Tax Update: GOP Huddles on Reconciliation
March 18, 2025
While the House and Senate have yet to agree on reconciliation instructions to advance President Donald Trump’s tax, border, defense, and energy priorities, House and Senate leaders convened different meetings this week to discuss tax strategy.
Why it matters: Reconciliation is a partisan exercise, but different wings of the Republican party remain far apart on key tax policy issues and spending cuts.
What they’re saying: Last week, President Trump met with Republican senators on tax priorities. Trump endorsed Sen. Mike Crapo’s (R-ID) plan to tweak congressional budget math to ease the ability to deliver a permanent extension of the 2017 Tax Cuts and Jobs Act and Trump’s additional priorities.
- Senate Republicans are pursuing budget math based on a “current policy baseline,” which would count extending existing tax cuts as adding $0 to the deficit.
- Since some TCJA provisions expire without action after 2025, the Congressional Budget Office counts extending those tax provisions as adding to the deficit—over $4.5 trillion. In theory, the government would be collecting $4.5 trillion by changing the law.
- Proponents of the current policy baseline—including The Wall Street Journal editorial board—argue that spending rules allow for a current policy baseline and thus make spending money easier while cutting taxes more difficult.
Yes, but: House Republicans are not necessarily sold on the current policy baseline, especially those concerned about the growing deficit and debt. However, using a policy baseline would make renewing the TCJA much easier, but it would still require legislators to offset or raise the deficient to pay for new tax cuts, such as no tax on tips, overtime, and social security.
House GOP Ways and Means members met last week in closed meetings to hash out their own tax proposals, though nothing was finalized. Recall that the House reconciliation instructions allow for $4.5 trillion in tax cuts and $2 trillion in spending.