When Republicans controlled Congress in 2017, it took about two months to enact the Tax Cuts and Jobs Act (TCJA) after passage of the initial budget resolution that year. House Speaker Mike Johnson (R-LA) is aiming to do the same this year with a smaller majority and in less time. Is that possible? Yes. Easy? No.

Last week's close vote on House passage of the Republican budget plan marked another narrow victory for the Speaker. But the road gets tougher ahead.

In many ways, the budget resolution simply papered over GOP differences, leaving in place conflicting instructions and targets on spending and revenue. The Senate would lift the debt ceiling by $5 trillion, whereas the House would raise it by $4 trillion. With respect to spending, the House plan would reduce spending by at least $1.5 trillion. Almost two-thirds of that could come from Medicaid, worrying some Republicans in both chambers. The Senate's plan includes only nominal cuts with assurances from Senate GOP leaders that the actual amounts would be in range of the House targets. 

On taxes, Senate Committee on the Budget Chairman Lindsey Graham (R-SC) authorizes the use a current-policy baseline that assumes for scoring purposes an extension of the expiring TCJA provisions. It also sets aside $1.5 trillion for tax policy changes above and beyond the TCJA. The House budget instructions would open up $4.5 trillion for tax reductions. The "on-budget" size of the House tax cut reflects the fact that it includes a current-law baseline for estimating the revenue impact. 

In the end, the differences are besides the point. If past is prologue, the budget resolution will fade fast, both in memory and as a guiding force in writing a reconciliation bill, because the real art of writing legislative language is now in the hands of the committee chairs in the House and Senate.

The calendar ahead and the past history of writing reconciliation bills offer some clues on timing for legislative action. Speaker Johnson's goal is to get a final reconciliation bill to the president by Memorial Day, which would mean wrapping up work on the bill by May 23, 2025. That seems optimistic given the margins of control and deep policy differences between the GOP majorities in both chambers. However, Speaker Johnson has a track record of delivering on tough votes on a tight calendar. His success in corralling conservatives to support the budget resolution last week is a testament to that fact.

If reconciliation does slip past the spring, the summer congressional calendar offers other possible decision points for action. Congress takes a week off for Memorial Day and returns for a solid month-long run ahead of the Fourth of July holiday week. Another four-week legislative session follows before the August break. The days leading up to any of these recess periods could be prime targets for completion of the reconciliation bill.

One wild card at play with respect to timing is the need to address the debt ceiling. The Congressional Budget Office (CBO) predicts that in August or September, the Department of the Treasury will exhaust the ability to maneuver its balance sheets under the current debt limit. Secretary Scott Bessent has warned that the debt limit crisis date could come sooner, as early as June, depending on a number of factors, including the level of April 15th tax receipts received. Obviously, this will concentrate the minds of lawmakers and could hasten action, although as an alternative the proposed debt limit increase could be pulled out of the reconciliation bill in favor of a bipartisan effort. 

It's always perilous to predict the timing for passage of major legislation in Congress. Congressional leaders almost invariably project optimism, while predicting cooperation, speed, and ultimate success. Our suggestion is to expect delays but plan for speed. #TaxTake

Upcoming Speaking Engagements & Events

Marc will present the American Staffing Association (ASA) webinar "Federal Tax Policy in Transition: Elections, Expiring Cuts, and What's Ahead" on May 1.

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