Back on January 5th, I noted that the Republican strategy to pursue virtually their entire legislative agenda in one “big beautiful” reconciliation bill risks catastrophic failure. The problem stems mainly from the GOP’s narrow House majority which presently stands at 219-215 with one vacancy. The vacancy will soon be filled by a Republican, but needing 218 votes to be successful, they can lose no more than two of their votes if the Democrats remain united in opposition, which seems likely.

They envision three main components to the bill, and possibly a fourth. The first two components center on immigration and energy, and many Republicans, including Senate Majority Leader John Thune, would prefer to tackle these by themselves in a reconciliation bill, and then try to use a second reconciliation bill to prevent the sunsetting of the Trump tax cuts, which is the third component. The GOP also must increase the debt ceiling, which can be done as part of the first reconciliation bill, the second one, or as part of a standalone second or third one. Yes, I know this is confusing.

The primary reason Thune and others want to tackle immigration and energy first is because they’re worried that they’ll have problems holding the House caucus together to extend the 2017 Trump tax cuts. And the reason for their concern is that House Republicans representing states like New York, New Jersey, Pennsylvania and California are angry that the 2017 tax cuts put a $10,000 limit on how much in local and states taxes can be deducted from federal income taxes. This exemption is known as “SALT,” and it disproportionately impacts voters in those states because of high property taxes. They also want to eliminate changes in the Alternative Minimum Tax (AMT) that were part of the 2017 bill that impact high earners in their states. Most Republican lawmakers, however, hate the SALT deduction, and the AMT changes helped offset the revenue losses of the tax cuts. It’s not possible to satisfy both groups simultaneously, but some compromise is essential if the bill is to pass.

Realizing the problem, Donald Trump hosted SALT-supporting Republicans at Mar-a-Lago on Saturday, and told them to come up with a number to offer as a compromise.

“The president certainly wants to increase the deduction for SALT to provide more relief, because he knows that our mayors and governors are crushing taxpayers,” said Rep. Nicole Malliotakis (R-N.Y.) in an interview after the meeting. “He wants us to work on what would be a fair number.”

The Republicans surely realize that a compromise is essential, but that doesn’t mean it will be attainable. It will probably be easier to get the SALT-supporters to reduce their demands than to get all but two SALT-opponents to agree with an increase. There are too many Republicans representing low-tax states that resent a deduction that doesn’t benefit their constituents, takes the sting out of high local and state taxes in the states that have them, and increases the overall price tag of extending the Trump tax cuts. Changes to the AMT would also increase the cost of the extension.

If the Republicans commit to doing one reconciliation bill, including the tax cut extension, it all could fail. If, on the other hand, they break things into two separate reconciliation bills, they put the tax cut extension at even higher risk. The first reason is that, with one bill, lawmakers who support the immigration and energy components will feel pressure to vote for tax provisions they detest or lose it all. Putting the tax provisions in their own bill removes that pressure making it easier to oppose them. The second reason is time. Passing two reconciliation bills in one year has never successfully been done, although the Democrats attempted it in 2021. If the GOP falls behind schedule, the tax cuts will sunset.

If this were not precarious enough, the debt ceiling still must be addressed, and the last time it was raised Speaker Mike Johnson had to rely on mostly Democratic votes. This angered his own caucus and almost cost Johnson his gavel, but the Democrats promised to protect him against a Republican challenge. The Democrats will not do that again.

What’s more, in an effort to appease his Republican critics, Johnson promised the next increase in the debt ceiling would be done in a reconciliation bill, meaning it could avoid a Senate filibuster and theoretically pass with only Republican votes. But most House Republicans refuse to vote to increase the debt ceiling. The idea that all but two of them will do so sounds like a fantasy. Johnson therefore committed to cut $2.5 trillion in mandatory spending in exchange for Republican support for a $1.5 trillion increase in the debt limit in this session of Congress.

As Axios reported at the time this commitment was made, “that ratio is too good to be true.” First, most mandatory spending comes from Medicare and Social Security, which Trump has promised not to touch. Not only that, but the budget reconciliation rules specifically bar changes in Social Security. Second, the tax cut extension is estimated to cost $4 trillion over 10 years. Third, there are campaign promises Trump made, like eliminating taxes in tips, that will collectively cost trillions more. This raises the question of where $2.5 trillion of cuts in mandatory spending will come from and whether they could gather near unanimous Republican support.

Despite these obstacles, Johnson is plowing forward.

In the Tuesday press conference, Johnson reiterated to reporters that “the intention is to handle the debt limit in reconciliation.” He added: “That way, as the Republican Party, the party in charge of both chambers, we then get to determine the details of that.”

Most reporting on this notes the difficulties of the plan without mentioning that Johnson would be breaking a promise he made last year if he doesn’t do the debt hike as part of a reconciliation bill. And because the debt ceiling needs to be raised no later than June to avoid a catastrophic credit default, it can’t be put off to a second reconciliation bill.

In theory, there’s another option but it may not be practical. To understand it, we need to look at what’s permissible under the Congressional Budget Act that governs reconciliation rules:

Under Senate interpretations of the Congressional Budget Act, the Senate can consider the three basic subjects of reconciliation — spending, revenues, and the debt limit — in a single bill or multiple bills, but a budget resolution can generate no more than one bill addressing each of those subjects. In practice, however, a tax bill is likely to affect not only revenues but also outlays to some extent (for example, via refundable tax credits). Thus, as a practical matter a single budget resolution can probably generate only two reconciliation bills: a tax-and-spending bill or a spending-only bill and, if desired, a separate debt limit bill.

If you’re asking why two spending/revenue bills are under consideration when only one is permitted, it’s because Congress didn’t pass a budget resolution last year and so is contemplating passing two this year. It’s an end run around the intent of the Budget Act, but one the Republicans tried in 2017 and the Democrats attempted in 2021. Neither plan worked. Still, it can be done. But what’s relevant here is that it’s permissible to have “a separate debt limit bill” that is not part of either the energy/immigration portion or the tax cut extension portion.

If this is under consideration, I have heard nothing about it. It seems to me that it would solve nothing for Johnson because his best chance of raising the debt ceiling using  only Republican votes is to have it as part of a larger bill with elements that House Republicans won’t want to oppose. And I think that’s the main idea behind doing everything in one “big beautiful bill.” Individual Republicans may be opposed to elements of the immigration and energy proposals or the tax extensions or raising the debt ceiling, but will they be willing to sink Trump’s entire first year legislative agenda if it’s all contained in one hugely consequential vote?

In any case, Trump attempted on Saturday to get things on track by meeting with the SALT-supporters and getting them to commit to making a compromise offer to the SALT-opponents. That’s a necessary step, but it’s going to be a miracle if this all goes according to plan. The risk to Trump’s agenda is immense, mainly because the Republicans have never yet demonstrated that they have a functional majority in the House and can govern without making concessions to the Democrats. This entire plan is premised on the idea that they can do so now, and I have my doubts.