Budget: What happened and what happens now?

Based on the latest information, here’s a concise update on the status and what to expect in the Senate as of May 22, 2025.

Status of the Bill

The House of Representatives passed a sweeping domestic policy package, often referred to as the “big, beautiful bill” championed by President Trump, on or around May 18, 2025, after intense negotiations with GOP holdouts. The bill, advanced by the House Ways and Means Committee on May 12, includes:

• Tax Cuts: Approximately $4.1–$4.6 trillion over 10 years, extending and expanding the 2017 Tax Cuts and Jobs Act (TCJA), with provisions like no taxes on tips, Social Security benefits, and overtime, and an increased state and local tax (SALT) deduction.
• Spending Cuts: At least $1.5 trillion, potentially up to $2 trillion, targeting programs like Medicaid ($880 billion), SNAP ($230 billion), and green energy ($100–200 billion), alongside other mandatory and discretionary spending reductions.
• Other Provisions: Increased funding for defense ($150 billion) and border security ($175 billion), and a $4–$5 trillion debt ceiling increase to avoid a default by summer 2025.

The bill passed narrowly (e.g., 217-215 or 216-214 in earlier votes on the budget resolution), with opposition from all Democrats and a few Republicans (e.g., Rep. Thomas Massie). House Speaker Mike Johnson secured support from fiscal hawks by promising deeper cuts in the final legislation.

What Happens in the Senate

The bill now heads to the Republican-controlled Senate (53-47 majority), where it faces scrutiny and potential changes. Here’s what to expect:

1. Reconciliation Process:
• The bill is part of the budget reconciliation process, enabled by the House and Senate adopting identical budget resolutions (finalized April 10, 2025). This allows passage with a simple majority (51 votes), bypassing the 60-vote filibuster threshold.
• Senate committees, particularly the Finance Committee, will review and propose amendments, focusing on aligning the bill with the Senate’s priorities, which initially emphasized $4 billion in cuts but now align with the House’s $1.5–$2 trillion target.
2. Key Senate Dynamics:
• Support: Senate Majority Leader John Thune has vowed to push for significant changes, aligning with the House’s deeper cuts (minimum $1.5 trillion). Most Senate Republicans support extending the TCJA and funding Trump’s border and defense priorities.
• Opposition: Senators Susan Collins (ME) and Rand Paul (KY) voted against the Senate’s earlier budget resolution due to concerns over Medicaid cuts and insufficient spending reductions, respectively. They may push for amendments or oppose the bill unless their concerns are addressed.
• Democratic Resistance: All Senate Democrats are expected to oppose the bill, citing cuts to Medicaid (affecting 72 million Americans), SNAP, and other safety net programs as harmful to low-income families. They argue the tax cuts disproportionately benefit the wealthy (45% of benefits to those earning $450,000+ in 2027).
• Amendments: The Senate’s “vote-a-rama” process allows unlimited amendments, which could delay passage. Democrats may propose amendments to protect Medicaid or block tax cuts for high earners, though these are likely to be rejected by the GOP majority.
3. Potential Changes:
• Spending Cuts: The Senate may push for deeper or more specific cuts to meet fiscal hawks’ demands, potentially targeting additional programs or accelerating cuts (e.g., Medicaid work requirements before 2029).
• Tax Provisions: The Senate could adjust tax cuts, such as the SALT deduction, to gain support from senators in high-tax states like New York and California.
• Clean Energy: Recent posts on X suggest the Senate may further reduce clean energy tax credits (except for nuclear), reflecting GOP priorities to roll back green initiatives.
• Debt Ceiling: The Senate’s resolution allows a $5 trillion debt ceiling increase, higher than the House’s $4 trillion, which may require negotiation to reconcile.
4. Timeline:
• Senate leaders aim to finalize the bill before Memorial Day (May 26, 2025) to meet Trump’s goal of signing it into law. However, the complex negotiations and amendment process could extend this timeline.
• If the Senate amends the bill, it must return to the House for another vote, potentially complicating passage due to the House’s razor-thin majority (e.g., 216-214 on the budget resolution).
5. Challenges:
• Intra-Party Tensions: Fiscal hawks like Rand Paul demand more aggressive cuts, while moderates like Susan Collins and Josh Hawley (MO) worry about Medicaid’s impact on their constituents (e.g., 21% of Missouri residents rely on Medicaid).
• Economic Context: Market turmoil from Trump’s tariffs and recession fears may pressure senators to balance tax cuts with deficit reduction, as the bill could add $3.3–$5.5 trillion to the $36.6 trillion national debt over 10 years.
• Public Opposition: Advocacy groups and constituents are pressuring swing-district Republicans to reject cuts to Medicaid and SNAP, which could influence moderate senators.

Sentiment on X

• Supporters: Some X users praise the bill as a step toward fiscal responsibility, extending tax cuts, and funding Trump’s priorities like border security. They view Senate changes as critical to ensuring deeper cuts.
• Critics: Others warn of negative impacts on clean energy, low-income families, and the deficit, with the bill seen as favoring wealthy taxpayers over social programs.

Critical Perspective

The bill’s passage in the House is a significant step, but the Senate’s review will be contentious. The GOP’s slim majority and internal divisions (e.g., between fiscal hawks and moderates) could delay or alter the bill, especially if amendments significantly change the House’s version. The proposed cuts to Medicaid and SNAP, while partially offsetting tax cuts, risk harming vulnerable populations, with 72 million Medicaid recipients and millions of SNAP beneficiaries potentially affected. The $3.3–$5.5 trillion deficit increase raises concerns about long-term fiscal sustainability, particularly amid economic uncertainty from tariffs. The Senate’s changes could either deepen these cuts, amplifying social impacts, or moderate them to gain broader support, but unanimous Democratic opposition limits bipartisan compromise.

Current Status in the Senate

As of May 22, 2025, the Senate has not yet taken official action on the bill. It is likely to be reviewed soon, given the urgency expressed by President Trump and the reconciliation process. Senate Majority Leader John Thune has indicated support for the spending cuts, suggesting the Senate will work to advance the legislation. However, there are hints that the Senate may propose amendments, particularly to tax provisions, which could lead to negotiations with the House.

Potential Changes and Controversy

The bill includes cuts to programs like Medicaid and SNAP, estimated at up to $1.7 trillion over 10 years, alongside tax cuts that could add over $3 trillion to the deficit. This has sparked debate, with critics arguing it disproportionately affects low-income families, while supporters see it as necessary for fiscal responsibility. The Senate’s potential tweaks, especially on tax policies, may intensify these discussions, reflecting the complexity of balancing economic and social priorities.

Potential Senate Actions and Challenges

The Senate’s review process is likely to involve committee amendments and a “vote-a-rama,” where unlimited amendments can be proposed, potentially delaying passage CNBC: “Trump tax bill clears the House in a victory for Republicans, advances to Senate”. Key areas of focus include:

•  Medicaid and SNAP Cuts: The bill proposes significant reductions, with Medicaid cuts estimated at $880 billion and SNAP at $230 billion, affecting 72 million Medicaid recipients and millions reliant on food assistance Federal News Network: “House Republicans pass Trump’s big bill of tax breaks and program cuts after all-night session”. Senate moderates, like Susan Collins (R-ME), may push to water down these cuts, sparking potential conflict with the House The Hill: “GOP House Passes Trump’s One Big Beautiful Bill Act”.

•  Tax Provisions: The Senate may adjust tax cuts, such as the state and local tax (SALT) deduction, to gain support from senators in high-tax states, potentially increasing the bill’s deficit impact Yahoo Finance: “The House passed Trump’s ‘big, beautiful bill.’ Here’s how it affects taxpayers and businesses”.

•  Timeline: Thune has previously stated that the Senate might not finish the bill by Memorial Day (May 26, 2025), suggesting a potentially extended process Politico: “Debt cliff is ‘hard deadline’ for GOP megabill, Thune says”. However, pressure from Trump and the debt ceiling deadline may accelerate efforts.

Economic and Social Implications

The bill’s passage has sparked significant debate. Critics, including Democrats and some Republicans, argue that the cuts to social programs will increase poverty and hardship, particularly for low-income households, with estimates suggesting households in the lowest income quintile could lose significant support MSNBC: “House Republicans narrowly pass Trump’s agenda megabill”. Supporters, including fiscal hawks, view the cuts as necessary to offset tax reductions and curb deficit growth, aligning with Trump’s economic agenda.

The Penn Wharton Budget Model suggests the bill could increase GDP by 1.7% by 2054 due to labor supply effects, but it would also raise national debt by 12%, exacerbating fiscal challenges.

 Thanks Grok!