America's Talking - Senate’s Budget Policy Change Sparks Debate

Episode Date: April 12, 2025

(The Center Square) – As Senate Republicans work on the floor to pass a compromise budget resolution, fiscal watchdogs are warning that permanently extending President Donald Trump’s tax cuts will have dire consequences. The Senate’s amendment to the House’s $4.5 trillion budget resolution would theoretically subtract $3.8 trillion from the price tag by adopting a current policy baseline, which treats renewing the 2017 Tax Cuts and Jobs Act as a continuation of current law rather than new policy. The unconventional tactic would also allow the TCJA to become permanent since it puts the costs of extension at zero. Support this podcast: https://secure.anedot.com/franklin-news-foundation/ce052532-b1e4-41c4-945c-d7ce2f52c38a?source_code=xxxxxxFull story: https://www.thecentersquare.com/national/article_501c956b-b50d-4fe9-8972-1b1f8d3a7f14.html Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hello and welcome to America in Focus powered by the Center Square. I'm Dan McAulb, Chief Content Officer at Franklin News Foundation, publisher of the Center Square Newswire Service. The U.S. House this week passed a $5.8 trillion-dollar concurrent budget resolution that would extend President Donald Trump's 2017 tax cuts, but add trillions of dollars in U.S. debt if significant expense cuts are not realized in the future. Budget hawks say the resolution is a gimmick because it zeroes out the cost of the tax cut, extension. Joining me to discuss this is Casey Harper, Washington, D.C. Bureau Chief for the

Center Square. Casey, this whole concurrent budget resolution process is a complex one. What do our listeners need to know? Well, sure, they need to know that after, you know, weeks and weeks of wrangling that Republicans were able to unify around getting an actual budget pass. This is not just, this is not as a short-term fix. This is more substantive. They also need to know that the Senate kind of incredibly successfully changed the way that accounting is done on their bills to make this one appear much cheaper. And it's very controversial. Basically, when they're trying to extend, make the Trump tax cuts permanent. So of course, in 2017, you know, his first term, Trump passed the Tax Cuts and Jobs Act. It did things like double the child tax credit, which is very popular

and among many other tax provisions that we enjoy today. But those are going to expanse. at the end of this year. And so Republicans are kind of under the gun wanting to extend these. Initially, the House said, let's extend it 10 years. And then the Senate said, let's make it permanent. And under this legislation, you would think that, okay, extending the tax cuts, you would have to factor in the cost of that and say, okay, it's going to cost this many trillion each year and add that up. But the Senate said, no, it's existing policy. We don't have to, we don't have to factor that into our accounting. So basically, they don't include the cost of the tax cuts in their in their version of the bill, which allowed them to kind of, you know, a lot of people called it a gimmick,

but they did it, right? And that's where it is. So some of the estimates say it's going to be like $5.8 trillion over the next 10 years. Now, I will say Republicans really don't like those estimates when you talk to them. They feel that the estimates from the CBO and other groups are not fair because they don't take into account the increased economic growth and increased revenue that tax creates. So, you know, theoretically, a lot lower taxes across the board will lead to more economic growth, and we have seen evidence for that. And then more economic growth means more tax revenue when the taxes are collected. So in a way, tax cuts can kind of help pay for themselves. But when you do the budgeting at CBO and things, they don't really take that into account well enough,

according to a lot of Republicans. So that's just a side note. So basically these tax cuts are going to be made permanent. It looks like that now the House and the Senate have to come together and work out the details. They need to find a lot of cuts. In the earlier stages of this process, they said, okay, we're going to cut, you know, this many billion from here, but they didn't say specifically where it's going to come from. They just said the committee will figure it out later, which allowed them to kind of get this across the finish line more quickly. But now we're at later, which is the point in the process where they have to say, okay, we're going to cut X dollars from X program. They're going to have to work that out with leadership and others, come up with, as President

Trump has called it one big, beautiful bill to make his tax cuts permanent and do some government spending cuts to help pay for it. The vote Thursday in the U.S. House, Casey, was razor thin, passed just 216 to 214, with all Democrats and two Republicans, representatives Thomas Massey, a Republican from Kentucky and Victoria Sparks, Republican from Indiana, voting with Democrats against the budget. So there's not a whole lot of room for error, particularly when we get into the next part of the process and trying to identify those cuts because Democrats are not going to support many cuts, I wouldn't think. No, but I think, you know, I think it's pretty safe to say they're going to have the votes at this point. If people are going to throw a fit, I think they would have stopped it by now and Johnson would have had to pivot. But, you know, he did make a lot of promises to get the bill this far. So maybe he does have to fulfill some of those promises. but he can kind of now do that on an ad hoc basis as it's needed behind closed doors to get the

votes that he needs. And part of what's making Republicans feel more comfortable about this is there's going to be a lot of provisions on the border and energy the Republicans have been waiting for. And so, you know, we're going to see better border enforcement. We're going to see, you know, a more favorable energy environment for domestic energy production. And so those things are, I think, helping, you know, satisfy some concern. and basically Republicans were also promised. They were just promised more cuts in the future, I believe. And so we're going to see if Johnson's able to deliver those cuts. Now, Democrats on the other side, they're talking about how this is going to blow out the debt. These tax cuts disproportionately favor of the wealthy. These are some of the things they're saying. But they're also saying, hey, there's no way Republicans are going to do all this without cutting Medicaid and maybe Medicare. And so that's something to be on the lookout for if Democrats, you know, predict. there or warning comes of fruition if it really comes down to it and Republicans do have to make cuts to Medicaid. Now, Mike Johnson, Speaker of the House has said that the only cuts of Medicaid

that are coming are kind of the waste, fraud, and abuse, which is really popular target right now in the Doge era. With that being said, who gets to define what waste, fraud, and abuse is is really probably the question right now because the devil's on the details. You can say anything is, if you can label something as waste, then you can cut it in this environment. The 2017 tax cuts were set to expire at the end of this year. This is not a done process. There's still plenty of work left to be done and more votes to come. But if the tax cuts were to expire, the average taxpayer would see a 20% to, excuse me, a 22% tax hike.

Democrats say it mostly goes, the tax cuts mostly are for the wealthy, but that's not really true. it would impact the average American middle class worker. Final word, Casey. Yeah, I mean, the tax cuts, they impact everyone. There's no question. If you have kids, you know, you felt the benefit of those doubling of the child tax credits, for instance, and there's plenty of other provisions here. So I think that Democrats would say it benefits the wealthy at a greater degree than it benefits to the middle class, but there's no doubt that it benefits the middle class. The tax cuts are popular. It's just a question of how do you pay for them without blowing up the federal deficit.

Thank you for joining us today, Casey. Listeners can keep up with this story and more at thecentersquare.com.