Republicans passed a budget plan in the House to advance President Trump’s legislative agenda, but the real challenge lies ahead. Congressional leaders must balance Trump’s costly proposals, like tax cuts and tips tax elimination, against his commitments to protect Medicare and Medicaid from cuts. While Trump appeared indifferent to debt concerns, many Republicans demand fiscal restraint. The House is tasked with drafting legislation that meets spending targets, while the Senate must create its own budget plan. Both chambers want to unify their approaches, with differing preferences on tax cuts and spending. Achieving consensus is critical to avoid jeopardizing Trump’s agenda.
The budget proposal that Republicans managed to pass in the House on Tuesday night marks the initial move towards advancing President Trump’s legislative agenda.
However, despite the tense atmosphere surrounding the narrow vote, that was merely the straightforward aspect. Now, Republican leaders face the challenge of identifying which of Mr. Trump’s priorities can be integrated into a substantial bill they aim to push through Congress.
This will be an immensely challenging and politically delicate endeavor that must balance the president’s requests for numerous costly initiatives — such as abolishing the tax on tips and permanently extending the 2017 tax cuts — against his commitments to safeguard programs like Medicare and Medicaid from reductions.
Although Mr. Trump has not shown much regard for debt or deficits, many Republicans whose votes are crucial for advancing the legislation through Congress do care. They have indicated that they will not support any proposals that significantly increase the deficit.
What comes next?
House Republicans will focus on drafting the legislation outlining the policy changes necessary to meet the spending targets specified in their framework. Before the House votes on this legislation, the Senate must also approve its own framework. The final outcome would be protected from a Senate filibuster, enabling Republicans to navigate around Democratic resistance and pass it with a simple majority.
However, achieving consensus between the two chambers may present challenges. Republican leaders in both the House and Senate have differing views on how best to promote Mr. Trump’s agenda. House Republicans are eager to pass what the president refers to as “one big, beautiful bill,” incorporating significant tax cuts and investments in immigration enforcement alongside spending reductions. In contrast, Senate GOP leaders are inclined to move swiftly to increase funding for military and border security efforts, followed by a separate extensive bill that would make the 2017 tax cuts permanent.
Mr. Trump has frequently wavered on which approach he favors. After supporting the House outline on social media last week, he informed reporters at the White House on Tuesday that he was “considering” both the plan the House was pushing forward and a different proposal the Senate approved last week that would address the border and defense aspects of his domestic agenda.
“I’m looking at both, and I’ll make choices,” Mr. Trump stated, adding that “each of them has elements that I like.”
Selecting which taxes to reduce
Mr. Trump has primarily concentrated on the tax aspects of the legislation. While campaigning, he not only pledged to extend the cuts signed into law in 2017 but also promised to abolish taxes on tips, Social Security benefits, and overtime pay. These proposals are all exceptionally costly.
The framework adopted by the House on Wednesday sets a $4.5 trillion ceiling on the tax cut, aiming to appease fiscal conservatives who have stated they will not support legislation that leads to a substantial increase in the deficit.
Continuing the 2017 tax law is projected to cost approximately $4 trillion over a decade, while several other highly sought-after business tax breaks will consume another few hundred billion. This leaves a limited portion of the budget for the assortment of other tax cuts Republicans aspire to include in the legislation, such as eliminating the tax on tips and lifting the $10,000 cap on the state and local tax deduction.
Moreover, Mr. Trump has insisted on making these tax cuts permanent, a point he reiterated on Wednesday.
The blueprint from House Republicans does not provide assurance for permanence. Senate Republicans have not yet unveiled a budget plan that would address tax reductions at all, but chamber leaders have indicated that making the tax cuts permanent will be a top priority.
Navigating Trump’s commitment to safeguard Medicare and Medicaid
A budget framework merely outlines the general boundaries for fiscal policy legislation, so the plan accepted on Tuesday did not specify the concrete changes House Republicans intend to implement to achieve their spending objectives.
However, it directs the Energy and Commerce Committee, which is responsible for overseeing Medicaid and Medicare, to generate at least $880 billion in cuts. This accounts for nearly half of the $2 trillion in expenditure reductions that Republican leaders have assured their most conservative members will be incorporated into the legislation to offset the cost of tax cuts.
While some Republicans have denied any intention to slash programs for the low-income, the total revenue they plan to raise would almost certainly necessitate cuts to at least one such program.
This would starkly contradict Mr. Trump’s repeated assurances that he would not reduce funding for Medicare or Medicaid.
“Medicare, Medicaid — none of those programs will be affected,” he claimed last week in an interview with Sean Hannity. “We won’t have to.”
An analysis by The New York Times revealed that even if the committee were to cut everything outside of healthcare to zero, it would still fall short by over $600 billion.
Margot Sanger-Katz contributed reporting.