Republicans have begun coalescing around a one-reconciliation bill approach that would allow for quicker action on tax legislation, but President-elect Donald Trump’s openness to other options leaves the plan somewhat unresolved.
Republicans first step toward enacting their ambitious legislative agenda is to settle on a process to use reconciliation, which will allow them to pass legislation in the Senate with simple majority votes. Many Senate Republicans prefer a two-bill approach, with the first bill focused on border security, defense and perhaps energy, and a second bill covering tax policy and other issues. Many House members have been pushing to keep everything together in one larger bill.
Trump endorsed the one bill approach on social media and in several public comments last week, calling for “one big, beautiful bill.” But Trump couched his comments as a preference rather than an edict, potentially leaving open the possibility of Congress resurrecting the two-bill approach.
On the Hugh Hewitt Show on Jan. 6, Trump said: “I favor one bill. I also want to get everything passed, and you know, there are some people that don’t necessarily agree with it. So I’m open to that also. My preference is one big, as I say, one big, beautiful bill. Now to do that takes longer. You know, to submit it takes longer, actually. But so it’s a longer process. I would say I’d live with that … It’s cleaner. It’s nicer.”
Two days later, after meeting with Senate Republicans, Trump again expressed flexibility: “Whether it’s one bill or two bills, it’s going to get done one way or the other. I think there’s a lot of talk about two, and there’s a lot of talk about one, but it doesn’t matter. The end result is the same.”
Trump’s preference created significant momentum for the one-bill approach, but his equivocation has left room for Republican in Congress to continue negotiating over the options.
House Ways and Means Committee Chair Jason Smith, R-Mo., has thrown his weight behind a one-bill approach, calculating that by making a bill that appeals to all corners of the current House Republican majority it will be too-big-to-fail, even if it includes individual items that members will find odious, like a debt ceiling raise (or elimination of it) and a state and local tax deduction cap.
The alternative argument and fear for Republicans is that a historically narrow, and difficult to manage, House Republican majority could drag out (or fail to pass) the biggest pieces of their legislative agenda, and the most likely ones to become law due to procedural dynamics in the Senate.
After officially removing the first House speaker in history last Congress, rebellious Republican rank-and-file members threatened Johnson’s reappointment to the post on Jan. 3, only for Trump to directly weigh in to tell them to get in line. The high-profile insurgent tactics have been a feature of House Republican majorities since 2011, and, combined with an extraordinarily narrow majority in which Republicans need to vote virtually unified in order to pass anything on party lines in the next few months, color the push for a one-bill approach — as well as concerns that it could be politically damaging.
Senate Majority Leader John Thune, R-S.D., as well as incoming Deputy White House Chief of Staff Stephen Miller, want to move an immigration enforcement and national security funding bill first, largely to bank an early, easier political win in anticipation of what are anticipated to be messier tax negotiations.
The distinction is important for the timing of tax legislation. Speaker Johnson said in a Fox News interview that he wants to pass a budget resolution in February, pass the reconciliation bill in the House in April, and have it through both chambers “certainly by May” or “in a worst-case scenario, Memorial Day.” That timeline could slip as Republicans get into the difficult negotiations, but sets up potential final tax legislation by early summer.
Under the two-bill approach, Republicans would spend the first several months on non-tax issues, perhaps delaying the completion of tax legislation until very late in 2025.
Now that the clock has begun ticking on this Congress — and the vehicles for budget reconciliation, one of which expires with the end of the federal fiscal year in October — Trump may need to weigh in more forcefully to push the legislative efforts, including major economic policy largely through the tax code, forward. Whatever approach Republicans land on, the revenue and funding pieces will have to fit together within the rules of budget reconciliation and satisfy the deficit hawks in their party.
Tax writers are already discussing various options for raising revenue to pay for tax cuts, and nay Republican proposals in past legislative drafts are likely to get a second look.
Trump picks Treasury tax lead nominee, tax committees get new members
Regardless of what approach Trump and Congressional Republicans land on, the rosters for this year’s tax negotiations appear to be fully set, with the incoming administration likely to have an experienced tax expert playing quarterback for its tax agenda on the Hill.
On Jan. 2 Trump announced he’d picked veteran lobbyist Ken Kies, a congressional staffer, during the 1986 bipartisan tax reform, to be his Assistant Treasury Secretary for Tax Policy. If confirmed by the Senate, Kies, a known quantity on Capitol Hill, will become a key voice in the room for this year’s tax negotiations. As likely Treasury Secretary Scott Bessent’s point man on tax issues and a 40-year veteran of tax policy in Washington, Kies may provide more specific direction from the executive branch.
The Ways and Means and Senate Finance Committees also finalized their memberships for the 119th Congress. They are:
Ways and Means
- Rep. Aaron Bean, R-Fla.
- Rep. Max Miller, R-Ohio
- Rep. Nathaniel Moran, R-Texas
- Rep. Rudy Yakym, R-Ind.
Senate Finance
- Sen. Roger Marshall, R-Kan.
- Sen. Bernie Sanders, I-Vt.
- Sen. Tina Smith, D-Minn.
- Sen. Ben Ray Lujan, D-N.M.
- Sen. Raphael Warnock, D-Ga.
- Sen. Peter Welch, D-Vt.
Republicans on both committees will play key roles in crafting the comprehensive tax legislation anticipated later this year, as Republicans have unified control of the legislative and executive branches of government they are expected to use a budgetary maneuver to pass that legislation along party lines.
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