Overview
Reconciliation Heats Up: This week, Senate GOP leadership released their amendment to the House budget blueprint, which could be taken up and passed later today after a series of amendment votes. The amended budget resolution does not require a certain level of spending cuts, instead noting a preference for $2 trillion in cuts over the course of the next decade, leaving the final level of cuts to be negotiated later. Additionally, the resolution includes language to reduce the cost of the package if the House and Senate are unable to find $2 trillion in savings. However, some members are hopeful that savings could reach $6.5 trillion.
Furthermore, this plan only gives the Senate Finance and House Ways and Means Committees a $1.5 trillion spending cap, meaning that they would have to use “current policy baseline” accounting to zero-out the cost of extending the Tax Cuts and Jobs Act (TCJA) — a priority for the President. The release of this plan also means that Senate Republicans have decided not to wait for the Senate Parliamentarian’s ruling on whether they can use the “current policy baseline” accounting strategy. According to Senate leadership, the Chair of the Senate Budget Committee, Sen. Lindsey Graham (R-SC), has the authority to set a current policy baseline in the resolution without the Parliamentarian’s endorsement.
Several spending hawks in the Senate had expressed concerns about the Senate’s new framework, claiming that without specified cuts baked into the plan, they doubt the necessary cuts would be made. However, after receiving assurances from the President during a meeting on Wednesday, they are expected to support the measure. But many House Republicans share those concerns and remain unhappy with using the “current policy baseline” strategy. With such a slim majority in the House, Speaker Mike Johnson (R-LA) cannot afford to lose more than a handful of votes on the resolution. President Trump has endorsed the Senate’s resolution publicly, which places pressure on the House to pass the resolution so the process can move forward.
Revenue Watch: Importantly, the Senate’s new budget resolution clarifies that savings from executive actions can be included towards the package’s total spending cuts. This change involves the big news of the week: savings from President Trump’s “Liberation Day” tariffs. According to preliminary estimates by J.P. Morgan, if they stay in place at current levels, Trump’s tariffs could raise just under $400 billion in revenue.
These total cuts could also include clawbacks of unobligated funding made through a rescission package, which would codify many of DOGE’s funding cuts. Senate Republicans reportedly discussed the formal rescissions process with OMB Director Russ Vought on Thursday. Republicans in both chambers have been excitedly waiting for the package, which could be sent over from the White House any day now and only needs a simple majority to pass Congress.
Impoundment Investigation Request: The top Democrats on the House and Senate Budget Committees have submitted a formal request to the Government Accountability Office (GAO) that it investigate several Trump administration actions that may have violated the Impoundment Control Act. This issue has long been a contention between Congress and the executive branch, but recent actions from DOGE and the Office of Management and Budget have put the issue back in the spotlight.
