Senate leaders believe Republicans should deliver on Trump’s immigration promises first, while some House members are pushing to prioritize tax cuts.
Congressional Republicans are eager to demonstrate to the American people that they can deliver on President-elect Donald Trump’s campaign promises — but disagreements have already emerged between House and Senate Republicans over which components of his agenda to prioritize in the new year.
Newly elected Senate Republican Leader John Thune has made clear his intent to use budget reconciliation to prioritize a legislative package focused on border security, defense, and energy at the start of the year. Budget reconciliation allows Republicans to circumvent the Senate filibuster’s 60-vote threshold and pass legislation with 51 votes. That package would be followed by a second reconciliation package focused on tax policy and extending Trump’s 2017 tax cuts. Many of those provisions expire at the end of the year.
“In my view, it makes sense to move quickly on things we know we can do quickly — border, defense, energy,” Thune told reporters earlier this week. “And then come back with another package that would address some of the savings that can be achieved through reductions in cost in various agencies and bureaucracies and government programs and then also deal with the expiring Trump tax cuts in a package later this year.”
But Thune’s strategy is running into opposition from House Ways and Means Chairman Jason Smith, the lower chamber’s principal tax writer who believes that delaying tax-related legislation until later in 2025 will sideline a key component of the president-elect’s agenda. Allies of this approach believe that a tax bill should either go first or be lumped together in a single reconciliation package alongside legislative sweeteners on immigration and energy to help whip budget hawks in line.
Senate Republicans are still working out the details on both packages’ top-line numbers and legislative details that will require near-unanimous buy-in from their 53 members as well as Speaker Johnson’s bare majority, which is about to shrink further now that at least two House members – incoming national security adviser Mike Waltz (R., Fla.) and soon to be U.S. ambassador to the U.N. Elise Stefanik (R., N.Y.) — are on a glide path to high-profile roles in the Trump administration.
Thune’s strategy is to give the president-elect an early legislative win on his campaign promises – particularly on immigration — while leaving the more complex tax fight for later in the year before many provisions of the 2017 Tax Cuts and Jobs Act expire and after House vacancies are filled, which will bring the House GOP majority to 220-215. Senate Republicans believe that more time is needed to hash out inevitable intraparty disagreements over the state and local tax deduction, spending cuts, and Trump campaign promises on tax exemptions for overtime pay, Social Security, and tips.
“I think that big tax piece is just going to take a while,” Thune said this week on The Hugh Hewitt Show, adding that his “goal is to have this done by summer” and that “failure is not an option as far as tax is concerned.”
Thune’s two-step reconciliation plan has won public buy-in from Speaker Johnson, ranking Senate Republican Budget member Lindsey Graham, and incoming deputy chief of staff Stephen Miller. Johnson told reporters he plans to speak in depth with Trump about strategy this Saturday ahead of the Army-Navy Game in Maryland.
But Smith believes that stalling on a tax bill will leave many Americans worried about a tax increase and leave small businesses uncertain about growth and hiring during the first year of Trump’s administration. He also believes that passing two separate reconciliation bills in one year will be extremely challenging.
“Congress has not passed two reconciliation bills into law since 1997 when Newt Gingrich was speaker, and guess what? They had a much larger majority,” Smith told Fox Business this week.
Smith’s tax-policy allies in Washington say that delaying an early victory on tax will come at a cost. “With such a slim majority, Republicans staying unified is the only way to deliver conservative wins on both tax and immigration,” says Mike Palicz, director of tax policy for Americans for Tax Reform. “Dividing up that coalition risks missteps on both. Getting the Trump tax cuts across the finish line doesn’t become easier if members holding out at the negotiating table have already secured their other priorities. One reconciliation bill keeps everyone rowing in the same direction.”
But in the Senate, Republican lawmakers are largely unified in pushing ahead with Thune’s strategy of breaking up Trump’s legislative priorities into two separate packages, with the tax piece coming second.
“We keep the first one very simple,” says Senator Ron Johnson (R., Wis.), a member of the Senate Finance Committee whose personal preference is to keep the first reconciliation limited to border funding. “If we keep it simple, we can do that in a couple weeks” and then focus on the next reconciliation bill. “I want to take time on the whole tax package.”
Senate Finance Committee member and North Carolina Senator Thom Tillis emphasized in a brief interview with NR on Wednesday that reconciliation negotiations are still in their “early stages.”
“To the extent that the border reconciliation will be ‘simpler’ than the tax reconciliation, maybe it is a good way for us to kind of test our ability to work together and for the speaker to deliver votes on the House side,” he said.
But Tillis also emphasized that Senate Republicans must be mindful of the timing if a tax-related reconciliation package comes second. “If we go too far into the year, as some of the provisions are set to expire, the market is going to price it in,” he said. “And we’ve got to avoid going too far. I don’t know what that magic date is but it’s probably sometime around August or September.”