BIG AND BEAUTIFUL: President-elect Donald Trump and at least some very key congressional Republicans appeared to be leaning toward trying to pass two large fiscal packages this year, when we last left you in 2024. But no more: Trump publicly backed on Sunday evening what he called a “one powerful Bill” approach that will include extending tax cuts. That’s long been the preference of House GOP leaders and the chamber’s top Republican tax writers, who point to their narrow majority and frequently unpredictable right flank as real potential impediments to extending the temporary parts of the 2017 Trump tax cuts that expire at year’s end. And if anything, Speaker Mike Johnson ’s reelection on Friday — which was on the first ballot, but with plenty of bumps along the way — might have bolstered the case for that approach. A one-bill strategy, if it works, would presumably have something every Republican is craving to vote for, be that tax cuts, border security or changes to energy policy. MORE ON THAT in a bit, but we first welcome you to the first Weekly Tax of 2025. Speaking of: We know some trees that could be of use, but might currently be covered in snow. An American milestone: Today marks a full half-century since the first episode of the game show “Wheel of Fortune.” (Pat Sajak and Vanna White didn’t join the fun for another few years, for whatever it’s worth.) Help us avoid embarrassing missteps. Send your best tips and feedback. Email: bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on X at @berniebecker3, @Brian_Faler, @ben_guggenheim, @tobyeckert, @POLITICOPro and @Morning_Tax. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. LOOKING AHEAD: Write this prediction down — Johnson is also saying that the worst-case scenario is that a large fiscal package, passed through Congress by budget reconciliation, will make it to Trump’s desk no later than Memorial Day, as our Gregory Svirnovskiy noted. That’s music to the ears of the GOP’s supply-side contingent, who have said that Republicans need to lock in the expiring tax cuts quickly to avoid injecting uncertainty into the economy. But it’s also far from clear whether Republicans would be able to meet that challenge. In fact, some Senate Republicans, like Ron Johnson of Wisconsin, are still publicly advocating for a two-step approach that would give Trump a quicker victory on border security. Pivoting back to that strategy likely can’t fully be ruled out, either — in no small part because of how complicated it might become to hash out a tax deal. Trump himself said in his social media post on Sunday that scrapping taxes on tips would be part of any agreement. Other Republicans will have their own demands for a tax bill, while still others will be concerned about the price tag for keeping all the expiring provisions from the Tax Cuts and Jobs Act — which CBO puts at around $4 trillion over a decade. (On that note, Trump only pointed to tariffs on Sunday as a way to defray the costs of a big fiscal bill.) Congress also has to deal with the debt limit and government funding in the coming months, which offers this reminder — Washington loves to work up to a hard deadline, and sometimes even a bit beyond it. And for the Trump tax cuts, that hard deadline is now about 359 days away. A LITTLE INSIDE BASEBALL: Anyone reading this particular newsletter likely will already have understood that tax policy will be center stage in Washington this year. But Trump’s pick of Ken Kies as Treasury’s assistant secretary for tax policy, which Pro Tax’s Brian Faler covered on Friday, certainly underscores that point further. First, there’s the timing. Trump announced Kies’ selection along with several other Treasury personnel moves, which might point to a greater overall organization from the president-elect’s second transition. In any event, it’s also early to be picking an assistant secretary for tax policy, at least compared with other recent administrations. (Trump announced the nomination of David Kautter, who held this role in his first administration, in May 2017. President Joe Biden chose Lily Batchelder, his first assistant Treasury secretary for tax, in March 2021.) But it’s probably not that early when you consider all the positioning and preparation that Republicans have already done to try and ensure a tax bill gets done this year, and the speed with which leading GOP officials say they want to move. Then, there’s the choice itself. Kies is one of the best-known Republican tax lobbyists in Washington — and to put it bluntly, he’s a big name to take the assistant secretary job. Even those who don’t agree with Kies politically acknowledge that he’s well qualified for the position. Kies has been involved in Washington’s political debates over taxes for around four decades now. Plus, Kies has plenty of experience as a tax lawyer — he was head of JCT in the 1990s, for instance, which would help with the regulatory side of the position. Jorge Castro of Miller and Chevalier called Kies a “serious pick” that shows that the Trump administration believes the assistant tax secretary will be “extremely consequential” in this year’s tax debate. As a long-time tax lobbyist, Kies will be well acquainted with both Senate Finance Chair Mike Crapo (R-Idaho) and House Ways and Means Chair Jason Smith (R-Mo.), which Castro said would help the executive and legislative branches to get on the same page in this tax debate. “What’s often underappreciated is needing a level of trust” between those two sides, said Castro, a former Senate Democratic tax aide and counselor to the IRS commissioner. That’ll be particularly true given the House’s narrow GOP majority, he added. “Smith and Crapo are going to need them,” Castro said of the administration. “For leaning on members, for making sure questions are answered, for lots of things.” There’s the flip side of that, too: It’s hard to imagine many people would fault Kies for calling it a career at this point. The fact that he wants the job also illustrates that it’s probably a particularly good time to have it. A few more odds and ends: The Biden administration has finalized a lot of the major clean energy rules from the Democrats’ 2022 tax-and-climate law — like last week’s regulation on an incentive for cleaner hydrogen production. But Castro noted that Kies would help oversee the rule-writing for other key parts of the Inflation Reduction Act, like the book minimum tax on corporations and the tax on stock buybacks. The client list: Kies has an extensive roster of big-time corporations and advocacy groups for which he has lobbied, like Microsoft, the Cruise Lines International Association and the National Association of Real Estate Investment Trusts. Certainly, people will be watching to see how Kies’ former clients might fare in this year’s tax negotiations, should Kies be confirmed (as expected). And finally, bygones are apparently bygones: Trump famously hated the 1986 tax overhaul, the last larger-scale revamp of the system before 2017. The future president called the 1986 law an “absolute catastrophe,” because of some unfavorable changes for the real estate industry. For his part, Kies was a senior GOP tax staffer at the House Ways and Means Committee when the law was passed, though that doesn’t appear to have been held against him.
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