Senate Republicans are forging ahead this week with a budget strategy that punts the debate about expiring tax cuts until later in the year.
The House GOP leadership disagrees with the Senate’s two-step approach, preferring to address tax cuts and spending in one giant budget reconciliation bill. But the Senate is getting a jump on the House this week by taking up its fiscal 2025 budget resolution first.
“It’s time to act on the decisive mandate the American people gave to President Trump in November,” Senate Majority Leader John Thune, R-S.D., wrote on X announcing plans to debate the resolution. “Securing the border, rebuilding our defense, and unleashing American energy.”
The House could take up its budget resolution, which allows for tax cuts, next week. It’s not yet clear whether the House leadership has the votes to get the resolution approved.
The Senate resolution would increase spending on defense and border security while increasing deficits by $515 billion, according to a Bipartisan Policy Center analysis. The resolution spells out only minimal spending cuts although senators say those are intended to be starting points.
The House resolution would allow for up to $4.5 trillion in tax cuts while directing spending cuts of at least $1.5 trillion. An amendment adopted at the request of the House Freedom Caucus would reduce the tax cuts to $4 trillion unless the spending cuts reach $2 trillion.
House Majority Leader Steve Scalise, R-La., affirmed the House GOP’s one-bill strategy Tuesday, saying that it would put “all of Trump’s priorities in one big, beautiful bill.”
On Wednesday morning, Trump emphatically endorsed the House Republican strategy over the Senate GOP's.
The House budget resolution "implements my FULL America First Agenda, EVERYTHING, not just parts of it! We need both Chambers to pass the House Budget to 'kickstart' the Reconciliation process, and move all of our priorities to the concept of, "ONE BIG BEAUTIFUL BILL," Trump said in a post on X.
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The House resolution would accommodate tax cuts, but not the permanent extension of the expiring Tax Cuts and Jobs Act provisions that Senate Republicans want, or the additional tax cuts that Trump has promised, including new tax exemptions for tips and Social Security income.
Rep. Adrian Smith, R-Neb., a House Ways and Means Committee member, acknowledged that the TCJA extension may be temporary to fit within the caps set by the budget plan.
“I want to make it go as long as we have votes for and the policies to support,” he told reporters.
He noted that Republicans tried but ultimately failed to make the original TCJA permanent. Setting some provisions to expire at the end of 2025 lowered the bill's impact on federal deficits.
Expiring provisions include lower individual tax rates, a 20% deduction for small business income, and doubling estate tax exemption. A bonus depreciation provision for business expensing also is phasing out.
Extending TCJA for 10 years would cost $3.9 trillion to $4.8 trillion, according to the Committee for a Responsible Federal Budget. Raising the cap on state and local tax deductions, a top priority for some House Republicans, would cost $200 billion to $1.2 trillion. Ending taxes on tips would cost up to $550 billion and ending taxes on Social Security would cost up to $3 trillion. Cutting taxes on overtime pay, which Trump also proposed, would cost up to $3 trillion.
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