Congress Considers Reconciliation 2.0

Key Takeaways

• Reconciliation is the only process for Republicans to pass a partisan bill.

• After the success of the One Big Beautiful Bill (OB3), many Republicans wanted reconciliation 2.0, but the dubious viability of the effort delayed the process.

• Vulnerable Members of Congress want to demonstrate continued action in D.C. 

• Speaker Mike Johnson (R-LA) has announced that he will pursue another partisan bill under reconciliation this year.

• The legislation will focus on taxes, spending cuts, health reform, and energy. 



• Chances of passage are lower than last year but still possible.

• The House is likely to begin the debate about the scope of the bill soon.

Why the GOP Believes It Must Take Action

Congressional Republicans are facing an uphill battle in the 2026 midterm elections. The president’s party has lost ground in the House in 90% of midterm elections since 1938. For Republican members of Congress running for reelection, the prospect of doing nothing in Washington for the next six months would give campaign fodder to their opponents. Vulnerable elected officials want more action in Congress, even if the chances are lower that the bill will be signed.

New Headwinds Make Reconciliation Less Likely This Time

The chances of passing reconciliation are lower this year than in 2025 (37%) because lawmakers are facing a new set of challenges, including: 

• Lack of a pressing deadline like the pending individual tax rate increases last year. 

• Margins in the House are tighter (217-214-1), leaving just one vote to spare. 

• Two GOP senators voted against the original OB3 because of the budget impact.

• Spending reductions and welfare reform will cost the votes of moderate Senators.



• There are not as many unifying, popular policies available to include. 

Predicting Policies That Might Be In Reconciliation 2.0

While reconciliation will be more difficult this year, there is certainly a chance that the right combination of policies could unlock a Republican breakthrough and get a bill to the President’s desk. Below is a non-exhaustive list of potential policies that might be included in a new reconciliation package:

• Apply OB3 Medicaid work requirements to other means-tested federal programs. 

• Apply OB3 anti-fraud measures and restrictions on access for illegal aliens to programs like SNAP and unemployment insurance.

• Border adjustment tax that would remove deductibility of imported business expenses. 

• Health care reform that includes giving money for insurance subsidies directly to consumers to shop for plans. 

• Health reform to require insurers and hospitals to post their prices publicly.

• Site-neutral payment reform that allows Medicare to fully reimburse non-hospitals. 

• Additional defense spending, including supplemental spending for actions in Iran.

• Codify President Trump’s Most-Favored-Nation (MFN) drug pricing framework.

• Codify the TrumpRx online, direct-to-consumer marketplace. 

• Pharmacy Benefit Manager (PBM) reform requiring remittance rebates to patients.

• Full repeal of the estate tax on increasing the current exemption of $15 million. 

• New tax credits for first-time homebuyers, including eliminating capital gains tax on the sale of homes to first-time home buyers.

• Expand mortgage portability by allowing people to keep the same rates on new mortgages guaranteed by Fannie Mae or Freddie Mac.

• Expand the “Trump Account” framework for children to new Home Savings Accounts.

• Permanently banning large institutional investors from buying homes.

• New retirement plans based on the federal Thrift Savings Plan, with a $1,000 match from the federal government.

• Permitting reform for energy projects (the SPEED Act). 

• Limit or withhold federal transportation funding to sanctuary cities.

• Reauthorize the Work Opportunity Tax Credit.

• Eliminate the federal “marriage penalty” that increases taxes after a couple marries. 

As the House and Senate move forward we’ll continue to monitor other policies that could become a part of Republican reconciliation language. 

Background and Process

By far the biggest policy victory for President Trump and Republicans in Congress was the use of budget reconciliation to pass the One Big Beautiful Bill Act of 2025 (OB3). The reconciliation process allows the majority party in Congress to pass major legislation through a fast-track process that does not require the normal 60-vote threshold to end debate. Given the 53-47 Republican majority in the Senate, it is the only way to move a purely partisan bill in Congress. 

As a reminder, here are the required legislative steps that make reconciliation a more complicated process than passing a bill in the Senate with 60 votes.

One: The House passes FY 2027 budget resolution with reconciliation instructions (217 votes). 

Two: The Senate passes FY 2027 budget resolution with reconciliation instructions (50 votes). 

Three: Both chambers reconcile differences and pass an identical joint budget resolution, which assigns committees to write individual bills that meet deficit targets.

Four: House and Senate committees write those bills, which are then combined. 

Five: The House passes its reconciliation bill (217 votes). 

Six: The Senate passes its reconciliation bill (50 votes).



Seven: If there are differences, the bills must be merged or one chamber must recede to the identical language approved by the other.

The process is complicated and usually takes months to complete. For instance, last year the House started reconciliation by passing its budget on February 25, 2025. OB3 was signed into law on July 7, 2025.