As 2025 begins, so does the 119th U.S. Congress. Friday, January 3 was the opening on the current two-year term of the U.S. Congress.
The new term opened with the reelection of Representative Mike Johnson (R-LA) as speaker of the House on Friday, January 3. In the Senate, Senator John Thune
(R-SD) will serve as Senate Majority Leader of the Republicans, a role he was elected to by colleagues in November.
Monday, January 6, Congress convened to count the electoral college votes and certify President-elect Donald Trump’s victory in the November presidential election. The inauguration of the 47th President of the United States is set to take place on January 20, 2025.
THE FY2025 BUDGET & RECONCILIATION
One of the last actions of the 118th Congress was to pass a second Continuing Resolution (CR; H.R. 10545) on December 20th, to extend federal spending and avoid a government shutdown through March 14, 2025. A spending bill needs to pass prior to March 14 to avoid a government shutdown.
While the CR buys time for the 119th Congress, there are now two paths that lie before Capitol Hill - a one-bill approach using “reconciliation” backed by Ways and Means
Committee Chair Jason Smith (R-MO), and a two-bill strategy backed by Senate Majority Leader John Thune (R-SD).
House Speaker Johnson has come out in support of a single reconciliation bill that would address border security, energy, and an extension of his 2017 tax law. Johnson’s hope is to pass a budget resolution which will set tax and spending levels by February, which would then pave the way for committees to
create legislation adhering to those outcomes. Once that is finalized, the package will be brought to the floor for a vote, which Johnson is planning to do by the beginning of April.
Reconciliation is a way for Congress to enact legislation on taxes, spending, and the debt limit with only a majority (51 votes, or 50 if the Vice President breaks a tie) in the Senate. This measure also avoids the threat of a filibuster, which
requires 60 votes to overcome. Since Republicans have 53 seats in the Senate and an incoming Republican Vice President (to break any ties in a vote), reconciliation looks to be a promising route through which to get a tax-and-spending bill to the president’s desk, even if all Senate Democrats opposed it. Budget reconciliation bills can deal with spending, revenue, and the federal debt limit, and the Senate can pass one bill per year affecting each subject. Congress can thus pass a maximum of
three reconciliation bills per year, though in practice it has often passed a single reconciliation bill affecting both spending and revenue. Policy changes that are extraneous to the budget are limited by the "Byrd Rule", which also prohibits reconciliation bills from increasing the federal deficit after a ten-year period or making changes to Social Security. These will all be keys in the discussion and any potential challenge to the process.
If Republicans take the path of reconciliation, they are faced with the challenge of maintaining party unity throughout both chambers. Republicans have a razor-thin majority in the House of just 217 members, once two members resign to take up roles within the Trump Administration, and there are many members that have endorsed the two-step plan.
Republican Senators in favor of the
two-bill strategy include Senate Budget Chairman Lindsey Graham (R-SC), who is in favor of focusing on border security, defense, and energy in the first bill and then focusing on taxes in the second bill. Senate Majority Leader Thune stated, “I think energy policy, energy dominance is a huge objective and goal, and I would hope that a reconciliation bill could also address that issue.”
BUDGETS BEYOND
FY2025
Now, DOE is developing its fiscal year (FY) 2026 budget (which under “normal” conditions, is slated to begin October 1, 2025) as a part of the President’s budget request, which ECA expects to see in late March after the passage of any appropriations bill or reconciliation bill.
