Introduction
Congress is currently considering budget resolutions in both the House and Senate to establish spending and revenue frameworks for fiscal year 2025 through fiscal year 2034. These resolutions will guide the development of legislation that will be advanced using the budget reconciliation process, which allows for expedited passage of certain fiscal policies. The primary motivation behind these resolutions is to accommodate the extension of the 2017 Trump-era tax cuts, which are set to expire on December 31, 2025. Republicans, who control the House, are prioritizing tax reductions, spending caps, and cuts to entitlement programs, while Democrats argue for maintaining social safety net programs and increasing revenue through corporate tax adjustments.
Senate Budget Committee Chairman Lindsey Graham (R-SC) and House Budget Committee Chairman Jodey Arrington (R-TX) are leading efforts to pass their respective resolutions, which serve as blueprints for future legislative action. The political landscape is highly contentious, as Democrats control the Senate, and any final budget reconciliation bill will require careful negotiations to secure passage. The deadline for passing a budget resolution is March 7, 2025, when committee chairs must submit their reconciliation instructions. Both the Senate and House resolutions passed on strict party-line votes.
Understanding Budget Reconciliation
Budget reconciliation is a legislative process that enables Congress to adjust spending, revenues, and the federal debt limit with a simple majority vote in the Senate, bypassing the 60-vote filibuster threshold. This process is particularly significant when controlling party leadership seeks to implement budgetary priorities without requiring bipartisan support.
The House and Senate are taking different approaches to reconciliation. The Senate is considering two separate reconciliation bills. The first will focus on border security, military funding, and energy policy, while the second, expected later in the year, will address extending tax cuts and enacting additional spending reductions. This strategy is intended to secure passage of politically favorable provisions first while allowing more time for negotiations on tax and spending policies. The House, on the other hand, is taking a more comprehensive approach by consolidating its reconciliation provisions into a single bill that covers tax cuts, spending, and deficit reduction.
Current Status of the Budget Resolutions
Senate Budget Resolution
- The Senate Budget Committee approved its resolution on February 7, 2025, on a party-line vote.
- The resolution proposes $85.5 billion in new spending per year, offset by corresponding spending reductions.
- The resolution instructs Senate committees to identify budget cuts, with some committees assigned specific reduction targets:
– Finance Committee: No specific dollar amount assigned, but expected to propose tax changes and spending adjustments.
– Homeland Security Committee: Propose up to $175 billion in border security funding.
– Armed Services Committee: Allowed up to $150 billion in military spending increases.
– Energy and Natural Resources Committee: Propose at least $1 billion in reductions related to federal energy programs.
– Health, Education, Labor, and Pensions (HELP) Committee: No specific dollar target, but tasked with proposing cost-saving measures in healthcare and education programs.
– Agriculture Committee: Cut at least $1 billion in agricultural subsidies and nutrition assistance programs.
The resolution sets a March 7, 2025, deadline for committee recommendations.
House Budget Resolution
- The House Budget Committeeās resolution was introduced on February 12, 2025, and was approved on a party-line vote.
- It proposes increasing the debt ceiling by $4 trillion while allocating $4.5 trillion for tax cuts and various spending initiatives.
- The resolution instructs seven House committees to identify at least $1.502 trillion in mandatory spending reductions over the next decade.
- Committee Instructions:
– Energy and Commerce Committee: Propose a minimum of $880 billion in Medicaid and Medicare cuts.
– Ways and Means Committee: Identify revenue-neutral tax adjustments while preserving Trump-era tax cuts.
– Armed Services Committee: Allowed up to $150 billion in defense spending increases.
– Homeland Security and Judiciary Committees: Each allowed to propose up to $175 billion in spending increases.
– Transportation and Infrastructure Committee: Propose up to $20 billion in spending increases.
– Agriculture Committee: Cut $1 billion from nutrition assistance programs.
Key Budget Provisions and Policy Changes
Senate Budget Resolution
- Health Care: No specific dollar instructions, but committees are expected to find savings through modifications to Medicaid and Medicare.
- Defense and Border Security: Authorizes up to $150 billion in military spending increases and up to $175 billion for border security measures.
- Energy and Infrastructure: Seeks at least $1 billion in federal energy program reductions.
- Tax Policy: Expected to include tax reforms, though no specified amounts were provided in the resolution.
House Budget Resolution
- Health Care: Requires the Energy and Commerce Committee to propose at least $880 billion in Medicaid and Medicare cuts.
- Defense and Border Security: Allows up to $150 billion for defense spending increases and up to $175 billion for border security.
- Energy and Infrastructure: Infrastructure spending allocations remain under negotiation, but energy program cuts are expected.
- Tax Policy: Preserves Trump-era tax cuts while requiring Ways and Means Committee to identify tax adjustments that are revenue-neutral.
Proposals Under Consideration Include:
- Federal Funding Changes
– Reduction in federal matching rates for Medicaid expansion populations (currently 90%)
– Implementation of per capita caps on federal spending
– Adjustments to minimum federal match rates, particularly affecting higher-income states - Provider Payment Reforms
– Modifications to state-directed payments to providers
– Changes to supplemental payment programs
– Review of provider tax arrangements
– Adjustments to hospital payment rates - Current Payment Context
– State-directed payments total over $110 billion for 2024
– 29 payment arrangements exceed $1 billion annually
Next Steps
- The Senate is expected to consider its budget resolution within the coming weeks, with committee chairs required to submit spending cut proposals by March 7, 2025.
- The House budget resolution will likely undergo modifications before a final vote, with ongoing deliberations on Medicaid reforms and tax policy adjustments.
- Both chambers must reconcile differences between their budget resolutions before proceeding with formal reconciliation legislation.
Next Steps in the Budget Reconciliation Process
With both the House and Senate budget resolutions approved along party lines, the focus now shifts to the reconciliation process. The next major deadline is March 7, 2025, when committees in both chambers must submit their recommendations for spending cuts and tax policy adjustments as outlined in their respective resolutions.
- Senate Process
– The Senate Budget Committee will begin reconciling the proposed spending and revenue frameworks to ensure compliance with procedural rules.
– Senate committees with reconciliation instructionsāincluding Finance, Homeland Security, Armed Services, Energy and Natural Resources, HELP, and Agricultureāmust finalize and report their recommended changes by the March 7 deadline.
– Once committee recommendations are compiled, Senate leadership is expected to introduce the first reconciliation bill focusing on border security, military funding, and energy policy by mid-March. Debate and a floor vote are anticipated before the March 14 government funding deadline.
– A second reconciliation bill addressing tax cuts and broader spending reductions will follow later in the year, with negotiations expected to intensify in the summer and fall ahead of the December 31, 2025, expiration of Trump-era tax cuts.
- House Process
– The House Budget Committee will continue refining the reconciliation package, incorporating spending cuts and revenue provisions mandated by committee instructions.
– The Energy and Commerce Committee is expected to advance proposals for $880 billion in health care-related cuts, likely triggering significant debate over Medicaid and Medicare policy.
– The Ways and Means Committee will finalize tax policy proposals, ensuring preservation of Trump-era tax cuts while identifying potential offsets to maintain revenue neutrality.
– House leadership aims to bring a single, comprehensive reconciliation bill to the floor by early April, with passage expected along party lines.
Reconciliation Bill Passage and Final Negotiations
- Once both chambers pass their respective reconciliation bills, differences will need to be reconciled in conference negotiations.
- Given the narrow Senate majority and procedural restrictions, leadership will need to ensure that the final reconciliation package meets the Byrd Rule requirements, limiting the inclusion of provisions unrelated to budgetary matters.
- Final passage is anticipated in the late spring or early summer, with additional modifications likely if Senate and House versions diverge significantly.
The reconciliation process remains fluid, with ongoing political negotiations influencing the final scope of tax and spending measures. Both parties will be positioning for broader fiscal debates in the run-up to the 2026 elections, further shaping the legislative trajectory of budgetary policies.
House and Senate Budget Resolutions Move Forward Under Reconciliation
Washington Stategic Consulting, Inc
February 14, 2025 12:54 pm
Introduction
Congress is currently considering budget resolutions in both the House and Senate to establish spending and revenue frameworks for fiscal year 2025 through fiscal year 2034. These resolutions will guide the development of legislation that will be advanced using the budget reconciliation process, which allows for expedited passage of certain fiscal policies. The primary motivation behind these resolutions is to accommodate the extension of the 2017 Trump-era tax cuts, which are set to expire on December 31, 2025. Republicans, who control the House, are prioritizing tax reductions, spending caps, and cuts to entitlement programs, while Democrats argue for maintaining social safety net programs and increasing revenue through corporate tax adjustments.
Senate Budget Committee Chairman Lindsey Graham (R-SC) and House Budget Committee Chairman Jodey Arrington (R-TX) are leading efforts to pass their respective resolutions, which serve as blueprints for future legislative action. The political landscape is highly contentious, as Democrats control the Senate, and any final budget reconciliation bill will require careful negotiations to secure passage. The deadline for passing a budget resolution is March 7, 2025, when committee chairs must submit their reconciliation instructions. Both the Senate and House resolutions passed on strict party-line votes.
Understanding Budget Reconciliation
Budget reconciliation is a legislative process that enables Congress to adjust spending, revenues, and the federal debt limit with a simple majority vote in the Senate, bypassing the 60-vote filibuster threshold. This process is particularly significant when controlling party leadership seeks to implement budgetary priorities without requiring bipartisan support.
The House and Senate are taking different approaches to reconciliation. The Senate is considering two separate reconciliation bills. The first will focus on border security, military funding, and energy policy, while the second, expected later in the year, will address extending tax cuts and enacting additional spending reductions. This strategy is intended to secure passage of politically favorable provisions first while allowing more time for negotiations on tax and spending policies. The House, on the other hand, is taking a more comprehensive approach by consolidating its reconciliation provisions into a single bill that covers tax cuts, spending, and deficit reduction.
Current Status of the Budget Resolutions
Senate Budget Resolution
- The Senate Budget Committee approved its resolution on February 7, 2025, on a party-line vote.
- The resolution proposes $85.5 billion in new spending per year, offset by corresponding spending reductions.
- The resolution instructs Senate committees to identify budget cuts, with some committees assigned specific reduction targets:
– Finance Committee: No specific dollar amount assigned, but expected to propose tax changes and spending adjustments.
– Homeland Security Committee: Propose up to $175 billion in border security funding.
– Armed Services Committee: Allowed up to $150 billion in military spending increases.
– Energy and Natural Resources Committee: Propose at least $1 billion in reductions related to federal energy programs.
– Health, Education, Labor, and Pensions (HELP) Committee: No specific dollar target, but tasked with proposing cost-saving measures in healthcare and education programs.
– Agriculture Committee: Cut at least $1 billion in agricultural subsidies and nutrition assistance programs.
The resolution sets a March 7, 2025, deadline for committee recommendations.
House Budget Resolution
- The House Budget Committeeās resolution was introduced on February 12, 2025, and was approved on a party-line vote.
- It proposes increasing the debt ceiling by $4 trillion while allocating $4.5 trillion for tax cuts and various spending initiatives.
- The resolution instructs seven House committees to identify at least $1.502 trillion in mandatory spending reductions over the next decade.
- Committee Instructions:
– Energy and Commerce Committee: Propose a minimum of $880 billion in Medicaid and Medicare cuts.
– Ways and Means Committee: Identify revenue-neutral tax adjustments while preserving Trump-era tax cuts.
– Armed Services Committee: Allowed up to $150 billion in defense spending increases.
– Homeland Security and Judiciary Committees: Each allowed to propose up to $175 billion in spending increases.
– Transportation and Infrastructure Committee: Propose up to $20 billion in spending increases.
– Agriculture Committee: Cut $1 billion from nutrition assistance programs.
Key Budget Provisions and Policy Changes
Senate Budget Resolution
- Health Care: No specific dollar instructions, but committees are expected to find savings through modifications to Medicaid and Medicare.
- Defense and Border Security: Authorizes up to $150 billion in military spending increases and up to $175 billion for border security measures.
- Energy and Infrastructure: Seeks at least $1 billion in federal energy program reductions.
- Tax Policy: Expected to include tax reforms, though no specified amounts were provided in the resolution.
House Budget Resolution
- Health Care: Requires the Energy and Commerce Committee to propose at least $880 billion in Medicaid and Medicare cuts.
- Defense and Border Security: Allows up to $150 billion for defense spending increases and up to $175 billion for border security.
- Energy and Infrastructure: Infrastructure spending allocations remain under negotiation, but energy program cuts are expected.
- Tax Policy: Preserves Trump-era tax cuts while requiring Ways and Means Committee to identify tax adjustments that are revenue-neutral.
Proposals Under Consideration Include:
- Federal Funding Changes
– Reduction in federal matching rates for Medicaid expansion populations (currently 90%)
– Implementation of per capita caps on federal spending
– Adjustments to minimum federal match rates, particularly affecting higher-income states - Provider Payment Reforms
– Modifications to state-directed payments to providers
– Changes to supplemental payment programs
– Review of provider tax arrangements
– Adjustments to hospital payment rates - Current Payment Context
– State-directed payments total over $110 billion for 2024
– 29 payment arrangements exceed $1 billion annually
Next Steps
- The Senate is expected to consider its budget resolution within the coming weeks, with committee chairs required to submit spending cut proposals by March 7, 2025.
- The House budget resolution will likely undergo modifications before a final vote, with ongoing deliberations on Medicaid reforms and tax policy adjustments.
- Both chambers must reconcile differences between their budget resolutions before proceeding with formal reconciliation legislation.
Next Steps in the Budget Reconciliation Process
With both the House and Senate budget resolutions approved along party lines, the focus now shifts to the reconciliation process. The next major deadline is March 7, 2025, when committees in both chambers must submit their recommendations for spending cuts and tax policy adjustments as outlined in their respective resolutions.
- Senate Process
– The Senate Budget Committee will begin reconciling the proposed spending and revenue frameworks to ensure compliance with procedural rules.
– Senate committees with reconciliation instructionsāincluding Finance, Homeland Security, Armed Services, Energy and Natural Resources, HELP, and Agricultureāmust finalize and report their recommended changes by the March 7 deadline.
– Once committee recommendations are compiled, Senate leadership is expected to introduce the first reconciliation bill focusing on border security, military funding, and energy policy by mid-March. Debate and a floor vote are anticipated before the March 14 government funding deadline.
– A second reconciliation bill addressing tax cuts and broader spending reductions will follow later in the year, with negotiations expected to intensify in the summer and fall ahead of the December 31, 2025, expiration of Trump-era tax cuts.
- House Process
– The House Budget Committee will continue refining the reconciliation package, incorporating spending cuts and revenue provisions mandated by committee instructions.
– The Energy and Commerce Committee is expected to advance proposals for $880 billion in health care-related cuts, likely triggering significant debate over Medicaid and Medicare policy.
– The Ways and Means Committee will finalize tax policy proposals, ensuring preservation of Trump-era tax cuts while identifying potential offsets to maintain revenue neutrality.
– House leadership aims to bring a single, comprehensive reconciliation bill to the floor by early April, with passage expected along party lines.
Reconciliation Bill Passage and Final Negotiations
- Once both chambers pass their respective reconciliation bills, differences will need to be reconciled in conference negotiations.
- Given the narrow Senate majority and procedural restrictions, leadership will need to ensure that the final reconciliation package meets the Byrd Rule requirements, limiting the inclusion of provisions unrelated to budgetary matters.
- Final passage is anticipated in the late spring or early summer, with additional modifications likely if Senate and House versions diverge significantly.
The reconciliation process remains fluid, with ongoing political negotiations influencing the final scope of tax and spending measures. Both parties will be positioning for broader fiscal debates in the run-up to the 2026 elections, further shaping the legislative trajectory of budgetary policies.