Three veteran Washington insiders had a wide-ranging discussion at the 20th annual renewable energy law conference at the University of Texas earlier this month about what parts of the Inflation Reduction Act they expect Congress to roll back, on what timetable it is likely to do so, what developers can do to qualify of transition relief, what to make of the pause by the Trump administration in disbursements for clean energy projects, and other subjects. The following is an edited transcript.

The panelists are Emily Domenech with Boundary Stone Partners and a former senior policy adviser to three successive Republican House speakers, Kevin McCarthy, Patrick McHenry and Mike Johnson, David Kautter, the top tax person in the first Trump administration as assistant Treasury secretary for tax policy and now head of specialty tax services for accounting firm RSM International, and JC Sandberg, chief advocacy officer for the American Clean Power Association and former managing director of global government affairs and policy for GE Renewable Energy. The moderator is Keith Martin with Norton Rose Fulbright in Washington.

Scalpel or Sledgehammer?

MR. MARTIN: The Inflation Reduction Act has been a tremendous tailwind for the renewable energy industry the last two years. Emily Domenech, do you expect Congress to take a scalpel or a sledgehammer to it?

MS. DOMENECH: The answer to that question depends a lot on the way Congress decides to score the cost of the upcoming tax bill. There has been a debate among Republicans in Congress whether it is necessary to offset the cost of extending the 2017 cuts that expire at the end of 2025.

If we are looking at a smaller-scale bill that perhaps has a shorter extension of the tax cuts, then I think they will try to offset every dollar and every part of the IRA that can be repealed will be on the chopping block.

If we are looking at a bigger bill that perhaps makes Trump tax cuts permanent, or there are things that are really beyond the scope of what can be paid for with offsets, then paradoxically the IRA is probably safer because any savings from it become symbolic. They end up being things that have really broad political opposition. The electric vehicle tax credits are in that category.

Eighteen House Republicans said in a letter to House Speaker Mike Johnson last August that they support taking a scalpel approach. Four of those Members did not return to the House. The letter did not identify the parts of the IRA that they want to preserve because that group could not agree on which parts to save.

Do not underestimate the challenge of getting a consensus about the parts to save. It is easiest for something like section 45Z, which is a biofuels tax credit that the whole Iowa delegation is going to support. It is a lot harder to preserve the IRA increase and extension of something like ITCs and PTCs. Why wouldn’t we just set that back to where it was before?

MR. MARTIN: JC Sandberg, scalpel or sledgehammer?

MR. SANDBERG: I have had this conversation with Emily in various places around the country. My sense is scalpel, but there are several big decisions that have to be made before we will know whether it is a sledgehammer or scalpel.

MR. MARTIN: Dave Kautter, same question.

MR. KAUTTER: Scalpel. There is Republican support to some degree for almost everything in the Inflation Reduction Act. The question is how much. I would encourage you to think as this process moves forward in non-binary terms. Much of the debate is binary. A provision is either in or it is out. I don’t think it will necessarily be that simple.

The other levers that can be pulled as part of this debate are reducing the amount of the credits or deductions and reducing the length of time that a particular provision is available. Every single provision in the Inflation Reduction Act is being closely evaluated both on Capitol Hill and at the Treasury, and they are trying to come up with a uniform policy on repeal or leave it in the law and decide, if it is left in the law, whether the credit amount should remain the same and be available for the same amount of time as current law provides.

MS. DOMENECH: . . . and whether it should be available to the same group of people that qualifies currently.

Most At Risk

MR. MARTIN: Emily Domenech, which two provisions in the Inflation Reduction Act are at greatest risk?

MS. DOMENECH: The consumer credit for EVs certainly and then my dark horse at-risk credit is the hydrogen tax credit. The hydrogen credit is at risk because the way the Biden administration wrote the rules to implement it cut out the oil and gas industry almost entirely. It is hard to see a scenario where that gets heavy support from lobbyists without a real change in the credit.

MR. MARTIN: JC Sandberg, what would you add to the list?

MR. SANDBERG: When you are out defending any number of tax credits, you are not betting against any of the other ones. Hydrogen is a tough one. We spent a lot of time trying to make the tax credit more workable. The decisions the Biden administration made left that credit almost unusable for certain sectors. If it doesn’t work for the sectors it was intended to help, then who is left to advocate for it?

MR. MARTIN: Dave Kautter, I am going to ask you a different question. Is there any possibility the credits for generating renewable electricity will survive?

MR. KAUTTER: I think they will, but not in their current form. There is an in-depth analysis being conducted on each of the provisions, including the tax credits for renewables. There is support on the Republican side for renewables, but it is not uniform and it is not as deep as some folks would like. I think there will be changes, and they could be significant, but I think something will remain.

MR. MARTIN: You said not in the current form. What is your bet about the form?

MR. KAUTTER: The issue a lot of people on the Republican side are talking about, both at the Treasury and on Capitol Hill, is the amount of the credits and some of the definitions of what qualifies for the credits. It is too early to tell. The quickest way to go broke is to bet on what Congress will do. And the quickest way to make money is to bet against me. If I make a prediction, take the opposite side and you will be fine.

Your earlier question was what parts of the Inflation Reduction Act are at greatest risk. The answer is the grants and loans. I think they are number one on the list.

The House Budget Committee put out a 50-page list of potential changes to the budget. The changes are organized by committee. Repeal IRA spending under the jurisdiction of Science, Space and Technology Committee. Rescind IRA funds under the Natural Resources Committee. This pops up repeatedly throughout the entire document.

Timetable

MR. MARTIN: Emily Domenech, on what timetable to do you think the budget debate will play out?

MS. DOMENECH: It will be longer than everyone says because that is just how things work in Washington. The last time Republicans had control of the White House and both houses of Congress, they did their first attempt at reconciliation in the summer, and then they came back and did tax reform late in the year.

They were doing healthcare in their first round, and they moved to taxes later. I don’t think it will be quite that long, but my guess is it will be June before we really have a package. They are a long way away from having a negotiated deal.

For the people in this room who care about the IRA tax credits, the Republican leadership essentially has to start with a package that repeals everything and then figure out how much to walk back because members of Congress say, “I can’t vote for the bill with that repeal included.” Time stretches out based on how long it takes to count votes.

MR. MARTIN: Do you think there will be one bill or two bills ultimately?

MS. DOMENECH: I think one bill, unless we get into the summertime without a deal, in which case I could see President Trump getting frustrated and wanting to move something forward.

MR. MARTIN: Will he wait for Congress?

MS. DOMENECH: He kind of has to in this case.

MR. MARTIN: When do you expect the House Ways and Means Committee markup?

MS. DOMENECH: That depends on when we see a budget resolution clear the full House. It will not be before mid-March.

Jason Smith, the chairman of the House Ways and Means Committee, and the other committee members believe they are ready to go. They have already written the provisions they want to write, and they are just waiting on the Budget Committee to give them instructions about how much in offsets they need to include.

MR. MARTIN: JC Sandberg, how much drama do you expect in March to keep the government open and also deal with the debt ceiling?

[Panelists laugh.]

MR. MARTIN: You get the easy questions. Funding for the federal government runs out on March 14.

MR. SANDBERG: What will be interesting to watch is not just what happens on the Republican side, but what do the Democrats in the House and Senate want in return, since there will not be enough Republican votes to keep the government open and increase the debt ceiling, so some Democratic votes will be needed.

House Speaker Mike Johnson is in a tough position. His caucus does not like it when he relies on Democratic votes. That was what brought down Kevin McCarthy as speaker before him.

I think at some point they will try to do away with the concept of a debt ceiling. It is a source of annual outrageous political brinksmanship by both parties that does not help anyone and moves the market in negative ways. It is still early. Nothing in Washington happens until it absolutely has to happen.

MS. DOMENECH: There is one wrinkle that makes this an unusual CR process. Normally, I would say Democrats have a lot of leverage. They will have to provide votes to move a CR. They have no reason to do so. House Republicans recognize that a CR is the easiest way to maintain federal spending at current levels. It is essentially the only lever they have, because once they negotiate a spending deal, we will almost certainly see an increase, if for no other reason than inflation.

The one piece that makes it hard for Democrats to accept is if the government continues operating under a CR past April, the Fiscal Responsibility Act will require a 1% across-the-board cut in spending. That is a universe we have never been in before, and I do not believe that Democrats have any desire to get there. Therefore, we are more likely to see a deal in late March or early April to fund the government.

MR. MARTIN: "CR" stands for continuing resolution. It is a form of kicking the can down the road. The government is operating currently under a continuing resolution that funds federal agencies at the same levels as last fiscal year.

Will there be a 1% cut if Elon Musk has already taken out more than 1% by then.

MS. DOMENECH: It will not matter. They still have to do it.

Transition Relief

MR. MARTIN: Dave Kautter, many developers rushed to start construction last year of projects in order to lock in the option to claim tax credits under the tax code as it existed in 2024, before the tax credits moved to the technology-neutral tax code sections this year. Do you agree it is hard to see how the current Congress could deprive such developers of that option?

MR. KAUTTER: I agree. Once taxpayers have acted in reliance on an existing statute, I cannot remember an instance where Congress revoked the statute retroactively.

There is always a first time for everything, and this administration is clearly unique in many respects. However, members of Congress feel a responsibility that once taxpayers change their economic positions in reliance on a statute, it is unfair retroactively to revoke that treatment. It could happen, but the chance is very small. I think they will be grandfathered.

MR. MARTIN: What is your advice to companies that did not start construction last year and are looking to start early this year? How should they do it?

MR. KAUTTER: Once you have a meaningful change in economic position, you have a strong argument to Congress to be grandfathered. If I felt strongly about a project or initiative, I would start, but start modestly so that if Congress changes its mind, my losses are not too substantial. But do not start in a de minimis manner or you are likely not to be grandfathered. It is a difficult dilemma. I wish I had a better answer.

Funding Pause

MR. MARTIN: Emily Domenech, one of the executive orders that President Trump signed on day one instructed federal agencies to pause disbursements under loan guarantees, grants and federal contracts. The optimistic view is this is normal for any new administration until it can get its new team in place. The pessimistic view is this is permanent and reflects an animus against renewable energy. What is your view?

MS. DOMENECH: I am somewhere in the middle. This is a standard practice for new administrations. But this is different in that this administration is trying to differentiate between funding that is required by statute and funding that is not. An example is the Department of Transportation put a lot of greenhouse gas reduction requirements on grants that were not authorized or required by Congress.

This administration is checking for community benefit plans, DEI initiatives and other things that do not align with the incoming president’s viewpoint and were not required by Congress, and it believes it should be able to pull them back.

MR. MARTIN: Is it also an effort to get a case up to the Supreme Court to test how much power the president has to say I am not going to spend under these old priorities? They are not mine.

MS. DOMENECH: It is less about how much spending and more about how we spend. The Trump administration wants to change requirements for grants that were policy choices by the prior administration that were not required by Congress.

MR. MARTIN: JC Sandberg, are you optimistic or pessimistic about the pause on disbursements?

MR. SANDBERG: We are watching a government without all of its players on the bench. It put in place a pause. I think we need to reserve judgment on how things will function until the full team is in place. Give it another four to six weeks.

MR. MARTIN: What are you hearing about websites, like the portal for registering tax credit sales?

MR. SANDBERG: I don't think the reports that the websites are down reflect an intention at this point to block tax credit sales. The portal was down part of last week. It is back up.

Most tax credit sellers making sales early this year already have their registration numbers. If the portal problems persist in late March or April, then that will be a problem because it will begin to impede tax credit sales for the remainder of the year.

MR. MARTIN: Emily Domenech, is the media overreacting about inability to get access to portals, like for tax credit sales? Is it just an effort to scrub them of DEI language and nothing more?

MS. DOMENECH: It is an overreaction. From what I understand, there have been directives to scrub websites for X, Y and Z and, if they cannot be scrubbed in time, they will go down. In some cases, it is simply timing.

We like to be hair on fire about things in Washington all the time, and things often level out more quickly than you expect. Take the Office of Management and Budget memo that said the pause of disbursements was broader than intended. Highway contractors and others working on basic infrastructure projects freaked out in the 48 hours between the Trump executive order and the OMB correction.

That kind of stuff happens in the federal government, particularly at the start of a new administration. The difference is that Democrats tend to want to spend money without authorization, and Republicans want to try to stop spending money without authorization. Both those things need to be balanced out by the legislature.

MR. MARTIN: You are describing a normal administration.

MS. DOMENECH: I remember when Obama said, "I don’t need Congress, I can legislate with a pen and a phone." This is not new. It is just a different style of the same executive overreach.

MR. KAUTTER: I’ll interject a personal story that some of you may find amusing. I did not at the time. On April 17, 2018, which was the last day of the tax return filing season, I was the acting commissioner of the Internal Revenue Service. I was scheduled to testify before the House Oversight Committee. About 8:30 in the morning, the deputy commissioner for operations came into my office and said, “Commissioner, we have a problem.”

I said, “We have problems every day.” He said, “No, this is a big problem.” He said, “Our systems are down. We cannot accept tax returns. It is the filing deadline and we cannot accept tax returns."

MS. DOMENECH: Brutal.

MR. KAUTTER: I am scheduled to testify in an hour and a half before Congress. What is the problem? Well, we don’t know what the problem is. All we know is the mainframe computers stopped accepting tax returns. I immediately turn around to face my desk, delete the oral statement I had prepared and start drafting a new oral statement.

I testified. Everybody is concerned that a foreign government or some other malign actor had hacked into the IRS system. The one thing I remember about the hearing is a congressman from Georgia who looked at me and said, “Mr. Kautter, let me understand this.” He said, “Today is game day and your team can’t get out of the locker room.”

It turned out the problem was software in the mainframes had malfunctioned, and it was not releasing data that was coming into the rest of the system. It backed up and stopped accepting returns. So, to Emily’s point, stuff happens. Now whether this last glitch was intentional or not, I don’t know, but things happen with technology from time to time.

MR. MARTIN: There is a tendency to have hair on fire about everything Trump does. Somebody yesterday sent a note about a new drug called Trumpfya, which can be taken to ease Trump-induced anxiety.

MR. KAUTTER: The sense of proportion seems to have disappeared not just with Trump, but also with all administrations.

My comment earlier about what happens with the Inflation Reduction Act is that we all tend to think of those provisions as binary. They are in or they are out. Life is more a scale. There is not the same sense of proportion that there was in the past. I don’t say that as a moral judgment. It is just an observation. Things are either at zero or they are 100 miles an hour.

MS. DOMENECH: I agree. For the folks in this room who care about the IRA, if you are thinking about it in those binary terms, the answer is going to be zero because not a single Republican voted for the IRA. If your choice is 100% or zero, you are getting zero.

This industry should think creatively about how to make a credit more reflective of the values of the Republican party. How do we require more domestic content? How do we restrict foreign entities of concern? How do we narrow the aperture so the credit is only accessible to the people whom we truly intend to help? That is how you end up making lasting policy.

MR. MARTIN: How long do you expect the pause on approvals for wind farms to last?

MS. DOMENECH: It is very unlikely that there will be new leasing for offshore wind under the Trump administration.

MR. MARTIN: Onshore?

MS. DOMENECH: For onshore, that is more of a mixed bag, mostly because in many cases, the onshore wind in the West is in Republican areas where there will eventually be pressure to continue development.

However, when one party uses the other team’s playbook, it usually ends badly for everyone. Look at offshore wind, where we have seen the NIMBY crowd team up with the environmentalist crowd, team up with the anti-renewable conservative crowd. That mix makes it incredibly difficult to build anything. We want to avoid those kinds of marriages as much as possible in this space.

MR. MARTIN: I moderated a panel last week among CEOs and CFOs of renewable energy companies, and they were talking about the "Joe Rogan effect." Joe Rogan, the popular podcaster, is now stirring up community opposition to renewable energy projects.

MS. DOMENECH: Joe Rogan is just recreating what we saw from the environmental left about every major project for the last 50 years. It has weaponized our broken permitting system against people who want to build things in America. The solution is to make it easier to build. As somebody on the right who has been trying to convince folks in the renewable community to work with me on permitting for decades, I think we are a little late to the party.

MR. MARTIN: JC Sandberg, what are you hearing from your members about whether agencies like BLM are applying the pause on disbursements more broadly than wind?

MR. SANDBERG: It is a mixed bag. The FAA is still doing determinations of no hazard. I know of two wind projects that got them last week. There is a little bit of sand in the gears right now. We will get it figured out in time.

Dave Kautter and his staff during the during the first Trump term at Treasury always gave us a fair hearing. I was at GE at the time. That is the best you can expect from any administration.

The new Trump team does not have all of its people in place yet that can give that fair hearing and make a decision. I think the career folks either are acting in ways they think are appropriate, or not acting at all because they don’t know what to do. Actions by some agencies are at the regional level, and you have some regions behaving one way and others another way until there are people in place at the top who can provide clearer guidance.

We are at a place in this country where we have unprecedented load growth. We need all the generating capacity we can get. We need gas. We need wind and solar. There will be speed bumps, but I think that will ultimately carry the day.

Rescinding Guidance

MR. MARTIN: Dave Kautter, how much time do you expect the Treasury to spend rewriting regulations issued under the Inflation Reduction Act while Congress is talking about dismantling the statute?

MR. KAUTTER: I think the new administration will look at every single regulation that was issued by the previous administration, which is what we did in the first Trump administration, and a decision will be made, both at Treasury and on Capitol Hill, whether changes are warranted in each regulation and, if so, whether that change should be made legislatively or through the Congressional Review Act, or through the Treasury regulatory policymaking process.

The reason to make changes legislatively is if the desired outcome goes beyond what is in the existing statute. Another reason to do it legislatively is there will be a search for revenue to pay for the upcoming tax bill. If Congress makes the changes legislatively, then the additional revenue counts as part of the score.

An issue I enjoy discussing, but I don't know whether my fellow panelists do, is the Congressional Review Act. People get fixated with the Congressional Review Act, which gives a new Congress the right within 60 legislative days to rescind regulations that were issued by federal agencies in the waning days of the last Congress. However, the Congressional Review Act burns up scarce floor time in the House and Senate.

Instead of using the Congressional Review Act, the affected agency simply issues a new proposed regulation, and that regulation may revoke the existing regulation or it may substantially amend the existing regulation. It is simple, straightforward and well understood. The Administrative Procedures Act governs the process. You have to consider all the comments that are submitted.

I am sure that many of the issues that concern the new Trump administration will be dealt with through the regulatory process as opposed to the Congressional Review Act. Some will be dealt with legislatively.

MR. MARTIN: Emily Domenech, do you agree that there will not be wholesale rollbacks using the Congressional Review Act of regulations issued in the last four months of the Biden administration?

MS. DOMENECH: I expect it to be used sparingly. The administration can go through the regular process of revising regulations by issuing new proposed regulations after using budget reconciliation to try to repeal everything and getting credit in the scoring.

Think about the existing Treasury guidance for tax credits in two phases. The legislative phase will come first in the form of a budget reconciliation debate, and then there will be another look at whether things that were not done by statute can be tackled through the rulemaking process.

MR. MARTIN: The Congressional Review Act has never been used to roll back tax regulations. There is always a first.

Dave Kautter, most of the guidance on which this industry relies is in the form of notices. It is sub-regulatory guidance. Do you see the Treasury revisiting those notices?

MR. KAUTTER: Revoking notices and other sub-regulatory guidance is exceedingly easy to do. I expect some of the sub-regulatory guidance to be revoked. It is part of the overall review I described earlier. For example, Treasury issued 59 final regulations and more than 500 pieces of sub-regulatory guidance to implement the 2017 Tax Cuts and Jobs Act. Revoking sub-regulatory guidance does not require public notice or hearings, and it does not require considering comments. It can just happen, and I expect some of that to occur.

MR. MARTIN: If that happens, would there be transition relief?

MR. KAUTTER: There is a sense that if taxpayers relied to their detriment and changed economic positions, they should be grandfathered. On the other hand, some people are on a mission from God, and God told them to revoke this sub-regulatory guidance and it doesn’t matter how many people are affected by it, so sometimes you do not get the transition relief you like. I think most of the time you will.

Relationships

MS. DOMENECH: This is a perfect segue to an important point, which is if you do not have a relationship with the congressman that represents the district where your project is, do not expect to be able to get grandfathered.

I hear all the time from folks who say, “We created X number of jobs, and we have a great project.” And I ask, “Have you gone to meet with Marjorie Taylor Greene yet?" If you haven’t, she doesn’t know you and she doesn’t care. But if you have, she can pick up the phone and call the president, and he is very receptive to those kinds of phone calls.

MR. KAUTTER: I will tell you a quick anecdote from the time when Keith and I both worked on Capitol Hill. There was a provision in the Senate Finance Committee that the Finance Committee staff wanted my boss, Senator Danforth from Missouri, to support. He did not want to support it. We had gotten a lot of letters from the state in opposition, and constituents had visited us in Washington to talk about it.

The chief of staff of the Senate Finance Committee was like a heat-seeking missile. Everywhere I went, he was right behind.

MR. MARTIN: That was Bob Lighthizer, right?

MR. KAUTTER: It was Lighthizer!

So Lighthizer said, “Your boss ought to support this. It is good policy.” Finally, I said, “Bob, I can’t explain this, but for some reason my boss has this inexplicable desire to please the people who elected him. I don’t know why he feels that way. He just does.”

To Emily’s point, I don't think I can remember a member of Congress I worked for taking a vote without asking what we had heard from folks back home.

MR. SANDBERG: We have been spending the last two years doing just what Emily said, and we continue to spend a lot of time on it. Some of that is to try to counter the Joe Rogan effect at the local level.

On the sub-regulatory piece, a lot of the guidance on which our industry relies is sub-regulatory, and that is the stuff that we are watching. I expect to see changes in some of that. I will not opine on which ones, but I do expect some changes.

MR. MARTIN: Emily Domenech, a corollary is if you think you are going to need help from Republican members of Congress or their staffs to grandfather projects from changes in the budget reconciliation bill, now is the time to visit them because once the debate starts, they will be very hard to reach.

MS. DOMENECH: Absolutely true. In fact, if you have not talked to them already, you are way behind. They are getting calls from everybody and their mom right now, and if you have not already put in the time and effort to build a relationship, you are at the back of the line.

Another important point is focus on the members who represent the districts where the projects are located. Too many people are lulled into thinking the 18 members of Congress who said they will defend the IRA are the key. Every single one of them also has a parochial project or a parochial interest, and about half of them care more about SALT than they care about energy.

MR. MARTIN: "SALT" means lifting the cap on deductions for state and local taxes.

MS. DOMENECH: They will all vote for their one thing that they will throw at Chairman Smith of the Ways and Means Committee before the committee takes the tax bill to the House floor. It may have nothing to do with the IRA. A personal relationship with your local representative is critical, and I cannot encourage you enough to establish one.

MR. SANDBERG: You have to make friends before you need them. What trade associations like ours do day in and day out is spend time making friends.

MS. DOMENECH: You cannot simply rely on your trade association to use its friends to help your project. You have to do the legwork yourselves.

MR. SANDBERG: I agree.

Lightning Round

MR. MARTIN: Let me ask a series of quick questions with hopefully short answers. Dave Kautter, what do you think will happen to the wage and apprentice requirements?

MR. KAUTTER: I do not think there is a lot of support on the Republican side for those requirements. I do not know whether they will be dealt with as part of the legislative process.

MR. MARTIN: What do you think will happen to authority for tax credit sales?

MR. KAUTTER: It is unlikely to be repealed, but that's my personal view, and what do I know? If you want to make money . . . .

MR. SANDBERG: I think the transferability market is here to stay. There are enough guardrails to prevent waste, fraud and abuse. The market is functioning the way the government wants it to.

MR. MARTIN: What about section 45X, which is a tax credit for manufacturers of solar, storage and wind components?

MR. KAUTTER: I think it is likely to remain in the law in some form. Any time there is a provision that encourages domestic manufacturing, this administration is likely to take advantage of it.

MS. DOMENECH: Section 45X is the easiest part of the IRA to sell to populists. My advice is to use 45X as a case study and say, “Look at how well it worked for clean energy. Shouldn’t we expand it to other industries?” That is how you get somebody like JD Vance to support it. That is a much more politically salient approach than trying to defend a tax credit that only subsidizes manufacturing for clean energy.

MR. MARTIN: What about the domestic content bonus credit?

MR. KAUTTER: There is a lot of sentiment on the Republican side in favor of domestic content. A lot.

MR. SANDBERG: You cannot have manufacturing in this country if you do not have the projects that need the equipment. The manufacturing renaissance that is happening around these technologies is important. It is happening in places that are constituencies that this president cares about. I think at the end of the day the domestic content bonus credit is here to stay.

MR. MARTIN: Dave Kautter, will the corporate tax rate be reduced? It is 21% currently.

MR. KAUTTER: That is a great question and as somebody told me once, when an answer begins with the phrase, "That is a great question," you can bet the question was better than the answer is going to be.

At the moment, what they are talking about in Republican circles is a revenue-neutral set of changes on the corporate tax side. In other words, the latest is, “What if we increase the corporate rate by 1% or 2%, restore full expensing of research and experimentation expenditures and 100% expensing of capital equipment purchases and liberalize the interest deduction limitations and treat that as a package that is revenue neutral?”

However, that may not fly with a lot of folks who are advocating for a 15% corporate tax rate.

MS. DOMENECH: I don't think there is a chance in hell that the corporate tax rate falls to 15%.

MR. KAUTTER: Each one percentage point reduction in the corporate rate costs about $100 billion over a 10-year period. If you want to reduce the corporate tax rate to 15%, it will cost $600 billion. Even in Washington, that is a lot of money.

I think what may become a leading candidate is some sort of restoration of an old deduction that was repealed in 2017, which was embodied in section 199 of the tax code and was a deduction for certain domestic manufacturing activities. President Trump said during the campaign he would like to have a 15% rate for domestic manufacturing. If I had to handicap it, the most likely provision on the corporate rate side is reintroduction of some sort of provision, probably a deduction, to reduce the effective corporate rate for domestic manufacturing as opposed to an across-the-board rate cut.

When you leave Washington, people make fun of politicians. When you are in Washington, the politicians make fun of the economists. There is a saying in Washington that if all the economists in the world were placed end to end, they would point in different directions, or if they were placed in a straight line from here to the moon, they would miss the moon by a million miles.

They very seldom coalesce around any theory. To my surprise, there has been about as much coalescing among economists across the political spectrum that the two most impactful elements of the 2017 Tax Cuts and Jobs Act were immediate expensing of capital expenditures and the corporate rate reduction.

That is why as you try to predict what is likely to happen this year, something that deals with immediate capital expensing and something that deals with corporate rates are likely candidates.

MR. MARTIN: Go back to the reduced rate for manufacturing. Do you think electricity will be considered manufacturing?

MR. KAUTTER: Yes.

Here is another important point to keep in mind for why there is so much momentum behind extending the 2017 tax cuts. If the Tax Cuts and Jobs Act expires at the end of this year, about 62% of all American taxpayers get a tax increase. About 28% remain about where they are and 10% get a tax decrease. The 10% that get the tax decrease tend to be the highest-income taxpayers. The primary reason they get a tax deduction is because of the state and local tax deduction, which would become uncapped.

MR. MARTIN: How concerned should we be about doubling of taxes on French, Italian, UK and Canadian companies because they impose digital services taxes on US companies making retail sales over the internet in their countries?

MR. KAUTTER: I love that question. There is a provision in the Internal Revenue Code, section 891, that allows the president to declare that US companies and individuals are being treated unfairly by foreign countries and to double the rate of US tax on foreign country companies and individuals on their income from US sources.

We looked at that very closely in the first Trump administration when France enacted its digital services tax. That was viewed as the nuclear option. It was a blunt instrument that would apply to all French companies and individuals.

What we decided was to use a much more targeted approach, which was to levy tariffs on French wine, cheese and selected other products. I think section 891 is still viewed as a last resort, but President Trump loves the word tariffs. He thinks, as he says, it is the most beautiful word in the English language. He may view section 891 as a tariff of sorts.

Let me leave this audience a final piece of advice. I have a really good friend who is fond of saving, "I trust my mother, but I still cut the cards."

You can trust that Congress is going to do the right thing and it will take care of you, but cut the cards. Make your views known as part of this process.