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Early Saturday morning, the Senate passed a concurrent resolution on the budget, or a proposed agreement between the House and Senate on how much to spend during the upcoming fiscal year. While both chambers have to adopt identical budget resolutions before they take effect, the resolution provides a key preview of Republicans’ plans for major tax and spending cuts.
Fifty-one of the chamber’s 53 Republican members voted in favor of the resolution, including both of Alabama’s senators, Katie Britt and Tommy Tuberville. All 45 Senate Democrats and both independents, Angus King, I-Maine, and Bernie Sanders, I-Vermont, voted against it.
In a video posted to Britt’s social media accounts at 3:16 a.m. Saturday, the senator said the resolution set the stage for reconciliation which could be an “opportunity to make sure we’re working diligently to secure our border, that we have a strong national defense, that we’re not just energy independent but energy dominant.”
“We’re going to be able to extend the Tax Cuts and Jobs Act, making sure that hard-working Americans can keep more of their hard-earned dollars,” Britt stated.
The signature legislation of President Trump’s first term, the Tax Cuts and Jobs Act of 2017 contained hundreds of billions of dollars in tax cuts for individuals all set to expire this year in order to work around the “Byrd Rule.”
Limits on what bills can be passed under reconciliation using just a simple majority of the Senate, the Byrd Rule is normally interpreted as excluding policies that increase the deficit outside of a budget resolution’s typical ten year window.
Extending the TCJA tax cuts, according to one 2024 estimate by the Congressional Budget Office, would increase the federal deficit by around $4 trillion. Republican senators, however, have pushed to let Senate Budget Committee Chair Lindsey Graham, R-South Carolina, rule that extending the tax cuts won’t increase the deficit.
In a public statement, Graham said he has “determined that current policy will be the budget baseline regarding taxation.” Because the TCJA tax cuts are current policy, this means extending them another decade wouldn’t be viewed as increasing the deficit despite absolutely monumental effects on projected revenue.
Under the traditional “current law” standard, where the effects of new legislation are compared to what happens under the laws currently on the books, renewing the tax cuts would reduce revenue by an estimated $3.8 trillion. That $3.8 trillion would be in addition to $1.5 trillion in cuts explicitly authorized by Saturday’s resolution.
Policy analysts Romina Boccia and Dominik Lett with the conservative Cato Institute called the move “playing budget games with America’s fiscal future” and wrote that a future Democratic Senate “could pass a one-year, temporary Medicare-for-All package and then extend it in the subsequent year, claiming it costs nothing.”
The chair of the House budget committee, Rep. Jodey Arrington, R-Texas, similarly said the move “sets a dangerous precedent by direct scoring tax policy without including enforceable offsets.” Steve Wamhoff, federal policy director for the Institute on Taxation and Economic Policy, complained that “Congressional Republicans want to enact trillions of dollars of tax cuts benefiting the wealthy without paying for them.”
A recent brief from ITEP suggests that renewing the TCJA would save the average family in the third quintile by income just $1,020 in 2026, compared to an average savings of $80,680 for families in the top one percent.
In Alabama specifically, the think tank estimated that even families between the 80th and 95th percentiles would pay just an average of $2,840 less in taxes annually, compared to an estimated $49,870 tax cut for the richest one percent.
One 2022 paper by economists with the Joint Committee on Taxation and Federal Reserve Board also found that, in the years immediately after the TCJA was passed, labor earnings increased for the top ten percent of earners, especially executives, but “do not change for workers in the bottom 90 percent.”
“No matter how these tax cuts are financed, the result will hurt most working families, especially low-income households,” Josh Bivens of the Economic Policy Institute argues. “The most damaging way to finance TCJA extensions would be with spending cuts for programs like SNAP or Medicaid.”
While some Republican politicians have promised not to vote for cuts to the nation’s premier social insurance programs, Saturday’s resolution still retains the instruction to the House Committee on Energy and Commerce, which oversees Medicaid and Medicare, to find $880 billion in cuts over the next ten years.
According to the CBO and other experts, the House Committee on Energy and Commerce simply doesn’t oversee enough funding on programs besides Medicaid and Medicare to cut $880 billion without touching either program. Robyn Hyden, the executive director of progressive think tank Alabama Arise, frankly stated in a press call last month that Alabama “would have to make major cuts to our state Medicaid program if we experienced a federal cut.”
However, one amendment described by its author, Sen. Dan Sullivan, R-Alaska, as an attempt to “strengthen and improve Medicaid for the most vulnerable populations, and strengthen Medicare so that it’s available for future generations” was approved. Sullivan’s amendment would allow the chair of the Senate budget committee to create a “deficit-neutral reserve fund” to protect the health insurance programs.
The resolution passed by the Senate on Saturday would also increase spending on the Department of Homeland Security, the Department of Justice, and the Department of Defense by $150 to $175 billion each. In total, the Committee for a Responsible Federal Budget places the price tag of the Senate’s resolution at around $5.8 trillion between the increased spending and new and renewed tax cuts with $4 billion in proposed cuts, compared to $2.8 trillion for the House’s version with $2 trillion in cuts.
However, as Arrington’s disdain for the “current policy” workaround and the gap between the House and Senate’s proposals may suggest, the two chambers will still have to work closely together to arrive at a single budget resolution.
“If we’re going to win, we got to play on both sides of the ball,” Senate Majority Leader John Thune, R-South Dakota, told reporters.
