Last week saw an uptick in chatter among policymakers about the possibility of pursuing another Republican-only budget reconciliation bill in Congress to enact various potential policies. Treasury Secretary Scott Bessent and White House Economic Adviser Kevin Hassett both raised the possibility after President Trump's State of the Union address, and Senate Majority Leader John Thune (R-SD) is reportedly soliciting input from his caucus for potential reconciliation policies to pursue. 

All of this raises questions among lawmakers and observers about the chances of even starting down the reconciliation route, much less succeeding with the enactment of a new bill. In short, the odds still look perilously long. Here's why. 

Like it or not, President Trump himself may have closed the door to a pre-election reconciliation bill in his State of the Union address when he said, "congressional action will not be necessary," to keep tariffs in place following the Supreme Court's ruling that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. Instead, the administration will be using "tested alternative legal statutes," he explained. Some Republicans in Congress have been urging their colleagues to codify the president's tariff regime via reconciliation, but with the president pursuing a different track, reconciliation is all the more difficult to get off the ground.

Without tariffs as a driving force for reconciliation, a secondary policy priority would be needed to drive the effort forward. At best, only a few approach that level of importance. The president did urge action on his healthcare proposals, but some Republicans worry about elevating an issue that could favor Democrats. Remember that reconciliation allows for almost unlimited amendments, and Republicans could find themselves again taking tough votes on extending the enhanced Affordable Care Act (ACA) premium tax credit and other divisive issues right before an election. Not many Republicans in tight races are going to charge up that hill. 

Another factor working against reconciliation is that President Trump's big speech did not include a long list of legislative priorities for Congress to address this year that could form the primary payload for a reconciliation bill. On taxes, the only real new proposal in the president's address is a plan to expand the Saver's Match enacted under the SECURE 2.0 Act. While important to many, the proposal does not have last year's marquee value for reconciliation, which included extending the Tax Cuts and Jobs Act (TCJA) and cutting taxes on tips, overtime, seniors, and auto purchases. 

This year's election calendar also works against reconciliation. Not only does it truncate the number of legislative days ahead of the election (i.e., no October legislative work), but a closely contested midterm election also has many Republican lawmakers itching to campaign at home rather than cast votes in Washington. 

However, if the November election dissolves the GOP House majority, all bets are off. Reconciliation could present a last-ditch opportunity to lock in additional legislative gains for the president in a "lame duck" session before Republicans are forced to surrender power to a new Democratic majority in the House.

Perhaps the most important factor standing in the way of a reconciliation bill is revenue. Without tariff revenue to offset the costs of a reconciliation bill, finding other revenue raisers will be almost impossible in an election year that could reshape the power centers in Congress.  

Upcoming Speaking Engagements 

Mike will speak at the Tax Executives Institute (TEI) 2026 Midyear Conference on March 16.

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