Senate Republicans are plotting an ambitious course in the first 30 days of the next Congress as they seek to pass a package expanding domestic energy production while potentially clawing back portions of the Democrats’ 2022 climate law.
Those energy provisions would be included in a larger border security and defense spending bill to be advanced through budget reconciliation, a process with many procedural hurdles but that has the advantage of circumventing the Senate filibuster. Incoming Senate Majority Leader John Thune (R-S.D.) shared the plans during a lawmaker policy retreat on Capitol Hill.
The effort would be a bold undertaking for the GOP, which will need to deal with a host of other matters early next year like confirming President-elect Donald Trump’s Cabinet and the likelihood of finalizing fiscal 2025 spending.
“The one thing I will say is: I think members left with a better understanding of just how complex reconciliation is,” said Susan Collins of Maine, the Senate’s top Republican appropriator, following the closed-door meeting Tuesday. “So, there’s going to be a lot to do.”
The gambit is being made considerably more complicated by the fact that Senate Republicans want to actually pass two reconciliation bills: the first dealing with energy, immigration and military readiness and the second focused on extending and expanding upon the expiring tax cuts Republicans passed in 2017.
It’s also unclear whether there’s full buy-in among House Republicans. House Ways and Means Chair Jason Smith (R-Mo.) called the approach “reckless,”according to Punchbowl News.
But the Republicans’ objective ultimately underscores the scope of the party’s determination to give voters tangible evidence they made the right decision in giving Republicans a new governing trifecta.
It also shows how Republicans believe energy issues are a political winner in the context of lowering costs and countering how the Democrats have approached climate policy the last four years under the Biden administration.
The prioritization of energy policy early in the 119th Congress has support from Trump, who called into the Senate GOP policy retreat at one point and “talked about the things that he wants to do and we all want to do, including the border, including energy, including taxes — all of which are important for the future of the country and getting the economy back on track,” according to Sen. John Barrasso (R-Wyo.).
Barrasso, who in the next Congress will shed his role as the top Republican on the Senate Energy and Natural Resources Committee to become the Senate majority whip, told POLITICO’s E&E News lawmakers talked specifically about how to use energy policy to their advantage.
“We discussed energy and how it’s been used in reconciliation in the past,” he said. “It’s been used a number of times to raise revenue with oil and gas lease sales and also has been used by the Democrats to spend a lot of money on their green climate agenda policies, and the discussion was how it can be used in the future both to raise revenue and to claw back money that we think is being misspent.”
Other Senate Republicans reported the bill was expected to include policies like opening the Arctic National Wildlife Refuge for drilling, easing environmental regulations for energy permitting and slashing grant programs created by the Inflation Reduction Act.
‘Billions of dollars into useless ideas’
It’s less certain what Republicans are prepared to do with regard to the suite of clean energy tax credits that are increasingly driving investments in red districts and states. More than a dozen House Republicans are on record in opposition to gutting those credits, but that sentiment has been more muted in the Senate.
Sen. Shelley Moore Capito (R-W.Va.), who in the next Congress will chair both the Senate Environment and Public Works Committee and the Senate Republican Policy Committee, said members spoke Tuesday more generally about “what we want to get rid of” in the IRA.
“There are … areas where Democrats just flooded billions and billions of dollars into useless ideas. And we’d like to recoup that,” she said, adding, “We didn’t get into the specific tax provisions.”
House Speaker Mike Johnson (R-La.) has acknowledged the need to bring a “scalpel” rather than a “sledgehammer” to the green subsidies in the IRA. Thune, however, was noncommittal on Tuesday.
“We’ll sort through that,” he said. “I haven’t really thought about it yet. We’re going to have to think through which pieces of the IRA to claw back.”
Whatever Republicans decide on, several senators acknowledged Tuesday that passing two reconciliation bills early in the next Congress will be a “big lift,” especially considering the complexity of the process and the competing factions within the House and Senate Republican conferences, including very narrow majority margins in both chambers.
Budget reconciliation allows for legislative changes with budget and revenue implications but generally not policy changes. That stipulation is known as the Byrd Rule, named for the late Senate Majority Leader Robert Byrd (D-W.Va.).
Sen. Lindsey Graham (R-S.C.), the incoming chair of the Senate Budget Committee, will have to quickly help craft and pass a budget resolution that establishes the contours for a reconciliation package. He said Tuesday he was preparing to “hit the ground running” in January but declined to offer specifics about where he was in the process and how much money each of the two bills would cost.
Graham also confirmed he was in talks with his counterparts across the Capitol. Johnson separately told NOTUS that his chamber was working in tandem with the Senate on the two-track reconciliation approach, and addressed Senate Republicans during their policy retreat Tuesday.
According to spokesperson Taylor Haulsee in a statement, Johnson “emphasized the need for unity heading into the first 100 days agenda next year given the different margins in the House and Senate.”
Sen. Chuck Grassley (R-Iowa), the current ranking member of the Senate Budget Committee who will chair the Judiciary panel next year, said he believed Johnson would keep his conference together — even as Smith said doing a non-tax reconciliation bill before a tax-focused one could “increase taxes for all Americans,” according to Punchbowl.
“I’m counting on Speaker Johnson,” said Grassley. “He knows that there’s a mandate to deliver. And all [House] Republicans know that there’s a mandate to deliver on and they know that they gotta deliver.”
Inspired by Dems
Republicans are confident about their chances to go big in the reconciliation process, looking to Democrats as a model for how they were able to create new programs and policies within the confines of the reconciliation process.
This is a message House Republican leaders have also shared with members, with House Majority Leader Steve Scalise (R-La.) in October telling colleagues that since “Democrats expanded what traditionally is allowed in reconciliation. … We intend to do the same.”
On Tuesday, Sen. Thom Tillis (R-N.C.), a member of the Senate Finance Committee, said that Republicans could try to change funding levels for certain programs as a workaround for reconciliation restrictions on policy changes. Members often attempt similar maneuvers in appropriations bills, eliminating funding for a program or office to target a related policy goal.
“If you have something authorized but not funded, then that program is not going to move forward,” Tillis said. “It could be as much as depleting or plussing up accounts that are priorities of the Trump administration and zeroing out accounts that are not.”
Republicans continue to be divided on the extent to which they might be able to amend the nation’s permitting laws through the budget reconciliation process, particularly if a deal on a larger permitting overhaul doesn’t get resolved in the waning weeks of the current Congress.
A top House Republican, Natural Resources Chair Bruce Westerman of Arkansas, said recently that his team was looking at ways to include some sort of permitting overhaul in a reconciliation bill. Whether that would work, however, is an open question.
And Sen. Ted Cruz (R-Texas) has been bullish on the prospect. He said late last month that permitting is “absolutely” on the table.
Others flatly reject the idea. “No, it’s a policy issue,” Sen. James Lankford (R-Okla.), the top Republican on the Finance Subcommittee on Energy, Natural Resources and Infrastructure, said when asked Tuesday if permitting could be done in reconciliation.
“There are things all of us would like to do with 51 votes but just can’t be done,” he said.
But that doesn’t mean they won’t try.
“We’re trying to be as aggressive as possible,” Capito said on easing the National Environmental Policy Act through reconciliation. “But that hasn’t been determined yet.”
Reporter Garrett Downs contributed.
