Tax Cuts and Spending Cuts: A Divided House
Top Republicans in the U.S. House of Representatives are planning to move forward this week on President Donald Trump’s tax cuts, but their caucus is divided over the lack of sufficient spending cuts in the budget blueprint passed by the Senate.
Broad Agreement and Divided Stance
There is broad agreement within the party about extending President Donald Trump’s 2017 tax cuts, and funding other elements of Trump’s agenda including new immigration enforcement and military spending. However, a divide remains on how to pay for a measure that nonpartisan budget analysts say will add about $5.7 trillion to the nation’s debt over the next decade.
Deficit Hawks and Medicaid Concerns
Deficit hawks, particularly in the House, are pushing for about $2 trillion in spending cuts over that time period. House Democrats and public health and anti-poverty advocates say that goal will be hard to reach without cutting deeply into the Medicaid program for low-income Americans and those with disabilities.
Stock Market Selloff and Fiscal Concerns
Further complicating matters is last week’s brutal stock market selloff, which followed Trump’s move to impose sweeping new tariffs on imported goods. Economists predict those measures will push prices higher and could trigger a recession.
Reconciliation Process and Spending Cuts
Like the Senate’s Saturday morning 51-48 vote to pass its version of the budget resolution, the tax cuts legislation will use a special budget process — reconciliation — which will allow it to bypass the chamber’s normal 60-vote threshold for most legislation.
House Republicans’ Concerns
Some House Republicans raised questions as to whether the Senate measure stipulates enough spending cuts. The Committee for a Responsible Federal Budget, an outside, nonpartisan think tank, calculated the different plans and found the Senate option required only 0.2% as much in budget cuts as the House resolution.
Top Republican’s Statement
The top Republican on the House Budget Committee, Representative Jodey Arrington of Texas, said in a statement the Senate’s approach to spending cuts was "unserious and disappointing."
House Vote and Senate’s Calculation Method
A House vote is expected this week on the budget process, but in order for it to be successful, the lower chamber must rectify changes between the Senate’s approach and the House version that was passed in February. The Senate’s calculation method, which asserts the cost of implementing the Trump agenda on taxes and other issues is several trillion dollars less than expected because it is an extension of the current Trump tax cuts from 2017, has been criticized by the CRFB nonpartisan analysts, who call it a "gimmick" and "fiscally unprecedented."
Conclusion
The fate of President Trump’s tax cuts and the accompanying spending cuts remains uncertain as the House of Representatives prepares to vote on the budget process. The divide between deficit hawks and those who prioritize tax cuts and other elements of Trump’s agenda will need to be bridged in order to pass the legislation. The consequences of inaction, including a potential default on the national debt, hang in the balance.
FAQs
Q: What is the current state of the tax cuts legislation?
A: The House of Representatives is preparing to vote on the budget process, which will allow the tax cuts legislation to bypass the chamber’s normal 60-vote threshold for most legislation.
Q: What are the main concerns about the Senate’s budget resolution?
A: Some House Republicans are concerned that the Senate’s budget resolution does not stipulate enough spending cuts, and that the calculation method used to determine the cost of implementing the Trump agenda is "fiscally unprecedented."
Q: What are the potential consequences of inaction on the national debt?
A: If the national debt is not addressed, the United States risks defaulting on its debt, which could have severe economic consequences.
Q: What is the current state of the stock market?
A: The stock market has experienced a brutal selloff in recent weeks, following Trump’s move to impose sweeping new tariffs on imported goods.