With the ink drying on the just-signed Reconciliation 2.0 bill, congressional Republicans now face a fork in the road. Their internal debate centers on two paths: an off-ramp that would park the reconciliation option in the garage until 2027 or restarting the engines for a third attempt at reconciliation that Committee on Ways and Means Chairman Jason Smith (R-MO) says must have tax provisions.

Last week, House Speaker Mike Johnson (R-LA) and other party leaders sounded both optimistic and enthusiastic about the so-called Reconciliation 3.0 effort. At a press conference, Speaker Johnson predicted quick action on a third reconciliation bill "in the coming weeks" and that the focus would be on "waste, fraud, and abuse." He noted that the White House is in sync with GOP leadership in Congress and that Vice President J.D. Vance is helping coordinate the effort. The president is calling on Republicans to use Reconciliation 3.0 for a $350 billion boost in military funding and election reforms in the Safeguard American Voter Eligibility (SAVE) Act.

Enthusiasm aside, a third attempt at reconciliation would be a herculean political and policy task, requiring many stars to align, including the shrinking legislative calendar, party cohesion, and Senate GOP buy-in.

In the Senate, Majority Leader John Thune (R-SD) has yet to predict or fully embrace the idea of moving a third reconciliation bill. "If there's a good reason to do another reconciliation bill, if there's support for it, then my assumption is that it will be something that could get 218 in the House and 50 votes in the Senate," he said on June 10. He said such a bill would be "centered" on military funding. 

Some Senate Republicans put the odds for action at about zero. Former Majority Leader Mitch McConnell (R-KY) said last week that "it's safe to conclude" that another reconciliation isn't in the cards – a view shared by Senator Susan Collins (R-ME), who warned against the risky expectation that reconciliation could deliver defense funding outside the regular appropriations cycle. 

We should know soon about the path forward for Reconciliation 3.0. Just 16 legislative days remain before the House starts its summer recess. The Senate has 29 days of action before the August break, and with control of Congress up for grabs, the chance to leave town sooner won't be ignored. #TaxTake

Upcoming Speaking Engagements and Events 

Mike and Katherine Jordan will speak at the NYU 18th Annual Tax Controversy Forum on June 25-26.

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