After immigration and securing the U.S.-Mexico border, a top concern for Republicans is extending provisions of the TCJA, better known as the Trump tax cuts. Trump won this election, giving him a second, nonconsecutive term. Republicans won a 53-47 Senate, ending four years of Democratic control, and the GOP House majority will stay in place, though with a narrow margin over Democrats.

However, assuming Republicans keep in place the Senate filibuster rule, which requires 60 members of the 100-lawmaker chamber to vote for bringing up legislation, Republicans are expected to pass tax legislation with TCJA extenders — and likely add new ones — through a budgetary process called reconciliation that only requires a bare majority of support or 51 votes.

It’s the same mechanism used to push through the Trump tax cuts the first time around.

“Certainly, they’re going to be using budget reconciliation,” Kyle Pomerleau, a senior fellow at the American Enterprise Institute, said in an interview.

There are some major limitations to using reconciliation because of something known as the Byrd rule. For instance, the provisions in the package must be budget-related and cannot include nonbudgetary items. So, moving tax rates up or down can be done, but adding in other policy changes would be outside the remit and could be shot down by the Senate parliamentarian.

Additionally, there might be time constraints with reconciliation.

The reason why so many parts of the Trump tax cuts are expiring is because the 2017 tax legislation was passed through reconciliation instead of a regular bill in order to circumvent the 60-vote filibuster. That is because reconciliation bills cannot increase the deficit in years outside the initial 10-year budget window.

Pomerleau said lawmakers will have to come up with a reconciliation instruction that targets some level of revenue and spending. Fully extending the TCJA is expensive without tax offsets, something that deficit-minded Republicans will have to grapple with.

“They need to figure out how much deficit they’re willing to live with in a reconciliation bill,” he said. “So does that mean, are they going to target the full cost of the Tax Cuts and Jobs Act at $4.6 trillion? Are they going to target more than that?”

Pomerleau said lawmakers could see the political costs of that pricey legislation as too high and go with a figure like $2 trillion.

Furthermore, Social Security, which makes up a big part of the budget, can’t be touched as part of the Byrd rule. Trump has proposed eliminating taxes on Social Security, something that would be prohibitive because of the rule.

Before the legislation reaches the Senate floor, tax writers will also have to contend with concerns about the country’s growing national debt and deficits. In addition to extending the TCJA, Trump has vowed several new tax cuts that would further reduce revenue.

The federal debt is approaching $36 trillion, and payments on interest have skyrocketed. Without major cuts to spending or new revenue-raising proposals, the policies would only make the situation worse.

“I think obviously on the Republican side, that is a core belief that’s going to have to be wrestled with,” said former Rep. Tom Reed, a New York Republican, in an interview.

Trump’s plans for tax cuts would see revenues fall by $5.8 trillion over the next decade, according to an estimate from the Penn-Wharton Budget Model, a group housed at the University of Pennsylvania’s business school that analyzes the fiscal effects of public policies.

“Permanently extending the expiring individual income tax provisions of TCJA would add $3.4 trillion to deficits (before interest costs) over the next ten years,” the report says. “Restoring the original TCJA regime for taxing business investment adds another $623 billion to increase the total cost of TCJA extension to more than $4 trillion.”

There are also looming deadlines to address Social Security and Medicare insolvency. The Medicare trust fund will be exhausted in 2036, and the combined Social Security trust fund is set to go broke in 2035, the program’s trustees projected in May.

Servicing debt is also more expensive. Interest costs have surged, given that the Federal Reserve was forced to hike its interest rate target to its highest level in more than two decades in response to inflation. Spending on interest on the public debt rose by $240 billion last year to a total of $950 billion.

“In the past couple years, we’ve had inflation, interest rates then had to go up, and sort of those factors, I think, have made deficits come back in salience as an issue,” said Alex Muresianu, a senior policy analyst at the Tax Foundation, in an interview. “And so we have higher deficits, more concern about the deficit.”

Republicans are unlikely to have a unified front on all provisions, and there will likely be some bargaining over some of them.

For instance, the initial TCJA included a $10,000 cap on federal deductions for state and local taxes. Lawmakers in high-tax jurisdictions, such as New York and California, have been adamant about raising or eliminating that cap, but others in the party want to see it extended.

Trump now says he supports expanding the SALT cap, a reversal from the 2017 tax law. Because Republicans are expected to have such a slim margin in the House, a few members could have outsize leverage in getting the cap raised, a prospect that would further complicate the fiscal footprint of the legislation.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

“That is probably one of the best exhibits of one of the things to keep on the radar because that obviously draws a lot of votes,” Reed said. “That’s in high tax states, California and New York, which have a lot of majority makers on the Republican side in there.”

There are also questions about what to do with the corporate tax rate, which was lowered to 21% from 28% as part of the TCJA. Trump has proposed lowering it to 15%, although that would further reduce offsetting revenue.