As Trump and some lawmakers advocate for "one powerful bill" to address tax reform and more, others still call for a two-bill approach.
Republicans are eager to start delivering on President-elect Donald Trump’s campaign promises via reconciliation — a fast-track option available when one party controls both chambers of Congress and the White House. But as Trump and some lawmakers advocate for “one powerful bill” to address tax reform and more, others still call for a two-bill approach.
In December, incoming Senate Majority Leader John Thune (R-SD) floated a two-step reconciliation plan: Pass a bill addressing the border, defense, and energy first and then tackle tax reform. However, nervous about the many 2017 Tax Cuts and Jobs Act (TCJA, P.L. 115-97) provisions set to expire at the end of 2025 and the ability to move two measures through the reconciliation process, some House Republicans pushed for a tax bill first — or one big reconciliation bill.
Now Trump, in a January 5 post, has endorsed the approach of moving “one powerful bill” to address border issues, energy, and the expiring tax cuts. However, the matter seems far from settled, with Trump saying a day later that while he “would prefer one” bill, he’s “open to either way as long as we get something passed as quickly as possible.”
Reconciliation basics.
To move proposals via reconciliation, Congress first passes a budget resolution containing instructions for congressional committees. Then it passes a reconciliation bill containing the committees’ legislative proposals.
The advantages of this process are that debate is limited and only a simple majority is needed in the Senate for a bill to pass. However, there are also constraints — under the “Byrd” rule, legislative proposals must be budget-related and cannot increase deficits outside of a 10-year budget window. They also can’t change Social Security spending.
Limitations on reconciliation.
“Reconciliation bills are about getting federal dollars and cents in or out the door,” said Bobby Kogan of the Center for American Progress (CAP). “Spending more money on defense, building a wall, funding DHS enforcement functions, and repealing the IRA credits likely fit within the rules of reconciliation (as long as they do not produce net deficits in any year beyond the 10th year) — they’re all about federal dollars and cents.”
However, Kogan told Checkpoint, “A lot of the changes to actual immigration law that many Republicans are seeking to pass … likely would afoul of the Senate’s Byrd rule.”
Brookings fellow Molly Reynolds explained that members can raise a “point of order” contending a reconciliation bill violates a budget rule. In that case, she added, reconciliation bills may still require 60 votes to pass the Senate.
Initial Plan.
Senate Republicans’ initial plan to quickly move a package on border, defense, and energy issues via reconciliation and then turn to tax reform makes some House Republicans nervous. House Ways and Means Committee Chair Jason Smith (R-MO), in particular, called for just one reconciliation bill that also includes tax provisions.
Smith cited the risks of waiting for a second bill to address tax, noting that it’s been years since two reconciliation measures have passed in one year. Smith said he was sounding an alarm about that risk, adding that “making sure these tax cuts do not expire” is his “number one priority.” And among the tax cut extensions Smith is prioritizing is the increased Child Tax Credit, which is attributed to tanking Smith and former Senate Finance Chair Ron Wyden’s (D-OR) bipartisan tax bill last year.
Incoming Senate Finance Chair Mike Crapo (R-ID) likewise said “we cannot tolerate failure to pass the tax reconciliation bill.” But Crapo indicated that the ultimate decisionmaker is President-elect Donald Trump. “If the president chooses to say, ‘I want to do it in steps,’ then that’s the decision that he gets to make,” according to Crapo.
“It’s not unusual for differences to emerge within the same party over the reconciliation process,” said Ernst and Young’s Adam Francis during a December 13 webinar. “It also wouldn’t be surprising or unusual if those differences that we see now are narrowed relatively quickly, particularly if there is a strong signal from President-elect Trump on his preference.”
‘One powerful bill.’
And on January 5, Trump signaled his support for swift action on one bill that addresses the border, energy, and taxes. Trump’s post indicted that the bill would also address taxes on tips. It would pay for the reforms with tariffs and “much more.”
Trump called on the Republican party to “unite” and send the bill to him for signature “as soon as possible.”
However, despite this “signal,” the matter seemed far from settled a day later, when Trump spoke on the Hugh Hewitt radio program. While he reiterated his preference for one bill, he acknowledged that approach would take longer. “I’d live with that,” explained Trump, because “to me,…it’s cleaner. It’s nicer.”
But Trump said he has “a lot of respect for Senator Thune” — a strong advocate of the two-bill approach. He also noted other lawmakers who prefer two bills, including incoming Senate Budget Chair Lindsey Graham (R-SC).
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