The House of Representatives has narrowly approved a $5.8 trillion budget resolution, ostensibly ensuring the permanence of President Donald Trump’s tax cuts, which were on the brink of expiration. This resolution, which spans a decade, faced an uphill battle, with the outcome appearing uncertain until the last moment.
Should these tax cuts cease to exist at the year’s end, taxpayers could be facing a staggering 22% increase in their tax bills, alongside a 50% reduction in guaranteed deductions. Moreover, the child tax credit would plummet from $2,000 to $1,000 per dependentâan alarming prospect for many families, as previously reported by The Center Square.
House Speaker Mike Johnson, a Republican from Louisiana, was forced to delay the vote originally scheduled for Wednesday night after a significant number of Republicans expressed reluctance to support the bill, which includes a $5 trillion increase to the debt ceiling.
When the vote finally occurred on Thursday morning, it resulted in a narrow 216-214 margin, with only two RepublicansâReps. Thomas Massie (KY) and Victoria Spartz (IN)âopposing it.
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Johnson managed to sway the dissenting hardliners by promising deeper spending cuts than the bill initially stipulated.
The Senate’s amendment to the House’s $4.5 trillion budget resolution preserves the Houseâs savings targets of $1.5 trillion in committee cuts but sets only a modest $4 billion savings floor for its committees. This amendment recalibrates the fiscal calculations regarding the extension of the 2017 Tax Cuts and Jobs Act. By adopting a “current policy baseline,” which interprets the extension as a continuation of existing law rather than a new fiscal initiative, the Senate’s revised resolution could theoretically reduce the budget’s overall cost by $3.8 trillion.
Furthermore, this resolution grants Senate committees an additional $1.5 trillion to allocate, thereby facilitating the permanence of Trumpâs tax cuts under the pretense that the extension’s costs are effectively zero.
Typically, both chambers agree upon identical budget resolutions, establishing uniform savings targets for House and Senate committees before progressing through the budget reconciliation process. However, Senate Majority Leader John Thune and Johnson opted for a dual-track strategy, sidestepping some alignment issues to expedite the realization of Trump’s fiscal agenda.
Critics have labeled this “current policy” approach a mere gimmick. The Congressional Budget Office has estimated that the Senate’s plan could ultimately contribute an additional $37 trillion to the national debt over the next 30 years, representing a more than 100% increase from current figures.
The Committee for a Responsible Federal Budget cautioned that the Senate’s proposal could inflate the federal deficit by at least $5.8 trillion over the next decade, an amount comparable to the combined costs of the 2017 TCJA, the CARES Act, the American Rescue Plan, and the Bipartisan Infrastructure Law.
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âThe Senateâs justificationsâclaiming they need flexibility, that this is merely a preliminary step to unlock the process, and their promises of future trillions in spending cutsâare unconvincing,â remarked CRFB President Maya McGuineas. âTheir reliance on the dubious âcurrent policyâ tactic should be a red flag for any fiscal conservative, indicating a lack of genuine intent to realize necessary savings.â
Democrats have raised alarms that the concurrent resolution mandates cuts to Medicaid, as it requires the House Energy and Commerce Committee to identify $880 billion in reductions.
The passage of this resolution marks the commencement of the budget reconciliation process in earnest, as both House and Senate committees gear up to draft specific legislation that will fulfill the spending and savings requirements to implement Trump’s tax, border, and energy policies.
Syndicated with permission from The Center Square.
