Senate Republicans are mapping out an ambitious two-step reconciliation strategy for 2025, planning to first address defense, energy, and border security before tackling a tax package later in the year. The initial focus is to secure an early win that could help build momentum for the more complex task of extending the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). (Tax Notes, Dec. 4)

Why It Matters

• This approach marks a notable shift from House Republicans' earlier plan to address tax issues within the first 100 days of President-elect Trump's term. (Washington Post, Dec. 4)

• Instead, Senate Republicans want to divide the legislative work to make each package more manageable, leveraging early victories to build momentum for harder battles. (PoliticoPro, Dec. 4)

Reconciliation Plan

• GOP senators, including Thom Tillis (R-NC) and Shelley Moore Capito (R-WV), emphasized the importance of consensus and coordination within the party, acknowledging that a slim House majority could complicate passage. (Tax Notes, Dec. 4)

• Sen. Capito noted that a smaller, earlier reconciliation package—focused on defense, energy, and border security—could help set the stage for tackling the more politically challenging tax bill.

• The initial bill could include measures that all Republican factions can support, such as limited deficit reduction and targeted energy policy reforms.

• Failure to act on tax reform by the end of 2025 will lead to the expiration of many provisions from the 2017 tax law, resulting in tax increases for most individuals and some businesses. (Bloomberg, Dec. 3)

• Rep. Jason Smith (R-MO), chairman of the House’s Ways and Means committee, voiced his opposition to delaying tax reform under Sen. Thune's plan, noting the difficulty of advancing two budget reconciliation packages, which are immune to filibusters in the Senate. (The Hill. Dec. 5 | CNBC, Dec. 4)

• “The important thing is getting all the policies done as quickly as possible, and what we ultimately all agree on [is] we’re all going to have to be in unison on that, but no final decision has been made,” said House Majority Leader Steve Scalise (R-LA) regarding the reconciliation timeline. (PoliticoPro, Dec. 4)

View from Senate

• Sen. Chuck Grassley (R-IA) pointed to the complexity of the tax package as the reason for its placement as the second bill.

• “We want to help lower energy costs, we want to help the military. We want to hit the ground running,” said Sen. Lindsey Graham (R-SC). (The Hill, Dec. 4)

• Sen. Rand Paul (R-KY) cautioned against using reconciliation to increase spending, emphasizing the need to reduce overall expenditures.

What's Next

• Senate Republicans, led by incoming Senate Majority Leader John Thune (R-SD), will work closely with House Speaker Mike Johnson (R-LA) and the White House to finalize the contents and timing of both reconciliation bills.

• Passage of a budget resolution, which is the first key step in the reconciliation process, will be crucial to move forward—a challenge in itself given the slim GOP majority in the House.

The two-bill reconciliation strategy reflects Senate Republicans' cautious approach to the legislative calendar. By securing an earlier, more straightforward win, the GOP hopes to gain the momentum needed to navigate a complex tax debate later in 2025.

On Tuesday, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, blocking enforcement of the Corporate Transparency Act (CTA), questioning its constitutionality and its impact on small businesses. The ruling prevents the federal government from enforcing CTA requirements until further notice. (Forbes, Dec. 4)

Impact of Ruling

• The CTA, effective January 1, 2024, mandates that over 32 million "reporting companies" disclose beneficial ownership information to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

• Due to the far-reaching scope of the CTA, The Roundtable has long raised concerns about the regulatory burden and cost the CTA would impose on many commercial and residential real estate investment businesses.

• The preliminary injunction halts enforcement of the upcoming January 1, 2025, deadline for filing ownership reports.

• The decision marked the second time a judge has deemed the law unconstitutional. An Alabama federal judge reached a similar conclusion in March (Reuters, Dec. 4 | Roundtable Weekly, March 8)

• The injunction is temporary; not a final decision. The pause on enforcement could be overturned if the ruling is challenged successfully on appeal.

Court's Decision

• In Texas Top Cop Shop v Garland et al., Judge Amos L. Mazzant III found the CTA's federal oversight of corporate ownership to be overreaching, infringing on constitutional rights typically overseen by states. (Bloomberg, Dec. 3)

• Judge Mazzant also highlighted the heavy compliance costs — projected at $22 billion in the first year alone — without adequate privacy safeguards.

• The plaintiffs, including small business owners and a trade association, argued that the CTA compels speech and association, infringing on First Amendment protections. They also raised concerns about privacy violations under the Fourth Amendment, given the extensive personal information required.

• The Court agreed that a nationwide injunction was necessary due to the sweeping impact of the CTA.

Roundtable Opposition

• The Roundtable has consistently opposed beneficial ownership rules under the CTA, the burdensome reporting requirements, and the negative impact on real estate partnerships and capital formation.

• In May, The Roundtable and more than 100 business organizations expressed strong support for bicameral legislation that would repeal the Corporate Transparency Act (CTA) and its onerous beneficial ownership burdens. (Roundtable Weekly, May 10)

• RER continues to work with policymakers to identify a balanced position that would inhibit illicit money laundering activity but would not place unnecessary compliance costs and regulatory burdens on the real estate industry. (Roundtable Weekly, June 7 )

The Roundtable’s Real Estate Capital Advisory Committee (RECPAC) will continue to closely monitor developments related to the enforcement of the CTA and challenges to the law.

Real Estate Roundtable President and CEO Jeffrey DeBoer has been recognized as one of the "Top Lobbyists" in Washington, D.C. for 2024, according to the prominent policy news publication, The Hill. This marks the seventh consecutive year that DeBoer has received this honor. (The Hill, Dec. 5)

• The Hill noted that their list details “some of the best in the business and those that have been “go-to advocates during a year defined by unprecedented political events, legislative logjams, federal spending cut crusades and big rulemaking swings by the outgoing Biden administration.”

• DeBoer stated, “I am truly honored to be recognized by The Hill for my work, especially in a city with more than 12,000 lobbyists. This recognition, though, really is a testament to the overall Roundtable team, leadership, and membership.”

DeBoer added, “This acknowledgment underscores the importance of the fact-based advocacy work we do to advance policies that foster solid real estate asset values, spur job opportunities, economic growth and strengthen communities nationwide."