By Richard Cowan
WASHINGTON (Reuters) -The U.S. House of Representatives aims to move forward on Wednesday on a measure that would extend President Donald Trump’s 2017 tax cuts, but first the majority Republicans must overcome internal divisions about whether they are cutting spending sufficiently.
Members of Republican House Speaker Mike Johnson’s caucus are pushing for about $2 trillion in spending cuts over 10 years, far more than was mandated in the budget passed by the Republican-controlled Senate early Saturday. This is to partly offset the $5.7 trillion that nonpartisan analysts say the measure would add to the national debt over that time.
The proposed spending cuts would be coupled with around $5 trillion in tax cuts.
The stakes are high, as the U.S. economy has been rocked by Trump’s move to impose sweeping new tariffs on imports, sparking Wall Street’s worst selloff in five years and raising fears of surging prices and possibly a recession.
Success on Wednesday would set off what is expected to be a lengthy, perhaps months-long, series of negotiations before the two chambers can agree on the specifics of the tax and spending plan.
In addition to extending Trump’s tax cuts – his primary first-term legislative achievement – the measure would stiffen border enforcement and could be used to enact the Republican president’s promises to eliminate taxes on overtime pay and tips.
Congressional Republicans huddled with Trump at the White House on Tuesday afternoon to try to iron out differences, including deficit hawks’ concerns about the measure’s toll on the nation’s $36.6 trillion national debt.
Trump told Republican lawmakers on Tuesday night to get in line, saying, “let me tell you, you don’t negotiate like I negotiate.”
The Committee for a Responsible Federal Budget said the measure would “allow twice as much borrowing as the House, while requiring only 0.2 percent as much in spending cuts and reforms.”
Further complicating matters in the House, some moderate Republicans are squirming over prospects of $880 billion in cuts to health and energy programs that Democrats and health advocates say could take a heavy toll on Medicaid, the federal healthcare program for the poor and disabled.
“Passing the Republican budget will be a death-blow to the American economy” when coupled with the Trump tariffs, Representative Pete Aguilar, a member of House Democratic leadership, said at a press conference on Tuesday.
Aguilar highlighted the proposed Medicaid cuts in particular.
The budget resolution under debate on Wednesday is a fiscal outline that is not enacted into law. It does, however, trigger work on a set of specific tax and spending policies that are supposed to adhere to its goals. These likely will take months for Congress to craft.
Failure to approve this early step would be a setback for the centerpiece of Trump’s agenda, as both chambers of Congress are set to begin a two-week recess on Friday.
Johnson called the effort “an historic once-in-a-generation opportunity to deliver relief to hard-working families and set our country back on the path of prosperity.”
Citing analysis by the non-partisan Congressional Budget Office, the Committee for a Responsible Federal Budget said that extending the 2017 tax cuts “would increase the size of the economy by an average of 0.3% through 2027” but would “begin subtracting from growth in 2028 and overall shrink the economy in 2034 and beyond.”
(Reporting by Richard Cowan; editing by Scott Malone and Richard Chang)
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