🏦 The Vault: The home stretch

THE VAULT LOOKAHEAD

It will be a long December

Musk wants fewer agencies. Republicans have ideas

Lobbying and the clean energy crunch

AARP goes up with tax ad

THE TOP

It will be a long December

Welcome to December — and the final gasp of a weird, dysfunctional but ultimately fascinating Congress.

This is the home stretch of the home stretch. We came into the lame duck with low expectations, and the dynamics are still not ideal for any last-ditch dealmaking.

But the next month will also involve a lot of stage-setting for the 119th Congress, which promises to be a wild ride.

Here’s what we’re watching.

Last call for policy: The word we’ve been hearing increasingly often with year-end bills — whether that’s the annual defense authorization or a continuing resolution to keep the government open — is “clean.”

It’s always a challenge to get significant policy into the NDAA or a CR. Staff and lobbyists have become increasingly convinced not much is likely to ride on either must-pass package this December.

That hasn’t stopped folks from trying. Speaker Mike Johnson is discussing outbound investment restrictions with the Senate as a potential NDAA rider, though objections from Rep. Patrick McHenry (R-N.C.) may punt the policy to “the incoming administration,” to quote a McHenry spox. Legislation to extend tax treaty-like benefits to Taiwan, a key U.S. ally, is also still in the mix for some sort of year-end action, though it’s looking like it may not make the cut for NDAA. Senate Majority Leader Chuck Schumer is exploring cannabis banking legislation in the CR.

The Taiwan tax bill probably can’t ride in the tax package that the GOP is plotting for next year under reconciliation rules, so that could give it some oomph now.

Meanwhile, things aren’t looking good for a deal to tighten de minimis rules for low-value packages entering the United States, though House GOP leadership has wanted to get this done. There’s just not the interest from all four corners in a deal right now.

This could come up again in Republican reconciliation efforts next year, but also keep an eye on whether President-elect Donald Trump takes executive action on de minimis.

Race to reconciliation: December will feature lots of work from Republicans on readying their reconciliation package for 2025.

Sen. Shelley Moore Capito (R-W.Va.), the incoming Senate GOP Policy Committee chair, is holding a policy retreat for the full conference on Tuesday, as we scooped. Reconciliation is expected to be a part of the programming.

Sen. Mike Crapo (R-Idaho), the incoming Finance Committee chair, is continuing to hold working group meetings to discuss tax options with his members. House Ways and Means Committee Chair Jason Smith (R-Mo.) is also holding meetings with his members throughout the month to work through tax choices.

Smith is planning to put together a final product reflecting the findings of Ways and Means Republicans’ 10 tax teams by the end of the year, according to people with knowledge of the plans.

Also keep an eye on the debate around how Republicans should calculate the price of their tax bill. Crapo has put himself in the spotlight, lobbying publicly that extensions of existing tax cuts shouldn’t add to the price tag next year because they are current law, not new policies. That would be huge: Just extending the Trump tax cuts as-is would cost over $4.5 trillion, per congressional scorekeepers’ math.

It’s not clear that’ll fly with House Republicans.

House Budget Committee Chair Jodey Arrington (R-Texas) told us he’s discussed the baseline question with Crapo. “There will be people with varying views on that question on how you score it, where the baseline is,” Arrington added.

New admin loading: Now that Trump has settled on billionaire hedge fund manager Scott Bessent to lead the Treasury Department, the confirmation process and meetings with senators happen quickly in December. While Trump has thrown some controversial picks at the Senate GOP, Bessent’s selection is lower drama.

Treasury secretaries typically get confirmed with lightning speed. Finance generally holds confirmation hearings before the next president is sworn in. Crapo has already made clear he’s aiming for a swift process.

The rest of Trump’s economic team is also taking shape. Jamieson Greer got the nod for U.S. trade representative. Greer was chief of staff for Robert Lighthizer at USTR in the first Trump administration, and he’s urged Congress to consider an aggressive trade posture toward China.

We continue to hear a lot of the same names for incoming financial regulators, though any of this could change on a Trump whim. Most insiders expect former officials from Trump 1.0 or other Republican governments to play larger roles.

Those folks include Federal Deposit Insurance Corp. Vice Chair Travis Hill, former Acting Comptroller of the Currency Brian Brooks, former OCC chief counsel Jonathan Gould, FDIC board member Jonathan McKernan, former Securities and Exchange Commissioner Paul Atkins and current SEC Commissioner Mark Uyeda.

Finserv watch: The main event in congressional financial services politics will be seeing who grabs the gavel to lead the House Financial Services Committee. The competition has been fierce, and right now, Rep. Andy Barr (R-Ky.) is the odds-on favorite. Steering presentations are slated for the week of Dec. 9.

Once that election is decided, the committee will begin the transition to new leadership. Depending on how much staff turnover there is, that could take some time.

– Laura Weiss, Brendan Pedersen and Andrew Desiderio

DEPT. OF … SOMETHING!

Musk wants fewer agencies. Republicans have ideas

A pledge from Elon Musk to cut down on “government waste” and reduce the number of federal agencies faces significant legal and political hurdles. The Department of Government Efficiency remains a half-cooked social media exercise for the moment.

But the campaign, fueled by the world’s richest man, has kicked off real conversation among GOP lawmakers who often rail against the shape of federal regulation with little opportunity to do much about it.

Musk told Tucker Carlson he’d like to shrink the number of American federal agencies from more than 400 down to 99. We asked several GOP lawmakers about that pledge. Many wanted to see more specifics but were comfortable with general thrust. Sen. Thom Tillis (R-N.C.) summed up the typical reaction.

“Well, that’s fine,” Tillis said. “Most of that’s going to require statutory authority, and I would have no problem with that going through.”

But financial regulation may be one of the government’s ripest areas for consolidation, and Republicans have been kicking around ideas for years.

Consider the three federal bank regulators: The Federal Deposit Insurance Corp. is the primary regulator for state-chartered banks. The Office of the Comptroller of the Currency is in charge of nationally-chartered banks. The Federal Reserve is responsible for overseeing bank holding companies which, yes, are different.

The regulatory situation is also weird for crypto investors, where two markets regulators split oversight between securities and commodities.

“At every level of regulation, we have a kind of strange situation,” Rep. John Rose (R-Tenn.) said. “I serve on the two oversight committees for digital assets — one housed in agriculture, one housed in financial services. Kind of an accident of history.”

No bad ideas: Republican proposals for agency consolidation run the gamut of familiar favorites to deep-cut classics. Just last week, we wrote about how plenty of GOP lawmakers would like to see the Federal Reserve stick to monetary policy and stop regulating banks.

The Consumer Financial Protection Bureau has been a target for years. Musk himself called for the agency to be deleted last week and boosted an interview with a16z’s Marc Andreessen on Wednesday, where the venture capitalist blasted the CFPB as “Elizabeth Warren’s personal agency that she gets to control.”

Many Republicans and their industry allies want to change the agency’s legal structure and govern the bureau with a commission, rather than a single director. Others want to limit the agency’s mission or delete it entirely.

“It’s like the blind squirrel thing. Not everything the CFPB does is bad, just the majority of it,” Tillis said. “The question is, does it need to be a separate agency? Or does it need to be a smaller agency? In the CFPB’s case, it needs to be a lot smaller.”

Rose wants to go further: “I would repeal the legislation that created the Consumer Financial Protection Bureau and parcel that responsibility back to the other agencies.”

Rep. Bill Huizenga (R-Mich.), who previously chaired the House Financial Services Subcommittee on Capital Markets, said he’d roll the Public Company Accounting Oversight Board into the Securities and Exchange Commission.

“How many of those regulator functions are duplicative?” Huizenga asked. “How many of those are already being done, or should be done by them and not someone else?”

Republicans say many of these maneuvers aren’t designed to make it harder for the government to do its job. If anything, having one bank regulator rather than several would probably make it easier for officials to move quickly in a crisis or to implement trickier regulations.

Look no further than the government’s inability to advance executive compensation reform from 2010’s Dodd-Frank Act. The rule, still in purgatory, requires buy-in from the Fed, FDIC, OCC, SEC, Federal Housing Finance Authority and National Credit Union Administration to be finalized. That’s a lot!

“There’s this fog of war that happens when you’ve got supposedly complementary regulators acting in a conflicting manner,” Huizenga said.

Others acknowledged the potential for disruption.

“Any time you start tinkering with these things, you’ve got to worry about the unintended consequences,” Rose said. “But what worked 30 years ago maybe doesn’t make sense today. And that’s true all up and down the spectrum.”

— Brendan Pedersen

K STREET

Lobbying and the clean energy crunch

Republicans are making no secret of their hopes to unravel one of Democrats’ signature Biden-era laws, the Inflation Reduction Act. But scrapping any of the legislation’s hundreds of billions of dollars in tax credits for clean energy will inevitably frustrate some companies.

On K Street, lobbyists and businesses are readying for a struggle over the future of the tax incentives, which Democrats hoped would spur a transition to a lower-emissions future.

Right now, there’s lots of uncertainty, which will make some companies antsy about planning big investments. Some of the tax credits absolutely have GOP allies, so Republicans will need to figure out how big they can go with a minuscule House majority. But some pieces — like tax credits for buying electric vehicles — are clearly on the chopping block.

As a result, there’s been a notable increase for a while now of lobbying hires focused on the IRA and clean energy. There have been a lot of new rulemakings on tax credits to weigh in on the last couple of years, so that makes sense. Now, there’s even more at stake.

Here’s a sampling of some lobbying hires:

– This fall, Thorn Run Partners inked the Clean Power Alliance of Southern California, including for lobbying on “maintaining Inflation Reduction Act tax credits and incentives.” Solar energy company Sunrun hired Trump megadonor Jeff Miller’s firm, Miller Strategies, to work on the implementation of IRA credits. Brownstein picked up Vital Chemicals to lobby on that implementation too.

– Critical mineral businesses have staffed up. IRA’s EV credits introduced new sourcing rules in an attempt to steer supply chains for the minerals used in car batteries through the United States or its allies. Lobbying disclosures this year include the American Critical Minerals Association hire of Cornerstone Government Affairs, the Cobalt Institute bringing on Imperium Global Advisors, United States Strategic Metals’ hire of Holland & Knight and Korea Zinc signing on Mercury Public Affairs.

– Some hires specifically point to work on EV tax credits from the IRA. That includes hires by the BATT Coalition. Plus, Nexii Charge brought on The Vogel Group. And Syrah Resources added Mission Strategies.

– Laura Weiss

ON THE AIRWAVES

AARP goes up with tax ad

AARP is hitting the airwaves with an ad highlighting the group’s top tax priority in 2025.

The organization — a major lobbying force advocating for people 50 and older — is pushing Congress to create a tax credit for family caregivers.

“America needs family caregivers, and they need a tax credit,” a narrator says in the spot.

Check out the ad, which is airing on TV and digitally in the D.C. area.

The ad says more than 48 million people take care of parents, spouses or other loved ones, and that too many have to quit their jobs to provide care.

AARP is urging lawmakers to support the Credit for Caring Act. The bill has bipartisan support in both the House and Senate.

While AARP has muscle in Washington, any new tax cuts will be challenging for Republicans to grant next year. Extending the Trump tax cuts already comes with a massive price tag. The GOP is currently figuring out how much deficit hawks in the party will stomach in a reconciliation package.

We have no doubt that you’ll catch plenty more ads like this airing in D.C. as the tax debate really gets juicy.

– Laura Weiss

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