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Congressional Republicans have cleared the first hurdle in what will be a long and complex fight to pass a major tax and spending package. With Speaker Mike Johnson leading the charge, House Republicans managed to pass a resolution setting spending targets, a crucial first step in the budget reconciliation process. The lone Republican holdout was Representative Thomas Massie of Kentucky.
Reconciliation is a powerful but tricky legislative tool. It allows Congress to pass certain budget-related bills with a simple majority in the Senate—meaning Republicans, who control 53 seats, can pass their agenda without needing Democratic votes. But while the budget resolution sets the stage, it isn’t a budget itself. Instead, it provides instructions to congressional committees on how much money they can allocate in different policy areas.
The Spending Debate: Modest Cuts Amidst a Massive Budget
Predictably, Democrats will claim Republicans are making “draconian” spending cuts. But in reality, the House’s proposed reductions are extremely modest—too modest, in fact, for anyone serious about curbing long-term debt.
Consider the numbers: The federal government is projected to spend a staggering $86 trillion over the next decade. The House resolution calls for just $2 trillion in spending cuts over that same period. That’s roughly 2.3% of projected spending.
For context, billionaire Elon Musk has floated the idea of reducing deficits by $1 trillion in a single year through spending cuts. The House proposal would achieve just $2 trillion in cuts over ten years—a drop in the bucket compared to what’s really needed to control the national debt.
Keeping the 2017 Tax Cuts Intact
At the core of this resolution is a directive to the House Ways and Means Committee to enact $4.5 trillion in tax cuts relative to the current baseline. Most of that figure isn’t even a “cut” in the traditional sense—it’s just keeping the 2017 Trump tax cuts in place, rather than allowing them to expire at the end of this year.
If Republicans accomplish nothing else, they must ensure these tax cuts remain. Allowing them to lapse would mean a massive tax hike on American families and businesses, stalling economic growth at a critical time.
The Challenges Ahead
Speaker Johnson himself acknowledged the difficulty of the task at hand. When asked about it at an event on Capitol Hill, he described it as a “prayer request.”
And prayer might be needed, because even the modest spending reductions in the House resolution will require tough tradeoffs—especially on Medicaid, a politically sensitive program that President Trump has promised Republicans wouldn’t touch.
But in reality, Medicaid reforms are necessary. The program has ballooned out of control, largely due to its expansion under Obamacare and poor oversight during the Biden administration.
House Republicans should use this opportunity to:
Enforce stronger work requirements for able-bodied adults
Crack down on improper payments, which cost taxpayers billions
End policies that subsidize able-bodied single adults more than children or the disabled
Consider block grants to states, capping federal contributions at a sustainable growth rate
Repealing the Inflation Reduction Act
Another priority should be the full repeal of the Inflation Reduction Act (IRA)—which is a $1 trillion lie at the heart of Biden’s economic legacy. The law was marketed as a way to fight inflation, but in reality, it’s a massive spending package that fuels government expansion. Republicans shouldn’t hesitate to dismantle it.
That said, getting buy-in from moderate Republicans will be a challenge. Some have grown attached to certain spending provisions, and without their support, repeal efforts will stall.
The Roadblocks in the Senate and Debt Ceiling Concerns
Even if House Republicans can pass their version of the reconciliation package, they still need to reconcile their plan with the Senate, which is working on its own version of the bill. Both chambers must agree on identical legislation before sending it to the president’s desk.
And time is not on their side.
The government faces a partial shutdown on March 14 unless a stopgap bill is passed, distracting from the reconciliation process.
The debt ceiling will need to be raised by June to avoid default. The House resolution includes a $4 trillion increase in the borrowing limit, but if the House and Senate don’t align, Congress will need a separate bill to raise it.
Conclusion: A Long Way to Go
Republicans have control of the House, Senate, and White House, giving them an opportunity to lock in tax cuts and rein in spending. But the path forward is filled with hurdles. The House plan makes a start, but it’s far from a done deal.
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