WASHINGTON — Senate Republicans are on track to adopt a budget resolution this weekend outlining over $5 trillion in deficit-busting tax cuts sought by corporate America, pressing forward with their legislative agenda even as President Donald Trump’s tariffs threaten to cause a recession and hike prices for millions of consumers.
The vote will likely occur on Saturday after fierce debate on the Senate floor and an overnight marathon session of votes on amendments offered by Democrats designed to divide Republicans in hopes of making fodder for attacks ahead of next year’s midterm elections.
“This resolution is the first step toward a final bill to make permanent the tax relief we implemented in 2017 and deliver a transformational investment in our border, national and energy security — all accompanied by substantial savings measures and commonsense reforms to our government,” Senate Majority Leader John Thune (R-S.D.) said in a speech on the Senate floor.
Republicans are rushing to pass their tax cut package amid growing fears of economic calamity at home and abroad, which could derail their agenda. Federal Reserve Chair Jerome Powell said Friday that Trump’s unprecedented tariffs are likely to raise inflation and slow U.S. economic growth. He warned that higher inflation could be persistent, not temporary. JPMorgan also raised its odds for a U.S. and global recession to 60%.
The budget resolution calls for permanently extending Trump’s 2017 tax cuts and cutting an additional $1.5 trillion in taxes. It would spend over $300 billion on defense and energy and hike the debt limit by $5 trillion, an eye-popping sum for a party that claims to be concerned about the nation’s fiscal health and far greater than what former President Joe Biden added to the debt in his four years in charge.
Like the House GOP version, the Senate budget blueprint includes instructions for spending reductions to finance the tax cuts, although it is more vague about the exact dollar amounts. However, Democrats warned the GOP will ultimately slash government safety net programs like Medicaid and food benefits that millions of vulnerable Americans rely on.
“Last night, Senate Republicans began the process to pass legislation eviscerating Medicaid, crushing the health care of the young and old alike, and squandering their future and our future,” Senate Minority Leader Chuck Schumer (D-N.Y.) said Friday.
There are several other obstacles Republicans face before they can begin crafting the bill.
Republicans’ controversial use of a “current policy baseline” to claim that extending the 2017 tax cuts permanently would not increase federal budget deficits by about $4 trillion over a decade could face a challenge from the Senate parliamentarian. The official, who advises the chamber on its rules, has not officially greenlit the novel accounting method. GOP leaders plan to instead go “nuclear” and ignore the parliamentarian over the objections of Democrats.
The use of the budget gimmick will also meet resistance from some conservative House Republicans, who have been fulminating against the idea for weeks. Both chambers need to pass the same resolution to unlock the reconciliation process that allows the majority party to sidestep a filibuster.
Rep. David Schweikert (R-Ariz.), chair of the House-Senate joint economic committee, called the current policy idea completely bogus back in February.
“It is an intellectual fraud to say, ‘Let’s ignore the actual law and let’s just keep doing what we’re doing because it’s convenient,’” Schweikert said in remarks he touted on his House website.
“If you use current policy to get tax permanence and pretend that there’s no adverse impact to the deficit — that is, to pretend that you’re not increasing the deficit — then that’s a gimmick,” House Budget Committee Chair Jodey Arrington (R-Texas) told reporters last week.
For these House Republicans, the budget trick is no replacement for sharp spending cuts to address the deficit, including to programs like Medicaid. The House budget resolution called for as much as $880 billion in cuts to the program, which pays health costs for 70 million Americans.
“If the Senate thinks they’re going to come back and deliver a product that is fat on taxes and is not doing what needs to be done on spending, that’s dead on arrival from my perspective,” Rep. Chip Roy (R-Texas), a member of the conservative House Freedom Caucus, told The Wall Street Journal this week.
But several Senate Republicans have expressed concerns about slashing Medicaid benefits. Sen. Josh Hawley (R-Mo.) briefly held up a vote to advance the budget resolution on Thursday to obtain a commitment from Trump not to cut the program’s benefits. Of course, Democrats and Republicans disagree on what constitutes a “cut” to the program. Republicans support instituting additional work requirements and other reforms to Medicaid.
“Tonight I spoke for a good bit with President Trump about Medicaid – he told me the House will NOT cut Medicaid benefits and the Senate will NOT cut Medicaid benefits and he won’t sign any benefit cuts,” Sen. Josh Hawley (R-Mo.) wrote in a social media post. “I hope congressional leadership will get the message.”
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All these disagreements will likely come to a head when it is time to actually write the legislation. Republicans hope to do that once the narrowly controlled GOP House approves the resolution.
Trump has refused to pick sides this year as Republicans in the House and Senate have clashed about the best way to enact his agenda. Instead, Trump’s main priority in the legislation has seemed to be an extension of the government’s borrowing limit. He addressed both House Speaker Mike Johnson (R-La.) and Thune, the Senate leader, during his tariff announcement on Wednesday.
“We have to get the debt extension passed, and I know you’re going to be able to do that, Mike, and it’s very important that you do that and all of the other things that the Senate budget plan gives us along with working because I know they’re working together, John and Mike,” Trump said. “And the two bills are going very well together. We need to get our shared priorities done, including certain permanent tax cuts. We want the tax cuts to be permanent spending cuts.”