House Republican leaders took the first step Wednesday toward enacting trillions of dollars in tax cuts and raising the nation's $36 trillion debt limit, offering a plan that risks rankling quarreling factions in the party.
The proposal aims to smooth the passage of President Donald Trump's top legislative priorities: extending expiring individual and business taxes passed in 2017, boosting defense and border security spending and cutting other spending.
The $2 trillion in cuts in the budget plan would likely require scaling back bedrock social safety net programs such as Medicaid health coverage for the poor and disabled and food assistance for low-income Americans, said William Hoagland, a former Republican staff director for the Senate budget committee who now works for the Bipartisan Policy Center.
Passing any measure is far from certain, given Republicans' narrow and fractious majority. Democrats are expected to be unified in opposition. The defection of any two Republicans could scuttle the plan.
House Speaker Mike Johnson told reporters he will use the coming days to rally his GOP lawmakers behind the plan.
"This will unlock the process and get us moving, so we are excited about it," he said. "We will need the week to work through it and talk to members.
The plan allows the House tax committee to cut taxes by $4.5 trillion over ten years — though it could approve more breaks if it finds other savings from welfare or other programs. That $4.5 trillion threshold gives Republicans only enough runway to do a straight extension of Trump's expiring 2017 tax cuts. To make any other tax code changes — including eliminating taxes on tips or fulfilling any of Trump's other campaign pledges — they'd need to find spending cuts or tax increases to offset the cost.
The plan requires at least $1.5 trillion in spending cuts over a decade in programs such as Medicaid, Obamacare subsidies and the Supplemental Nutrition Assistance Program commonly referred to as food stamps.
To mollify fiscal hawks, the plan would reduce the size of the tax cuts if Congress doesn't meet a higher goal of cutting at least $2 trillion in spending.
The budget plan doesn't specify what programs should be cut but sets minimum targets for spending reductions for individual House committees.
The House panel in charge of health programs is required to cut at least $880 billion. That would far exceed the savings from merely rooting out fraud and introducing work requirements to Medicaid, according to previous estimates by the nonpartisan Congressional Budget Office.
The top Democrat on the House Energy and Commerce Committee, Frank Pallone of New Jersey, charged that level of cuts would "eviscerate" medical care for the poor.
"Millions of Americans will lose their coverage, hospitals will be forced to close, and Community Health Centers will be forced to lay off doctors and nurses," Pallone said.
Trump's priorities
The budget plan mandates a $300 billion increase in spending on defense, immigration enforcement and border security — high priority goals for Trump.
The plan also would fast-track a $4 trillion increase in the debt ceiling, avoiding a catastrophic default on U.S. payment obligations later this year.
Dozens of current GOP lawmakers are opposed to raising the debt ceiling on principle and have never voted to support an increase to the nation's borrowing limit. Previous increases have required bipartisan support.
The debt ceiling came back into effect on Jan. 2 but the Treasury Department can avoid a default by employing accounting measures, possibly into the summer. By using the partisan budget reconciliation process, the GOP would deprive Democrats of any ability to use the debt ceiling deadline to extract concessions. Bills passed with this process cannot be filibustered in the Senate, effectively allowing passage by a simple majority rather than the usual 60 votes needed to end debate.
A handful of fiscal hawks have demanded much larger cuts to non-defense spending in any tax cut bill, while a group of moderate Republicans have said they would not back deep cuts to programs like Medicaid, the government-funded health care program for people with low incomes.
The GOP also has been divided over how high to let the deficit go to accommodate tax cuts.
House Ways and Means Committee Chairman Jason Smith is pushing for as much flexibility as possible on the deficit in order to enact top Trump priorities like eliminating taxes on tipped wages. Flexibility may also be needed to satisfy a group of Republicans mostly from New York, New Jersey and California who want to see an end to the limit on the deduction of state and local taxes. Ending that limit would lead to bigger tax cuts for many property owners in their states.
Senate Republicans, frustrated by weeks of infighting among their House counterparts, are moving forward on their own scaled-back plan this week. The Senate plan would delay tax cuts for now and focus on providing hundreds of billions of dollars for defense and border security paid for by unspecified spending cuts elsewhere.
Senate Republican Leader John Thune had a tepid response to the House budget plan, calling it "a starting point."
"Well, it's a marker. I think it sets broad parameters which can be built upon," Thune added.
Johnson has pressed for combining all of Trump's major priorities in a single package, arguing it would be harder for bitterly divided House Republicans to defect on an up-or-down vote on Trump's agenda.
Democrats say the GOP plans show the party isn't concerned with lowering the deficit but rather with cutting programs the poor rely upon to deliver tax cuts for the wealthy.
"This is a Republican betrayal of the middle class," said House Budget Committee top Democrat Brendan Boyle. "There is nothing to bring costs down. But what they do have is $4.5 trillion of more debt."
Without action by Congress, the lower tax individual rates and higher standard deduction enacted in 2017 will expire at the end of 2025. A host of business tax breaks related to capital expenditures, interest and pass-through companies will also disappear.
