By Ray Birch
WASHINGTON— Senate Budget Committee Chairman Lindsey Graham’s comments Wednesday that Republicans will “expeditiously move toward creating a second budget reconciliation bill” are giving new shape to what had been a speculative discussion in Washington—and prompting renewed attention within the credit union industry to whether the movement’s federal tax exemption could again surface as lawmakers look for possible offsets.
In a post on X, Graham said that after consulting with President Trump, his team and Senate Majority Leader John Thune, the Senate Budget Committee will move quickly on a second reconciliation package focused on “adequate funding to secure our homeland” and support for the military.
The remarks are notable because they offer one of the clearest indications yet that a second fast-track budget measure—previously discussed but far from certain—may now be gaining traction. CUToday.info on Wednesday reached out to House Budget Committee Chairman Jodey Arrington to ask whether the same House GOP-developed list of possible offsets circulated earlier this Congress could again be referenced as lawmakers consider new pay-fors.
The Defense Credit Union Council moved quickly to frame the risk.
Jason Stverak
“As Congress begins assembling a second reconciliation package and openly discussing potential ‘payfors,’ the credit union community must be clear-eyed about what’s at stake. We have seen this playbook before. When large legislative vehicles move, long-standing policy priorities like the credit union tax status can quickly reappear as potential offsets,” DCUC Chief Advocacy Officer Jason Stverak said.
He added that House GOP-developed pay-fors lists this Congress “have already included the credit union tax exemption. That is not theoretical, it is a warning sign.”
Stverak said DCUC’s message is that the movement cannot assume the issue will fade.
“For the Defense Credit Union Council and the more than 200 credit unions we represent serving servicemembers, veterans, and their families, the strategy cannot be to simply hope this issue goes away or assume it won’t make it into final negotiations,” he said. “Hope is not a strategy. Vigilance is.”
Stverak stressed that credit unions are “not-for-profit, member-owned financial cooperatives that exist to serve not to maximize profits,” and said weakening that framework would directly affect defense credit unions’ ability to serve “junior enlisted servicemembers, veterans transitioning to civilian life, and military families who rely on stable, mission-focused institutions.”
DCUC, which earlier this month shared concerns about a second budget bill and the CU tax break, also argued the political groundwork may already be forming.
“We are already seeing the early stages of what could become a renewed push from bank lobbyists to use reconciliation as a vehicle to revisit this issue,” Stverak said, adding the group is “actively engaging with lawmakers on both sides of the aisle to reinforce the real-world consequences of any change to credit union taxation.”
He said, “protecting the credit union tax status is not just about our industry, it is about protecting the financial readiness of those who serve this country,” and pledged DCUC will remain “hyper-vigilant, proactive, and fully engaged” so credit unions and the Americans who depend on them are not used as a pay-for in Washington negotiations.
Scott Simpson
The renewed concern comes against the backdrop of a Jan. 18, 2025, CUToday.info report that obtained a 51-page House Republican document listing numerous possible ways to fund a budget bill, including eliminating the credit union tax exemption—an option estimated in that document to raise roughly $30 billion over 10 years.
America’s Credit Unions took a more measured public stance earlier this month, with President/CEO Scott Simpson, in a message to ACU members, stating: "We know that some members of Congress and some business are calling for additional tax reform this year, creating renewed risk of bankers attacking our tax status. Rest assured, America’s Credit Unions and the league system are vigilant against these threats…To unnecessarily raise alarm or launch action alerts at this time would be premature, and could cause more harm than good. We do not want to add oxygen to coals that are burning out.”
Anthony Hernandez
In a statement Wednesday, Simpson said ACU has “always known that budget reconciliation remained a potential legislative pathway for advancing significant policy changes. We recognize an ever-changing funding priority landscape, but looking at credit unions’ tax status as a pay-for must be off the table. To fund these new priorities off the backs of 145 million credit union members, our teachers, first responders, farmers, and our military men and women, would be irresponsible of Congress. We should not use this moment to take away the economic freedom of everyday Americans who rely on credit unions.
"America’s Credit Unions and the broader credit union industry are prepared to engage. The budget reconciliation pathway is anything but certain, and credit unions are ready to engage. As additional details emerge and the legislative process moves forward, we stand ready to fully mobilize our advocacy efforts,” continued Simpson.
"Congress is already well aware of our position following recent engagement on these issues, and our perspective will be clear, consistent, and firmly grounded in ensuring consumers maintain access to safe, affordable financial services,” Simpson added. “We stand ready to work with Congress to ensure this effort delivers real economic benefits for consumers and communities across the country.”
DCUC President and CEO Anthony Herhandez emphasized, "We cannot afford to bury our heads in the sand and hope that maybe Congress won't notice credit unions. Once again, we must be fully prepared to defend the industry's tax exempt status, which is exactly why DCUC never took the last battle for granted.
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