four decades and said, "As more money flowed into this sector, it has become a prime target for misuse and abuse … " Ranking Member Richard Neal (D-MA) said affordability proposals would have been a more appropriate markup topic rather than Republican bills. The Committee defeated several Democratic amendments.

Treasury — Unrelated to the bills, Reps. Lloyd Doggett (D-TX) and Brad Schneider (D-IL) took the opportunity to question the circumstances of the reported departure of Treasury Assistant Secretary for Tax Policy Ken Kies. In a related development, Senate Finance Committee ranking member Wyden issued a news release, "Wyden, Senate Democrats Call for Independent Investigation Into Political Interference in IRS Audits Following Departure of Top Trump Tax Official," describing an effort calling on "independent investigators at the Treasury Department to open an investigation into whether Trump administration officials are violating federal laws that prohibit political influence over federal tax audits."

Separately, in a July 22 social media post, Treasury Secretary Scott Bessent said Treasury and IRS are "examining Wall Street tax products that may exploit the tax code and tax strategies" and that the government "will not turn a blind eye to abusive Wall Street tax dodges or tolerate products designed to exploit our federal tax code." A July 21 Reuters story, "US Treasury flags Wall Street tax strategies as potentially abusive," said, "The products under scrutiny include so-called 351 conversions, box-spread exchange-traded funds, products that offset ordinary income, and funds that avoid dividend income by flipping between other ETFs … "

The Senate Finance Committee approved four Treasury nominations July 23, all on party-line 14-13 votes:

• Francis Brooke to be Deputy Secretary of the Treasury
• Erin Browne to be Under Secretary of the Treasury for International Affairs
• Sriprakash Kothari to be Assistant Secretary of the Treasury for Economic Policy
• George McMaster to be Assistant Secretary of the Treasury for Financial Markets

Trade — On July 23, 2026, the Office of the U.S. Trade Representative (USTR) took final action in its Section 301 investigations into whether 60 trading partners impose and effectively enforce a prohibition on the importation of goods produced with forced labor. As described in an accompanying fact sheet and a Federal Register notice, USTR is imposing additional ad valorem duties of 10% or 12.5% on substantially all products of these economies, subject to exemptions. According to USTR, the action "applies to the top 60 U.S. trade partners covering 99.4% of U.S. imports." The additional duties take effect for goods entered for consumption on or after 12:01 a.m. eastern time on July 24, 2026. The action follows USTR's June 2, 2026, proposed action, on which USTR received more than 1,600 written comments and held public hearings July 7-9, 2026.

The July 22 Senate Finance Committee hearing with USTR Jamieson Greer included discussion of President Trump's revamped tariff strategy, including newly announced tariffs on Canadian goods, the Joint Review of the U.S.-Mexico-Canada Agreement (USMCA), and various state-specific concerns of Senators on issues like agriculture and tourism. Asked by Chairman Mike Crapo (R-ID) about a realistic timeline for concluding negotiations, Ambassador Greer said he hoped to have before the end of the year options for leaders to consider regarding interim actions and arrangements — one with Canada, one with Mexico — but issues such as rules of origin and labor and environment enforcement may take longer. Senator John Cornyn (R-TX) asked what is to be made of the Administration opting not to renew the USMCA. Greer said the July 1 options were, "you can rubber-stamp the agreement and renew it without further revisions, or you can enter into this period where we decline to renew and see if there are ways to improve the trading relationship."

Ranking Member Ron Wyden (D-OR) criticized the President's "new tariffs on clothes, school supplies and other products from Canada, using a provision passed in the Smoot-Hawley Tariff Act of 1930," and anticipated forthcoming "global tariffs under the guise of addressing forced labor." Senator Elizabeth Warren (D-MA) was also critical, asserting that President Trump promised to lower prices but is finding new ways to put tariffs on many products. A WCEY Trade Alert has details.

Crypto — On Thursday (July 23), in response to a reporter's question, Senate Majority Leader Thune said he didn't think the Senate would be able to complete work before the August break on the Clarity Act (H.R. 3633), a bill establishing a market structure for cryptocurrency and other digital assets, or a college sports compensation framework bill. "I don't think we'll be able to get them done," Thune said. "I would like to at least get Clarity started. We'll see where the votes are." His remarks were a setback for the crypto bill, whose supporters have been pressing for the Senate to bring up and pass the bill before the August recess, mindful of the dwindling number of legislative days before the midterm elections. With key Democrats calling for changes in the latest draft, the Senate may end up holding only a failed cloture vote before the recess on a motion to proceed to H.R. 3633.

Senator Cynthia Lummis (R-WY) and other Republican sponsors released a new, 616-page version of the market structure bill earlier this week, but it was quickly criticized by a group of seven pro-crypto Democrats led by Senator Angela Alsobrooks (D-MD) that has been negotiating with Republicans. In a statement on Thursday (July 23), they said, "Key provisions, including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity, must be strengthened." One of the sharpest areas of contention has been over ethics language targeting conflicts of interest among high-ranking Federal officials. The new text would prohibit such officials from being paid for issuing or sponsoring crypto products while in office. (The covered officials would be the president, the vice president, House and Senate members, Federal judges and other covered Federal officials and employees, and their spouses.) The provision is enforceable only by the Department of Justice, though Democrats have insisted on language that would allow enforcement outside the federal government, such as by state attorneys general. Senator Alsobrooks said, "This DOJ enforcing an ethics provision? That's an unserious offer." But Senator Lummis told Punchbowl, "For both Republican senators and the White House, state [AGs] are not the right venue. It needs to be the Department of Justice. That's it."

The bill has several other issues that need work to reach a 60-vote consensus. Senators John Curtis (R-UT) and John Cornyn (R-TX) told Politico they share the banking industry's concerns that allowing crypto platforms to pay yield on stablecoins could lead to a flight of deposits out of community banks. A coalition of bank trade groups said in a statement this week that the latest Clarity Act text "still puts at risk the local lending that drives economic activity in the U.S." Cornyn has also expressed concern about a provision opposed by some law enforcement groups that would protect crypto software developers or firms from being prosecuted for illicit activity committed by others on the platforms they create.

Retirement — The top-ranking Democrats on both the Senate Finance Committee and House Ways and Means Committee, ranking members Wyden and Neal, respectively, on July 21 introduced bills (S. 5040/H.R. 9813) to impose limitations on high-income taxpayers with large retirement account balances. A news release said, "The proposal would prevent the accumulation of massive fortunes inside mega-retirement accounts by requiring ultra-wealthy individuals to take distributions from accounts with balances over $10 million." The release included estimates from the staff of the Joint Committee on Taxation regarding retirement holdings at the end of 2024.

The House considered as part of the 2021 Build Back Better Act a so-called Mega-IRA provision to prohibit new contributions to a Roth or traditional IRA if the total value of the individual's IRA and defined contribution accounts exceeds $10 million, which was not part of the narrower Inflation Reduction Act in 2022. There have been other similar proposals on the issue.

A story in the July 23 Wall Street Journal, "Retirement Accounts Get Supersized," said, "IRAs and workplace retirement accounts were created to help working Americans save for old age by providing tax incentives for doing so," but "have been supercharged by" those successful in certain industries.