The resolution allows for $4.5 trillion in tax cuts and mandates up to $2 trillion in spending cuts, meaning up to $2.5 trillion could be added to the nation’s debt over 10 years with these two items combined. The resolution also proposes a $4 trillion increase to the national debt ceiling. Despite several GOP leaders casting doubt on passage, only one Republican voted with all Democrats against the bill in the end (217-215).
Next, the Senate must approve the House budget resolution, which is expected to be done in early April. Once both chambers agree on a deficit increase amount, drafting of actual provisions can begin as no specifics are laid out in the budget resolution process. The House and Senate must ultimately agree on contents as well to finalize the bill and send it for the President’s signature.
To help lower the bill’s cost, it’s possible Congress will attempt to codify the Department of Government Efficiency’s (DOGE) reported savings and formally claw back previously appropriated funds. Some Senators are also trying to assert that extending TCJA has no cost; however, it would reduce federal revenue by an estimated $4.6 trillion over 10 years. This proposed new method of scoring the bill may also be rejected by special reconciliation rules that will be used to pass the bill.
President Trump laid out the following tax proposals in his address to Congress on March 4 that he hopes will be included:
Trump also suggested that the bipartisan CHIPS Act should be repealed (along with the Inflation Reduction Act of 2022 that supports clean energy investments). The CHIPS Act provides incentives for domestic semiconductor research and manufacturing. The President has also previously mentioned ending both the tax preference on carried interest and tax breaks for billionaire sports team owners. Senate Finance Committee Chair Mike Crapo recently mentioned restoring and making permanent research and development expensing, which was altered in the TCJA of 2017 to require capitalization and amortization. His other two priorities include reinstating full bonus depreciation that began phasing down in 2023 and a more favorable interest expense limitation calculation, both of which were used as pay-fors in the original TCJA as well.
Whether these add-ons outside of TCJA extensions find their way into a final bill has yet to be seen. There are budgetary and reconciliation rule constraints, along with disagreement on some items within the GOP. The TCJA continues to be a main focus, with House Ways and Means Chairman Jason Smith recently reiterating that “failure is not an option” regarding its extension. In the future, President Trump reportedly would like to eliminate the individual income tax for those earning less than $150,000 by continuing tariff increases.
Budget resolution talks are still ongoing, but the House is reportedly moving forward with drafting specifics of the reconciliation bill in hopes a deal can be quickly reached. Memorial Day is the newly stated goal for the bill’s enactment.
Published: 03/18/2025
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