House and Senate Republicans return to Washington this week eager to align on a strategy for budget reconciliation as they look to roll back environmental rules, expand oil and gas leasing, and repeal tax credits from Democrats’ 2022 climate law.
But first, they have some key procedural questions they need answered. And critically, they need to settle on a concurrent budget resolution if they want to begin drafting legislative language.
“We’re tired of kicking the can down the road. Let’s get to work,” Rep. Lisa McClain (R-Mich.), chair of the House Republican Conference, said last week on Fox Business. “It’s not going to be easy; it’s going to be a little messy. But we can get everything done.”
Although Republicans are united in their goal of cutting spending in order to pay for an extension of the 2017 tax cuts, the party is at odds on how to get there. The next several weeks will be crucial for setting the tone for the remainder of the process.
So far, the House and Senate have advanced their own unique budget resolutions, and President Donald Trump has vacillated in his endorsement of the plans. The GOP also has not reached a conclusion on how many bills to pass, which tax credits and regulations to scrap, or how to account for the cost of possibly trying to make the tax cuts permanent.
Republicans’ ability to align on those essential questions could have significant implications for myriad programs in the Inflation Reduction Act, the renewable energy projects the law has funded, the hundreds of thousands of jobs it has created and the future of the United States’ energy transition.
Lobbyists representing renewable energy companies, manufacturers and other businesses with a stake in the GOP’s cost-cutting efforts are gearing up for another big Capitol Hill blitz in the coming weeks to urge Republicans to preserve some of the most impactful tax incentives.
“Nothing has really been set,” said Alan Ahn, deputy director for nuclear energy at the center-left think tank Third Way. “There’s still an opportunity to inform and to shape the decisions that are going to be made in this process.”
Members of the House Ways and Means Committee are expected to hold more meetings over the coming weeks to decide which programs they might repeal to pay for the tax cut extension and other provisions.
Senate Republicans plan to meet with the Senate parliamentarian about whether their potential use of the “current policy baseline” for the tax cut extension could pass muster under strict reconciliation rules, Punchbowl News reported.
That maneuver would allow them to count the renewal of the tax cuts as costing nothing, which could fundamentally alter the nature of their budget plans.
“Staff-level engagement has been virtually non-stop over the recess, and we expect in-person member-level discussions to pick up where they left off once the Senate returns on Monday,” said a Senate aide.
Process impasse
Republican leaders want to see results soon. House Speaker Mike Johnson (R-La.) has been wanting to get a reconciliation bill ready for a House vote by Easter, and Senate leaders insist that they urgently need money for border security and defense.
The House is pushing for one all-encompassing reconciliation bill, while the Senate is eyeing at least two separate bills. Senators are concerned that packaging more divisive priorities with well-supported defense and border security provisions could compromise the whole effort, but House leaders say their slimmer margin is more conducive to the one-bill approach.
That rift has been a main sticking point within the party. House and Senate Republicans traded barbs in separate Fox Business interviews last week.
“The idea that somehow, because they have a narrower majority in the House, the Senate has to do what the House wants to — what their bill fails to do is really big,” said Sen. Kevin Cramer (R-N.D.), noting that the House’s budget resolution would not make the 2017 tax cuts permanent.
“I don’t quite understand this pride of ownership, if you will, that the House has,” he said. “I think both sides have to be respectful of the challenges that the other side has, but I also think that a great big bill runs the greatest risk of failing.”
McClain responded to Cramer’s criticism the next day, quipping in her own interview that the Senate has “been sitting on their budget resolution now for almost a month.” The House passed its resolution about a month ago.
“We prefer one big, beautiful bill, but if it takes two, four, I don’t care,” she said. “I just want to get the job done, but I think it’s easier to accomplish the task in one bill.”
‘Game on’
Environmental groups, renewable energy advocates and businesses benefiting from the various IRA tax credits that Republicans are considering targeting are on the same page about wanting to protect them, but no one knows what the final outcome will be.
Congressional Republicans have not yet settled on which programs they will roll back, and committee leaders and aides have been tight-lipped about their plans. They are weighing the savings potential of eliminating different tax credits against the potential economic consequences. Meanwhile, lobbying from organizations across the political spectrum continues.
“It’s game on,” said Heather Reams, president of the center-right group Citizens for Responsible Energy Solutions.
Oil and gas producers last week sent a letter to tax committee leaders arguing for a full repeal of the IRA as the only “moral and practical path forward” to “truly unleash American energy.”
Earlier this month, the nonprofit sustainability group Ceres led meetings between 80 businesses and more than 100 lawmaker offices — including 76 Republican offices — to advocate for the preservation of IRA tax credits for energy production and manufacturing. In April, it plans to return to the Hill for yet another lobbying blitz.
“Our message is the same: that these credits are necessary to achieve the goals of energy dominance and affordability for everybody and to keep manufacturing here,” said Zach Friedman, senior director for federal policy at Ceres.
The Monday after Ceres’ past trip to Capitol Hill, 21 House Republicans signed onto a letter to Ways and Means Chair Jason Smith (R-Mo.), the House’s lead tax writer, expressing support for “sector-wide energy tax credits” that benefit “traditional and renewable energy sources alike.”
Still, it’s not clear that any of those members would vote against a reconciliation bill to try to save those tax credits.
“I think the clean energy industry and the people who are benefiting from the IRA are in a little bit of a state of delusion at the moment,” said Jeff Navin, co-founder of the advocacy firm Boundary Stone Partners. “Until you get a few members saying, ‘We will not vote for this bill,’ [tax credits] are at risk.”
Reporter Nico Portuondo contributed.
