The Republican-led U.S. Senate approved a budget resolution aimed at making tax cuts from 2017 permanent while significantly reducing government spending. Despite opposition from two Republicans, the resolution passed 51 to 48, enabling tax reforms and military funding aligned with Trump’s agenda. Analysts warn the proposals could increase federal debt by $5.7 trillion, while Republicans estimate $1.5 trillion. The plan also seeks to raise the debt ceiling and includes provisions affecting Medicaid, amid concerns over economic stability and stock market reactions.
Senate Passes Budget Resolution to Make Tax Cuts Permanent
On a pivotal Saturday in Washington, the Republican-controlled U.S. Senate greenlighted a budget resolution aimed at solidifying the tax cuts introduced by President Donald Trump in 2017. This resolution is also designed to drastically decrease government spending.
Key Details of the Budget Resolution
The Senate approved the resolution with a narrow vote of 51 to 48 after a lengthy late-night session. This move paves the way for the ‘budget reconciliation’ process, a legislative shortcut that allows certain bills to be passed without facing obstruction, enabling the advancement of tax reforms, military funding, and border security measures that align with Trump’s agenda.
Lindsey Graham, the chairman of the Senate Budget Committee, expressed optimism, stating, “Tonight, the Senate took a small step toward reconciliation and a big step toward making tax cuts permanent, securing the border, providing essential aid to the military, and reducing unnecessary spending in Washington.”
However, the measure faced opposition from two Republican Senators, Susan Collins and Rand Paul, who voted against it alongside the Democrats. Following this vote, the bill is set to move to the House of Representatives, which is also under Republican control and is expected to deliberate on it in the coming week.
According to independent analysts, if Trump’s proposed measures are enacted, they could inflate the federal debt by approximately $5.7 trillion over the next ten years. In contrast, Senate Republicans estimate a lower cost of $1.5 trillion, arguing that the implications of extending current tax policies, which are scheduled to expire at year’s end, should not be included in the overall cost assessment.
This budget plan also aims to elevate the federal debt ceiling by $5 trillion, a critical decision Congress must make by summer to avert a potential default on a staggering $36.6 trillion debt. To balance the tax cuts, which would increase the deficit, the plan includes provisions to cut spending. However, Democrats caution that these Republican goals could threaten the Medicaid program, which provides health insurance for low-income Americans.
Without an extension of existing tax programs, Republicans predict that average taxpayers could face a tax increase of 22%.
During his initial term, Trump reduced the corporate tax rate from 35% to 21%, a change that does not have an expiration date. In contrast, individual tax cuts were set with time limits to lessen their impact on the deficit.
In response to the Senate’s decision, Senate Democratic leader Chuck Schumer criticized, “Donald Trump has betrayed the American people. Tonight, Senate Republicans joined him in this betrayal. By voting for this bill, Senate Republicans have sided with billionaires against the middle class, in total obedience to Donald Trump.”
Stock Market Reactions and Future Outlook
The legislative debate, which commenced Thursday night, coincided with a considerable decline in stock markets following Trump’s announcement of new tariffs. Economists warn that these tariffs could lead to increased prices and potentially push the U.S. into a recession.
Some Republican lawmakers have voiced concerns that ongoing economic instability might obstruct the implementation of Trump’s proposals if market conditions worsen. “I fear that if we have the same kind of conversation in three weeks, the distraction will be so great that it will slow down what we are trying to do,” said Republican Senator Thom Tillis.
In a six-hour session focused on amendments, Senate Republicans adjusted the bill to include a neutral deficit reserve fund intended to safeguard Medicaid and Medicare for seniors. Nonetheless, they dismissed numerous Democratic amendments aimed at reversing tariffs and bolstering social safety nets such as Medicaid, Medicare, food assistance for low-income women and children, Social Security benefits, and veterans’ support.
Republican Senators Lisa Murkowski, Josh Hawley, and Collins did back some Democratic initiatives aimed at protecting social welfare programs, but their efforts fell short of altering the bill’s trajectory.
If House Republicans follow through on their objectives, Congress could potentially reduce spending by $2 trillion by revising Medicaid and food assistance programs and cutting popular environmental regulations.
The budget proposal also seeks to reinforce security measures at the U.S.-Mexico border and fund initiatives to expedite the deportation of migrants.