Momentum is growing for a second reconciliation bill as bipartisan negotiations falter on key Republican priorities.
Republicans appear increasingly reluctant to seek bipartisan agreements on funding for Immigration and Customs Enforcement and Iran military action, instead discussing handling those issues through reconciliation. Republicans could also add spending cuts or parts of the SAVE America Act to a reconciliation bill, though the voter identification bill may not survive reconciliation rules.
While tax is not the primary driver of the renewed reconciliation efforts, any reconciliation bill would create an opportunity for tax legislation. House Ways and Means Committee Chair Jason Smith, R-Mo., reportedly said at a recent event that he would seek to include tax provisions on any reconciliation bill, though no details were offered.
Republicans achieved the bulk of their tax agenda in the One Big Beautiful Bill Act (OBBBA) and Treasury Assistant Secretary for Tax Policy Ken Kies recently said the administration is unlikely to offer any new provisions in this year’s budget proposal. Republicans could consider reviving provisions that didn’t survive the OBBBA legislative process, particularly revenue raisers that could pay for other priorities.
Any effort to pass a second reconciliation bill would face major hurdles. Republicans can only lose a single vote in the House, and Smith has said several times in the past that he doesn’t think Republicans have enough votes for a second reconciliation bill. President Donald Trump has also appeared cool to the idea of a second reconciliation bill, saying that he thought they achieved everything they needed in the OBBBA.
BDO Takeaways
The potential for a reconciliation bill is growing, but significant challenges remain. It is not yet clear whether a bill is realistic or what tax provisions could be considered. The first step in the reconciliation process would be to pass a budget resolution in both chambers. The budget resolution would lay out reconciliation instructions that would provide more clarity on potential tax provisions.