Capital Corner: Fasten Your Seatbelts

Noted political pundit (and sometime Academy Awards winning actress) Bette Davis once commented, “Fasten your seatbelts, it’s going to be a bumpy night.” That’s an apt way to describe the environment in Washington as we begin 2025.

To be sure, there are opportunities—and challenges ahead for the incoming Trump Administration and Republican congressional majorities. There is a widespread sense that the momentum Republicans may have gained from their somewhat surprising sweep in November 2024 has a definite shelf life, and that there is a need to act quickly if they want to accomplish their lower tax, less regulation agenda.

For DCUC, the first focal point of the year will be the impending tax reform bill, and what that could mean for the credit union industry. Expiring provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 makes a rewrite of the tax code necessary. DCUC’s initial intel from Capitol Hill suggests that the House will try to pass tax reform legislation through a complex parliamentary maneuver known as budget reconciliation.

Budget reconciliation historically has been used by the majority party to pass controversial bills. The reconciliation process requires passage of matching budget resolutions in the House and Senate, approval of the agreed-upon resolution by impacted Committees, and then passage by simple majorities in each Chamber. Under the last Democrat trifecta in 2021, that party passed two reconciliation packages with a narrow 222-213 House majority and a tied 50-50 Senate.

The 2025 process is expected to take the same road, although it is not entirely clear whether there will be one or two reconciliation bills. The DCUC advocacy team has been aggressive in gathering the latest intel on this evolving situation: some Senators, including Majority Leader John Thune (R-SD) continue to advocate for two reconciliations, with the second one containing tax reform and dealt with after the August recess. However House leaders are pushing for one bill, and President Trump emphatically came out in support of that position after an early January meeting with House Speaker Mike Johnson (R-LA).Stay tuned for the final outcome of this tactical debate.

Either way, DCUC is actively working to educate Congress on the ongoing economic benefits of the credit union tax exemption to American consumers, while reminding lawmakers (especially Republicans) that their charge from voters is to find ways to reduce taxes, not raise them to over 120 million credit union members nationwide.

Here are some key dates to keep in mind as the year unfolds:

• March 14, 2025 — Expected expiration of Continuing Resolution for Fiscal Year 2025 (FY25)
  
• April 30, 2025 — End of “First 100 days.” This is rumored to be the target for passage of at least one reconciliation package.
  
• September 30, 2025 — End of FY25
  
• December 31, 2025 — Expiration of TCJA provisions