The House and Senate have both approved the “framework” of Trump’s “big, beautiful” budget reconciliation bill. But now the real work begins: hammering out the particulars to craft a final package that both fits within that framework and can garner enough votes to clear both chambers. Congress needs to cut $1.5 trillion over the next ten years to fit the framework, but cuts to Medicare, Medicaid, Social Security, border security, or defense spending would cost the GOP’s slim majorities enough votes to kill the bill. So, where will the money come from?
As House Speaker Mike Johnson (R-LA) told Fox News’ Maria Bartiromo on Sunday, “I would just say stay tuned. The next five to six weeks are going to be critical as all these negotiations happen in the committees of jurisdiction.” In other words, who knows?
Taxing the Rich to Save the Budget?
President Donald Trump has told Republican lawmakers that he’s open to increasing taxes on the rich if that’s what it takes to pay for the budget, which is supposed to include tax cuts for the poor and middle class.
Trump ally Steve Bannon told Bill Maher on Friday that Republicans would increase taxes on top-bracket earners. Mahar and the other guests expressed their skepticism, but Bannon assured them “Trump and the MAGA movement will raise taxes on the wealthy.” Some Freedom Caucus legislators, often called “hardline” by the media and their more moderate colleagues, support the idea.
Mike Johnson doesn’t agree – and he isn’t alone.
“We’re the Republican Party, and we’re for tax reduction for everyone, and that’s a general principle that we always try to abide by,” Johnson said during his interview with Bartiromo.
“We’re not looking for tax increases; we’re looking for locking in current rates so there is not a tax increase,” House Majority Leader Steve Scalise (R-LA) told CNBC.
Bloomberg reported the floated increase would be 39% or 40% and would affect those earning $1 million or more a year. That’s a 2% or 3% increase from the current rate of 37%. In percentages, it doesn’t sound significant – but it represents an additional $20,000 to $30,000 per person per million dollars on top of what they already pay. Add up all the millions made in America and that’s quite a lot of money to help offset the other tax cuts. But it’s also a significant burden for those who must pay it.
“You’ll hear lots of rumors and lots of talk,” Johnson said, “but we’ll see where it all lands.”
Protect Medicaid – But Cut the Fraud
Where it won’t land, according to the House Speaker, is cuts to entitlement spending – though he does suggest it’s time to cut out the fraud. About 61% of the approximately $6.75 trillion federal budget is mandatory spending like Medicare, Medicaid, and Social Security. Another 13% is interest on the debt – which, unless a major cut in interest rates comes, certainly can’t be slashed. Republicans also want to increase spending for the border and defense; that doesn’t leave much room for trimming expenses. At 2024 levels, there’s only about $1 trillion a year in discretionary spending that could be cut. Could that add up to $1.5 trillion over the next decade, especially since Republicans are also eyeing several trillion in tax cuts over the same span? Sure, but it won’t be easy.
Many lawmakers and pundits – including some Republicans – fear the difference will be made up in cuts to Medicare, Medicaid, or Social Security. Again, there are those in the GOP who wouldn’t mind dipping into entitlement spending to balance the budget. But it’s a nonstarter for many in the Republican Party.
“We just wanted to be clear, again, with the Speaker, as we’ve had numerous times before, that we will not vote for something that strips benefits from seniors and our vulnerable population that rely on traditional Medicaid services,” Rep. Nichole Malliotakis (R-NY) said before Thursday’s vote.
Johnson told Bartiromo Sunday that Republicans would protect entitlement programs – but he qualified that statement by saying the government must “eliminate people on Medicaid” who aren’t “eligible to be there.”
“The president has made absolutely clear many times, as we have as well, that we’re going to protect Medicare, Social Security, Medicaid, for people who are legally beneficiaries of those programs,” Johnson promised. “There are a lot of Americans who rely upon those – those programs, and we’ve got to ensure that they’re safeguarded.”
“At the same time, we have to root out fraud, waste and abuse, we have to eliminate on, for example, on Medicaid who are not actually eligible to be there,” he then clarified. “Able-bodied workers, for example, young men, who are – who should never be on the program at all.”
Rough Road to Reconciliation
Johnson still seems hopeful they can get a bill on Trump’s desk by Memorial Day, but there’s lot of work left to do – and not everyone seems to agree on how to go about doing it. “The timing’s critical,” Johnson said, “because for all the reasons you know and you have discussed on your show all the time that we know, we have to show that stability to the markets.”
“We have to send a message to the bond market, the stock market investors, to our allies around the world and to our enemies as well that America is on sound fiscal ground. And so we can bend the debt trajectory curve, get us back on a path to fiscal sanity,” he continued.
Can the GOP across both chambers of Congress come together and agree on all these details by Memorial Day – just over a month away? It’ll be a rough road either way. As Johnson told his host on Sunday, “stay tuned.”
