Until last week, it was safe to say that taxes would probably be the first major legislative initiative for the newly installed Republican majorities in Congress next year. That changed after a meeting with GOP Senators, House Speaker Mike Johnson (R-LA), and President-elect Donald Trump, when incoming Senate Majority Leader John Thune (R-SD) flipped the script with a plan to advance two reconciliation bills. 

As envisioned by Senator Thune, Senate Republicans would pursue quick action on a reconciliation bill that focuses on the border, energy policy, and national security. A second, tax-focused reconciliation bill would take shape later in 2025. 

Remember that reconciliation bills can pass without fear of a Senate filibuster, but their provisions must be primarily connected to revenue or spending rather than a straight policy change. So lawmakers may be able to revise certain immigration laws in reconciliation, but only if the policy change directly raises or lowers revenue. It's not always clear cut. Senate Democrats, for example, tried to create a path to citizenship in 2021 via reconciliation, but were rebuffed multiple times. And some Republicans think permitting reform should be included to help further develop domestic energy infrastructure, but it's not certain such changes can clear the reconciliation germaneness rules. 

The Senate Parliamentarian, which typically previews questionable language, makes the final call. And the Parliamentarian's ruling may be waived only with a 60-vote majority.    

Senator Shelley Moore Capito (R-WV) said that "specific tax provisions" weren't discussed at last week's GOP huddle. However, several key Republicans have sketched out what this first bill could encompass, including scaling back the green energy provisions enacted by the Inflation Reduction Act (IRA), particularly the tax credit for purchasing electric vehicles (EVs). Alaska energy development, funding for a border wall, and clawing back various IRA grants and funding are also in the mix. Senator Capito said her colleagues aim to repurpose IRA funding provisions that "flooded billions and billions of dollars into useless ideas."  

Not everyone's on board with the idea of leading with a non-tax reconciliation bill, however. House Ways and Means Committee Chairman Jason Smith (R-MO) said the strategy is "reckless," warning it could jeopardize the entire effort to extend the TCJA's expiring provisions. He appears concerned that dividing reconciliation into two bills could overload the agenda and threaten both. He feels strongly that a tax bill should move first. "[T]he idea that we will do a small reconciliation at the beginning that does energy and immigration and defense, and a second will be tax, is very foolish," he warned. Citing the narrow GOP margin in the House, Chairman Smith pointed out that no Congress has succeeded in passing two reconciliation bills in the same year. 

As Senator Thune and Speaker Johnson have noted in recent days, differences over process do not telegraph intra-party divisions that jeopardize the ultimate goal of scoring legislative victories. "The key is getting the things that [Trump] campaigned on—the border, energy dominance, national security, rebuilding our military, and extending the Trump tax cuts," Senator Thune said after last week's meeting with GOP leaders. Speaker Johnson hit the same notes arguing that "the sequence is less important than the idea that we actually put those points on the board." 

The shot clock starts ticking on January 3, 2025, when the 119th Congress convenes for the first time.

Upcoming Speaking Engagements and Events

Loren will speak at the 2025 DC Bar Tax Conference on January 15. 

In the News

Jorge commented on the 2025 legislative session under Republican control and the tension between policy priorities in The Washington Post. "You can't do it all, you have to prioritize."

Marc was named a Top Lobbyist by The Hill for the fourth consecutive year.

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