Senate Republicans on Wednesday rolled out a 70-page blueprint to advance President Trump’s tax agenda, along with directions that could pave the way for more than a trillion dollars in cuts to government spending.
The resolution comes after weeks of negotiations between House and Senate Republicans to reach a compromise on how to enact the president’s priorities. Republicans are pushing to quickly adopt the resolution to kick-start a complex process that will allow them to eventually move major spending and tax cut legislation through Congress without Democratic support.
However, some instructions in the measure underline a few of the differences both chambers will need to hammer out in the coming weeks as they look to assemble the planned package.
Here are five things to know about the framework.
Trump tax cuts
Senate Budget Committee Chair Lindsey Graham (R-S.C.) said in a statement accompanying the release of the resolution that Republicans intend to permanently extend Trump’s signature 2017 tax cuts.
“This will allow the tax cuts to be permanent — which will tremendously boost the economy,” he argued, as Republicans have sought to make the case that their tax cuts are “pro-growth.”
Graham also said he has “determined that current policy will be the budget baseline regarding taxation,” moving forward with an accounting method that would allow the proposed tax cut extensions to appear costless because they’d be considered current policy. That would allow the Senate to enact them without needing to offset them in the bill.
The Senate’s instructions also made changes from their previous resolution that could allow for further significant tax cuts.
Fiscal hawks and Democrats have loudly sounded alarm over the accounting method, pointing to projections that show extending the tax cuts could add trillions of dollars to the nation’s deficits in the coming years.
By contrast, the House’s instructions allow its tax-writing committee up to $4.5 trillion for changes that could increase the deficit, along with proposed spending cuts that would ride with the tax cuts. Top Republicans had previously raised concerns that the cap would not allow for permanency for the tax cuts, noting projections that place the cost estimates above the cap amount.
In remarks to reporters earlier this week, House Budget Committee Chair Jodey Arrington (R-Texas) said he also supports “making tax cuts permanent and equal to the way [the Congressional Budget Office (CBO)] treats spending.”
“CBO treats spending on current policy, but I only am open to that if we offset the cost of tax cuts so we don’t increase the deficit,” he said.
Spending cuts
The resolution includes different instructions for the House and Senate for spending cuts over roughly the next decade.
The House’s instructions call on various committees to find at least $1.5 trillion in savings, while leaning on its Agriculture, Education, and Energy and Commerce committees to find ways to reduce the deficit. It also retains language in the House’s previous resolution calling for the cap on tax cuts to be reduced if eventual cost-cutting recommendations from committees don’t total at least $2 trillion.
The Senate’s instructions call for at least $4 billion in cuts. They task committees on Agriculture, Banking and Housing, Energy and Natural Resources, Health and Education to find at least $1 billion each in a move that some argue is meant to provide them with more flexibility when it comes time to write the expected bill. The addition of the Senate Committee on Banking, Housing, and Urban Affairs to that group of committees is new for the Senate’s instructions.
Conservatives on the House side had already been grumbling about the rumored move to create competing instructions across the chambers ahead of the resolution’s release.
“Then it will just set it up for failure down the road, so you might as well work it out now,” Rep. Warren Davidson (R-Ohio) told The Hill earlier this week. “Bad news doesn’t get better with time.”
Debt limit
The House instructions call for raising the debt limit by $4 trillion, while the Senate instructions detail a $5 trillion increase to the debt ceiling.
The debt limit caps how much money the Treasury Department can owe to pay the country’s bills. It was reinstated in January after being suspended for a year and a half under a previous bipartisan deal struck between former President Biden and House GOP leadership.
Absent congressional action, recent projections have indicated the nation risks defaulting on its debt later potentially in the summer or early fall — an outcome that experts have warned would mean catastrophic effects for the economy.
Republicans say it’s important to raise the debt ceiling through the special process known as budget reconciliation, which bypasses the Senate filibuster and thus would avoid handing Democrats any leverage in the process.
Graham told reporters on Wednesday that a $5 trillion increase to the debt limit should stave off the threat of default through the coming midterm elections. Doing so would help Republicans avoid having to give into demands for concessions from Democrats in exchange for their help to raise the nation’s borrowing limit.
But there could be resistance from hard-line conservatives who have traditionally had a hard time voting for debt limit increases to agree to a higher number than proposed in the House.
Medicaid
The resolution still contains instructions from the House’s earlier budget resolution that calls for its Committee on Energy and Commerce, which has jurisdiction over Medicaid, to submit recommendations to reduce the nation’s deficits by at least $880 billion.
The Congressional Budget Office said in a report last month that House Republicans would have to make cuts to Medicaid in order to cut $2 trillion in spending over the next decade.
However, Republicans in both chambers have raised concerns over potential cuts to the program, posing a possible hurdle for leadership as they look to move quickly to craft and pass the major legislation this year.
Some funding boosts
The resolution also allows for funding increases for a list of committees that Republicans have said will be aimed at boosting defense and the military, while providing funding for Trump’s border and deportations plans and other measures.
Senate Republicans say their instructions allow for upward of $340 billion in spending for those goals, while the House GOP’s instructions still outline caps for their boosts at around $300 billion.
