Narrowly reelected House Speaker lays out 100-day plan for tax reform

Al Drago/Bloomberg

Newly reelected House of Representatives Speaker Rep. Mike Johnson, R-La., began his leadership term pledging fast action on tax policy through one massive budget reconciliation bill.

Johnson, who was narrowly reelected Friday, laid out an ambitious timeline on Sunday to tackle top GOP campaign promises in the first 100 days of President-elect Donald Trump's administration. Trump takes office Jan. 20.

The House will seek to pass a single reconciliation bill "as soon as April 3" that would include the extension of expiring provisions in the 2017 Tax Cuts and Jobs Act, an increase in the debt ceiling, energy permitting reform, border security and other things, Johnson said on Fox's "Sunday Morning Futures" program.

"That would put that bill on the president's desk for signature by the end of April. That would be fantastic," Johnson said. "And, in a worst-case scenario, Memorial Day."

The municipal bond market is closely watching the tax policy debate, on the lookout for any attempts to nibble away at or totally eliminate the tax exemption on municipal bonds. Many participants expect cities and states to accelerate borrowings to get ahead of any potential tax changes.

Republicans are split over whether to pursue one reconciliation bill or two pieces of legislation. A two-bill approach would first tackle immigration and energy policy and leave the tax debate for a second bill, later in the year. Senate Majority Leader John Thune, R-S.D., and some House Freedom Caucus members have pushed for the two-bill approach.

Trump said Sunday on a Truth Social post that he supports one bill, but signaled Monday he would be breaking it into two pieces of legislation.

"While I favor one bill, I also want to get everything passed. And you know, there are some people that don't necessarily agree with it," Trump said in an interview with conservative talk show host Hugh Hewitt Monday. "I'm open to either way, as long as we get something passed as quickly as possible."

Passing legislation via the reconciliation process requires only a simple majority in both chambers of Congress, meaning it can be passed without Democratic support. Congress also needs to pass a final fiscal 2025 spending bill before funding expires on March 14, and the debt ceiling will need to be lifted before the so-called X date arrives this summer.

Johnson won the leadership post Friday in a squeaker with the minimum of 218 votes. The narrow support signals potential difficulties in passing legislation in the House, where Republicans hold the smallest majority in nearly a century, according to Roll Call.

Separately, Trump will reportedly meet Saturday with Republicans from New York, New Jersey and California to talk about reform to the state and local tax deduction. The TCJA capped SALT deduction at $10,000, a cap that's set to expire in December. The issue is important to lawmakers from high-tax states like California, who want to lift or eliminate the cap.

Most Republicans want to keep the current cap, but the party's narrow majority gives the anti-SALT cap lawmakers leverage. Rep. Mike Lawler, R-NY, for example, said he would oppose any tax bill that fails to eliminate the SALT cap. Trump on the campaign trail signaled he was open to lifting the cap.