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by Nicholas Ballasy
The GOP-led Congress is now turning to the budget reconciliation bill that is expected to include tax reform and spending cuts after the passage of the Continuing Resolution, which keeps the government funded through the end of the current fiscal year on September 30.
According to the Committee for a Responsible Federal Budget, the House and Senate have to “pass a concurrent budget resolution that includes a deficit reduction or cost target for relevant committees” in both chambers to formally put the reconciliation process into motion.
“Each committee would then propose policies to meet those targets and compile them into reconciliation legislation,” read a CRFB analysis. “The final package would be eligible to be privileged in the Senate, meaning that it would not be subject to the filibuster.”
The House passed a Fiscal Year 2025 budget resolution in February that “calls for up to $2 trillion in spending cuts as partial offsets for $4.8 trillion of tax cuts and spending increases,” the CRFB said. The CRFB explained that the House resolution is still available for the Senate to pass to begin the reconciliation process or Congress could use a FY2026 budget resolution.
Between $5 trillion and $11 trillion in cuts; closing key loophole
The budget reconciliation bill is expected to include tax policy changes that could cost as little as $5 trillion and as much as $11 trillion over 10 years. Those changes include expanding the State and Local Tax (SALT) deduction, eliminating taxes on tips, exempting overtime pay from federal taxes, exempting Social Security benefits from federal taxes, lowering taxes for U.S. production of certain goods and reducing tax benefits for stadium owners.
The bill is also expected to end the carried interest loophole, which would save about $100 billion.
Several studies have shown that economic growth won’t pay for the tax cut portion of the reconciliation bill so significant spending reductions would be necessary as offsets. GOP members of Congress have floated several ways to further reduce spending to at least revert back to pre-pandemic federal funding levels but it’s unclear what will make it into the final reconciliation bill.
“What we really need to be focusing on now is reconciliation over the next 60 days,” said Rep. Troy Nehls, R-Texas (pictured above), on the “Just the News Not Noise” TV program. “That’s where you’ll see the real cuts.”
The Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk, is searching for waste, fraud and abuse within federal agencies as a way to cut the federal budget. DOGE is also working with the administration to reduce the federal workforce. GOP leaders have said DOGE findings would be incorporated into reconciliation and FY2026 appropriations.
The conservative Heritage Foundation argued the American public wants a reconciliation bill that secures the borders, “unleashes American energy, cuts wasteful spending and preserves the Trump tax cuts.”
Bring spending back to pre-pandemic levels
Senate Republicans recently met with President Trump and several senators indicated that they do not yet have universal agreement on the level of “deficit reduction” that will be in the reconciliation package.
“Their bill is not quite yet beautiful,” said Senate Finance Committee member Steve Daines, R-Mont., referencing Trump’s previous call for “one big, beautiful bill” with tax cuts and spending reductions, according to The Hill. “We have to be aligned first and foremost. The first step is to get our budget resolution passed that aligns more closely to where the House is.”
Sen. Ron Johnson, R-Wis., said Trump and the Senate GOP discussed his plan to bring spending back to pre-pandemic levels, which he estimated would save a minimum of $700 billion from current spending levels.
“There is so much room for reducing the size of the federal government and balancing the budget is entirely doable. I look forward to working with the @WhiteHouse and getting spending under control,” Johnson wrote on X.
Sen. John Kennedy, R-La., delivered a Senate floor speech about the forthcoming reconciliation package in front of a chart showing the per-citizen debt in the U.S. at $102,000, which he said demands substantial spending cuts.
“Write this down and take it home to Mama: The reconciliation package is going to have substantial spending cuts. If it doesn’t, it will never pass the U.S. Senate,” Kennedy wrote on X on Jan. 31 with a video of his speech.
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Nicholas Ballasy has been breaking news for more than a decade in the nation’s capital and questioning political leaders about the most pressing issues facing the nation. Since 2008, Ballasy has interviewed former President Bill Clinton, House Speaker Nancy Pelosi, former President Donald Trump, Sen. Mitt Romney, Sen. Bernie Sanders, Sen. John McCain, former Secretary of State Hillary Clinton, former Vice President Al Gore, former House Speaker Newt Gingrich and more.
Photo “Rep. Troy Nehls” by Rep. Troy Nehls.
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