House Republicans released a plan on Wednesday for enacting President Trump’s sweeping fiscal agenda, laying out initial budget targets for a bill that would cut taxes, slash spending on health care for the poor and raise the debt limit.
The budget blueprint calls for legislation that would add roughly $3 trillion to the deficit over a decade while imposing deep cuts in spending on health care and food programs for low-income people. That would help pay for $4.5 trillion in tax cuts, a huge sum that Republican tax writers have nevertheless said will constrain their and Mr. Trump’s ambitions. It also calls for raising the debt limit, the statutory cap on what the government can borrow to finance its debt, by $4 trillion, a heavy lift among anti-spending conservatives.
House Republicans have struggled for months to come up with the numbers they released Wednesday, and even now have yet to make major decisions that would determine whether it can win approval given their razor-thin majority. Fiscal hawks have clashed with moderates in the party over how much spending to cut and how much more the United States can borrow.
They rushed out their plan on Wednesday just as the Senate Budget Committee was meeting to consider its own, much narrower fiscal blueprint, having decided to move forward ahead of the House given the many divisions that have delayed action there. The Senate plan is focused on increasing spending on immigration enforcement and the military.
Republicans in Congress must agree to a budget outline to unlock a special legislative procedure, known as reconciliation, that allows them to blow past Democratic opposition in the Senate and push through a fiscal package on a simple-majority vote.
At the center of the differences between the chambers is whether to try to pass a tax cut quickly. House Republicans want to, while Senate Republicans have made clear they are happy to take their time with the tax code. Many of the tax cuts enacted in 2017 during Mr. Trump’s first term expire at the end of the year, creating a hard deadline for Congress to extend them or effectively impose a tax hike on many Americans.
But simply preserving current tax rates on individuals, as well as large and popular tax benefits like the child tax credit, could cost more than $5 trillion over a decade. Cutting taxes any further would add to that price tag, and Representative Jason Smith, the Ways and Means chairman, has in recent days complained that even a $4.7 trillion budget for the tax cuts would be insufficient.
The $4.5 trillion maximum for tax cuts set by the House budget plan would require Republicans to rein in their plans. They have already discussed the possibility of extending some of the 2017 tax cuts only temporarily and are planning to ignore many of Mr. Trump’s ideas for additional tax cuts, like not taxing overtime pay.
Republicans trying to squeeze their favorite tax cuts into the bill, including lawmakers from New York and New Jersey who want to lift the limit on the state and local tax deduction, will now have to compete for precious budget space.
At the same time, House Republicans plan to pursue deep cuts to Medicaid, the health care program that covers nearly 90 million Americans. The plan instructs the Energy and Commerce Committee, which oversees Medicaid, to come up with at least $880 billion in cuts, more than half of the reductions laid out in the budget outline. Cutting spending on programs for poor Americans while approving tax cuts that provide their largest benefits to the rich could pose a political problem for Republicans, some of whom have worried about deeply cutting Medicaid.
The outline also calls for $300 billion in new spending on defense and immigration enforcement. House Republicans now plan to consider it in the Budget Committee on Thursday.
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