It’s starting to look like the Senate has the inside track in the “horse race” between the chambers on budget reconciliation, as Sen. John Hoeven, R-N.D., puts it.
Republicans in that chamber expect to mark up their budget resolution as soon as next week, as the House GOP remains locked in an intraparty struggle over its version. The House’s difficulties have given Senate Republicans an opening to strike first with their their two-bill plan, which envisions a defense, immigration and energy package moving first followed by action on extending the 2017 tax cuts later.
Senate Budget Chairman Lindsey Graham, R-S.C., said Wednesday after briefing Republicans at lunch that he could mark up his budget resolution as soon as next week. It would set the table for about $300 billion in new spending, with roughly half for border security and half for defense, in a first reconciliation bill. It would be paid for with cuts to mandatory programs that authorizing committees would be charged with finding.
“The bill will instruct committees, like the [Health, Education, Labor and Pensions] Committee, to go find savings in the mandatory space,” Graham said. “And what will happen is these committees will be instructed to find savings. They’ll report their savings back, we’ll put it all together, and it needs to match what we’re spending. Then we’ll take it to the floor.”
Republicans in that chamber have been eyeing rollbacks of Biden administration regulatory expansions, such as the former president’s student loan forgiveness rule, as money savers, for instance. And onshore and offshore energy exploration provisions could be included, which generate offsetting receipts for the government and are another key plank of President Donald Trump’s domestic agenda.
If Graham’s committee marks up next week, the resolution could go to the floor for a “vote-a-rama” the week of Feb. 17, when the House is supposed to be in recess. That’s when the House earlier had expected to be finished with floor action on its budget resolution, which envisions an “all-in-one” package rolling together the border and defense money, energy policy, extensions of Trump’s 2017 tax cut plus some new tax cuts.
Tied in knots
But that schedule looks increasingly unlikely, House lawmakers said after a GOP conference meeting Wednesday, as they remain tied in knots over how to pay for the sweeping measure and how much deficit reduction is required.
Their task grew even more complicated Wednesday as it appeared GOP leaders had ruled out a budget gimmick they’d been considering to write off the $4 trillion-plus cost of the tax cuts as simply extensions of current policy — preventing a tax increase rather than cutting taxes.
Even a markup next week might not happen, Rep. Ralph Norman, R-S.C., one of the conservatives holding out for deeper spending cuts, said Wednesday. “I would love to have a budget resolution next week if we get everybody together,” Norman said. “It’s like herding cats or, another analogy, nailing Jello to the wall.”
Norman and other conservatives have for weeks advocated for something more like what Senate Republicans are planning. Later on Wednesday, Norman said he felt there’d been progress during the day, and that the House can still act on its own rather than wait for the Senate.
Still, the Senate plan is much closer to what Republicans in both chambers were talking about shortly after the elections: a lightning-quick budget process to get an initial legislative package to Trump’s desk shortly after Inauguration Day, focused on border security.
But after Trump blew up the initial bipartisan stopgap funding deal in December — fueled by an aggressive social media campaign by Elon Musk, his Department of Government Efficiency leader — it became evident that there’s only so many tough votes House GOP leaders can ask their members to take.
That gave House Ways and Means Chairman Jason Smith, R-Mo., Majority Leader Steve Scalise, R-La., license to argue for the “one big, beautiful bill” approach that eventually appealed to Trump’s grandiose instincts. Their contention was that sweeteners were needed to bring together the conference in a way that wouldn’t cost them more than the couple of votes they can spare, and the only way to do that is to have something for everyone, in one package.
Speaker Mike Johnson, R-La., also came around to that view, which Trump also initially endorsed before wavering a bit, telling the House GOP at their Florida retreat last week that he didn’t care if they passed one or two bills. Johnson and Smith were huddling Wednesday when the news broke that the Senate planned to move first.
Leaving Johnson’s office together, the speaker said he’ll appeal to his colleagues across the Capitol to think twice about their plan.
“I’m going to talk to Lindsey. He’s a good friend, and he has to understand the reality of the House. It’s a very different chamber with very different dynamics, and the House needs to lead this if we’re going to have success,” Johnson told reporters. “So we’re very comfortable about where we are. We feel very optimistic we’re getting there, and we’re going to find that equilibrium point and get this done.”
‘Bleeding out’ interest costs
House GOP leaders are working hard to get their conference unified on a plan, and the gap appeared to be closing Wednesday. But the differences within the conference over fiscal policy still run deep, with conservatives like Norman and Chip Roy, R-Texas — pushing for trillions of dollars in 10-year spending cuts — in a different place politically and philosophically over many others.
Scalise suggested GOP leaders were moving closer to locking in a promise of $1 trillion in spending cuts as part of the package. But Roy said Republican leaders committed to $2.5 trillion during December’s stopgap funding bill talks, and he’s looking to hold them to it.
The government is “bleeding out a trillion dollars in interest [payments] every year. So we believe we need… more spending restraint than that, or we have to kind of go back and look at what we’re doing on tax policy,” Roy said.
That’s led to some talk of scaling back the tax-cut extensions to something more like five years, particularly with a current policy baseline seemingly off the table.
Getting to $2.5 trillion in savings seemed like too high a bar at this stage in the talks. With Social Security and Medicare benefits off the table, the largest pool of potential cuts Republicans have been looking at is in Medicaid.
Rural hospital concerns
But House Energy and Commerce Chairman Brett Guthrie, R-Ky., said GOP leaders have had a tough time getting members comfortable with cuts to the joint federal-state health care program for the poor.
Guthrie wants to convert the program into per capita allotments for each state that grow with medical inflation each year. But while that sounds simple, it leads to big cuts in the program’s rate of spending growth. “Everybody’s concerned about the rural hospitals in their areas,” Guthrie said. “It just takes a while to explain . . . I do think we’ll come to an agreement.”
House Budget Chairman Jodey C. Arrington, R-Texas, said there were other issues corralling the votes on his panel for the budget resolution. In addition to concerns about the level of cuts from members like Roy and Norman, there were disagreements both on the current policy baseline issue and what rate of economic growth to assume, which could produce substantial revenue at least on paper.
“I’ve got guys on the Budget Committee who don’t want to make any assumptions on growth,” Arrington said. “We know it’s going to be somewhere between two-and-a-half and 3 percent growth rate, I don’t think anybody would balk at that.”
But such aggressive growth assumptions aren’t shared by the Congressional Budget Office, which sees sub-2 percent economic growth in the long run, and there are also questions about whether “dynamic” scoring would fly with the Senate parliamentarian under reconciliation rules.
Taken all together, Senate Republicans look at their approach as much simpler and a faster way to deliver at least a partial win to Trump’s desk, and much more quickly.
“I’ve always believed that one big, beautiful bill is too complicated,” Graham said. “What unites Republicans for sure is border security and more money for the military. It’s important we put points on the board, and this plan of the president to deport people and get rid of the gangs and the criminals is running into a wall of funding.”
When asked if the Senate was now taking the lead on budget reconciliation, Sen. Ron Johnson, R-Wis., said, “Isn’t that kind of obvious?”
Caitlin Reilly and Paul M. Krawzak contributed to this report.
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