Fast-Moving GOP Agenda Could Punt Tax Law Fight to Later in 2025

Republicans are struggling to find consensus over how to extend their 2017 tax cuts, as a crowded GOP agenda may force a punt of tax to later next year.

The party wants to speed passage of legislation via so-called reconciliation, averting the need for support from Democrats. But internal deliberations over the scope and size of bills Republicans could move through special procedures could delay any package’s enactment, potentially clashing with House lawmakers’ ambitious 100-day deadline for a tax bill.

“We’re not drafting a reconciliation bill at this moment,” said incoming Senate Finance Chair Mike Crapo (R-Idaho). “We are preparing all the foundational work.”

Incoming Senate Majority Leader John Thune (R-S.D.) told Republicans at an hourslong Tuesday meeting in the ornate Library of Congress he wants a reconciliation bill focused on border security, defense, and energy within the first 30 days of President-elect Donald Trump’s Jan. 20 swearing-in.

Tax policy would come in a second reconciliation package, according to a person familiar with the remarks granted anonymity to discuss private discussions.

That would give tax writers more time to come up with a bill and to bridge the intraparty divides that separate them from a deal.

Incoming Senate Budget Committee Chair Lindsey Graham (R-S.C.) said the contours of a first reconciliation bill remains to be determined. But it could have mandatory spending and offsets for some priorities like funding border security projects or to hire people needed to expedite deportations.

Whether it can get done in the 30-day timeline also is unclear. “We’ll give it a whirl,” Graham said.

Settling the Score

Estimates peg a decade-long extension of the 2017 law at an estimated $4.6 trillion, which has worried some Republicans in both chambers. Crapo has sought to allay fiscal hawk concerns about that price tag.

“Everything has to be scored properly,” Crapo told reporters this week. “If it’s scored properly. I don’t believe that we will see a deficit increase.”

Crapo and others are pushing for the package’s cost to be calculated based on “current policy” instead of “current law.”

Using current law as a standard assumes the law will expire and thus extending it adds new taxes and adds to the deficit.

Current policy doesn’t assume the taxes expire and thus doesn’t add to the deficit. Budget hawks call the latter math an accounting gimmick. Republicans can also push for the Joint Committee on Taxation to conduct a “dynamic” analysis of a 2025 tax bill, where estimates include indirect impacts due to economic growth.

But how lawmakers go from getting numbers and listening to presentations to finding agreement on how to proceed remains an open question.

“It’s going to be a challenge, it’s going to take leadership,” said Sen. Ron Johnson (R-Wis.) after he exited a Dec. 2 meeting with GOP members of the Finance Committee.

Lawmakers are looking to the next White House for legislative guidance, as some of Trump’s signature campaign promises pose expensive hurdles. It’s still unclear which leaders may emerge to help guide the package as Trump’s team assembles and Congress finishes its lame duck session.

“We need to see if we can find room to fit them into whatever package we do,” Crapo said, referring to provisions from the 2017 tax law. “There will be some we agree with and some we don’t.”