Welcome to a special Friday edition of The Best & The Brightest. I’m Abby Livingston, back in your inbox with the first in a series of deep dives into some of the most pressing legislative and policy issues facing Capitol Hill as Washington prepares for a new Congress, and a new administration, in January.

In today’s issue, a close look at a surprisingly under-the-radar aspect of Trump’s 2025 agenda: his expiring 2017 tax cut, a $1.5 trillion program with massive implications for families, businesses, billionaires, and yes, the midterms. Republicans have a power trifecta—White House, Senate, and House—and couldn’t be more giddy to take yet another crack at the tax code. But, as always, it’s complicated… especially as House Republicans contemplate the future of deductions that are very popular in the wealthy, suburban districts where they’d like to make inroads in 2026.

• Closing the Gaetz: A day after Matt Gaetz withdrew from consideration for attorney general, he went a step further on Friday to clarify that he will not be returning to Congress. This was obviously somewhat of an open question after the Florida congressman resigned from the 118th congress without pledging specifically whether he was giving up his seat in the 119th congress, too. On Friday afternoon, however, Gaetz clarified his position for good. “I’m still going to be in the fight, but it’s going to be from a new perch,” he told Charlie Kirk.

  As my partner Tara Palmeri reported last night, prior to the A.G. debacle, Gaetz had been talked about as a potential contender for Florida governor in 2026, when Ron DeSantis’s term is up—which would likely put him on a collision course with the state’s first lady, Casey DeSantis, who is considered a frontrunner for the job alongside Byron Donalds. In the meantime, Gaetz is apparently using his free time to make a couple extra bucks on Cameo, where a paid message from the ex-congressman is currently going for $500.

• 🎧 Johnson’s margin & the Senate succession: Tomorrow, on a special Saturday episode of The Powers That Be, I’m chatting with Ben Landy, Puck’s executive editor, about what John Thune’s elevation to majority leader portends for the Senate’s looming confirmation battles with Trump. We also discuss whether Mike Johnson has the votes to fend off the Chaos Caucus, and how Democrats are grappling with the prospect of another two years in the minority. [Listen Here]

In the end, of course, that’s exactly what happened. Sure, there were plenty of other reasons that Democrats took back the House—this was the peak of the Trump #Resistance, after all—but the SALT cap (some wags just call it the “blue state tax”) certainly didn’t help. All across the most impacted states, congressional seats flipped from red to blue. According to the Times, Democrats flipped 10 of the 20 Republican-held districts where the largest proportion of taxpayers took the deduction—places like Orange County and McLean and the Hudson Valley.

Eight years later, the Trump tax cuts are expiring just as Republicans have once again scored an electoral hat trick. Despite a fractious conference and a slim majority, renewing the 2017 tax package should be an obvious Republican unifier—and a layup legislative win for Trump. But as the effort to renew (and expand) the Trump tax cuts takes shape, a fierce intraparty battle is brewing over whether to increase the SALT cap, especially after the G.O.P. made major inroads in blue counties across the country this year—including wealthy, SALT-impacted suburban areas that are suddenly looking pretty swingy. Indeed, New York Republican Rep. Mike Lawler campaigned hard on eliminating the cap. Republicans from red states, meanwhile, tend to favor keeping the cap where it is. “This will be the earliest test for House Republicans on where the fault lines are,” said Lisa Camooso Miller, a lobbyist and former Republican Hill staffer.

Anyway, if the 2025 tax push mirrors Trump’s successful 2017 effort, the bill will likely be a partisan, monoparty product, so the red-on-red fight is the key to understanding where this is all headed. And Republicans of all stripes want to move fast. The first 100 days of the Trump presidency will be even more legislatively crucial than a president’s typical opening act—because, well, it’s difficult to keep this particular president focused. One need only invoke “infrastructure week” to be reminded of Trump’s penchant for getting sidetracked from his own priorities. Realistically, Congress is not likely to pass tax cuts in the first 100 days, but the G.O.P. wants a big policy win early in the year.

Enacting any of these would almost certainly increase the deficit. Factoring in additional interest, Brookings estimated that the 2017 round of tax cuts will have added $2.3 trillion to the deficit by the end of 2028. If the expiring provisions are extended, it’s estimated that the tax cuts could cost more than $3.1 trillion—and that figure doesn’t include the impact of Trump’s new proposals. Throw some SALT into the fiscal mélange and it’s not hard to see why red state Republicans (most of the conference) and blue state Republicans (a dwindling group) are at each other’s throats.

The problem from the blue state perspective comes down to home values. Homes in New Jersey, New York, and parts of California cost far more than comparable homes elsewhere in the country, which translates to higher property taxes (even before you get to high property tax rates in New York and New Jersey). The SALT deduction has existed for as long as the federal income tax has, but over the decades, Congress has chipped away at it, and indeed, some Republicans considered scrapping it altogether during the 2017 negotiations. Conservative members from lower-tax states have little sympathy for people buying multi-million-dollar Manhattan apartments, Short Hills tudors, or Bay Area ranch houses. In the end, negotiators settled on the $10,000 cap.

But the blue state Republican delegations took some hits in recent weeks: Elise Stefanik, a New Yorker and member of House G.O.P. leadership, appears on a glide path to the U.N. ambassadorship, and thus won’t be around for tax bill negotiations. Three Republicans from New York and at least one from California lost reelection two weeks ago. (When all the votes are counted, California might lose as many as three Republican incumbents.) Meanwhile, three members of the blue state Republican delegations currently sit on the Ways and Means Committee, which has jurisdiction over federal tax law, where they’re ostensibly poised to influence the actual drafting of the bill: New York’s Claudia Tenney and Nicole Malliotakis, along with Californian Michelle Steel. (Steel’s reelection race is still outstanding, however, and it’s unclear whether she will be returning to the House.)

It’s too soon to speculate about whether Democrats will support another Trump tax cut, to the extent they’re relevant to this process at all, but no Democrats voted for the 2017 version. They winced in particular at that legislation’s slashing of corporate tax rates. They also chafe at Republicans’ “deficits for me and not for thee” approach, whereby G.O.P. members are happy to blow a hole in the budget for their top economic priority (tax cuts), but threaten to shut down the government over Democrats’ preferred mode of deficit enhancement (entitlements).

It’s still worth noting that the cap affects the constituents of the most powerful Democrats: soon-to-be-Senate Minority Leader Chuck Schumer, D.S.C.C. chair contender Kirsten Gillibrand, House Minority Leader Hakeem Jeffries, and speaker emerita Nancy Pelosi. But if past is prologue, they’ll be locked out of negotiations.

So even though red state Republicans have the numbers advantage over their blue state brethren—to say nothing of Democrats—the margin will matter. The question is how much, and whether the beleaguered blue state Republicans, with Trump’s apparent backing, can leverage their meager numbers to win a war they’ve been waging unsuccessfully for seven years. After all, this past Congress it only took a handful of members to defenestrate then-Speaker Kevin McCarthy. This time, at least, the drama will have nothing to do with Matt Gaetz.