Two budget plans, one big problem for Trump’s agenda

The budget plan that Congress approved last week employs an accounting method that reinterprets some of the nation’s deficit spending in a way that conservative fiscal hawks believe hides the true cost of Trump’s “one big, beautiful bill.” The “current policy baseline” would consider the country’s current expenses as a ground-level starting point instead of an already-towering staircase that’s about to climb higher.

Some Senate Republicans say the current policy baseline method would help lawmakers permanently implement tax cuts from Trump’s first term. Fiscal conservatives worry that the change will lead to an even larger national debt.

How was the budget adopted? The House of Representatives and Senate each passed widely different budget resolutions earlier this year. (The House passed one version in March; the Senate passed its draft in February.) After prolonged negotiations among House Republicans, the House this week approved the Senate’s budget resolution. It will serve as a guide for lawmakers to start writing the “one big, beautiful bill” that President Donald Trump has requested to achieve his policy priorities such as border security and tax cut extensions.

To pass that bill, Republicans plan to use the budget reconciliation process, which is not subject to filibuster in the Senate. It takes 60 votes to break a filibuster, and Republicans only have 53 Senate seats. Budget reconciliation lets them pass a bill with a simple majority, but it comes with additional restrictions on what the legislation can do.

What’s in the budget? And what has changed since last time? The Senate’s version of the budget plan calls for increasing the U.S. debt ceiling by $5 trillion; the now-scrapped House version would have raised it by $4 trillion.

Both chambers called for a $2 trillion reduction in mandatory spending on things like entitlement programs over 10 years. But to the frustration of fiscal conservatives in the House, the Senate set just a $4 billion minimum for spending cuts to discretionary spending (the expenses Congress approves annually through legislation)—less than 1% of the cuts outlined by the House.

One of the most significant differences is the Senate’s shift to a “current policy baseline” to estimate spending increases. The current policy baseline looks only at increases compared to existing spending.

Suppose a household has a phone plan that costs $20 a month, but the family plans to upgrade to a plan that costs $25. A current policy baseline would interpret the costs going forward at just $5 per month instead of the full $25.

Jared Pincin, professor of economics at Cedarville University, says the current policy baseline is a way to understand new spending legislation in light of what’s already on the books.

“I think it makes a lot more sense from where you are now because that’s the current policy,” Pincin said. “To say extending that policy is going to cost us additional, I think, is wrong—but there’s disagreement on that.”

Democrats have decried the current policy baseline as an accounting gimmick that makes the Senate’s budget plan look less expensive.

What does adopting a current policy baseline enable Republicans to do? Republicans want to make Trump’s signature Tax Cuts and Jobs Act of 2017 permanent. That bill shrank taxes on almost every area of the economy, which cut the government’s revenue. The tax cuts are set to expire in 2026.

If Republicans want to renew those tax cuts as part of the “big, beautiful bill,” the rules of budget reconciliation require them to confine any changes to government spending within a 10-year window. Senate Republicans hope to get around that rule by rolling the current 2017 tax cuts into the current policy baseline. By interpreting the tax cuts as a starting point, they don’t count as “spending changes” and won’t automatically expire in 10 years.

What do fiscal hawks think about that plan? Some Republicans in the House of Representatives disagree deeply with the Senate’s approach. While many of them would like to extend Trump’s tax cuts, they don’t want to codify a perpetual increase to the national deficit.

Rep. Chip Roy, R-Texas, voiced opposition to the bill’s framing. But on Wednesday, he voted to advance the budget anyway, citing promises from leadership to enact spending cuts that would make up for the increased deficit.

If the budget framework is only a precursor to Trump’s legislative package, why does it matter? The budget framework sets political expectations and practical guidelines for the work Congress will do. It sets the expectations for the nation’s spending, deficit, and borrowing over a 10-year window. By addressing the big-picture costs of Trump’s bill at the outset, Republicans stand a better chance of keeping the party together and passing it into law.

The budget lays out the plan for what happens next. Under reconciliation, Congress must cut spending along the lines of what the budget prescribes and can only deviate marginally from the instructions it provides.