March 26, 2025: Setting the scene for Congress’ Q2
Good morning, all,
We’re two months into the Trump administration (!), a quarter way through the year (!!), and are about to enter what could be an eventful few months for the GOP’s legislative agenda. Below is a quick check-in on where we are and what to look out for as we enter 2025’s second quarter.
Where things stand
Earlier this month, Congress funded the government through September 30 while giving the President new power to decide how taxpayer dollars are spent, taking resources away from Americans’ health care and education, and boosting funding for the Pentagon and mass deportations. A lot of ink has been spilled covering that issue, so I won’t rehash it here—but if you want a brass tacks summary, check out our last update, What the CR fight is really about.
At the same time, President Trump and Elon Musk’s attacks on working families have continued, as have lawsuits challenging them. Below are a few examples of recent administration actions and their impacts:
Social Security is being overwhelmed following Musk-mandated cuts. Callers face hours-long hold times, the agency’s website keeps crashing, homebound and homeless beneficiaries can’t set up direct deposits or verify their identity, and staff literally can’t get paper and pens for Social Security offices.
DOGE has put veterans’ care in jeopardy. Cancer treatments have been cancelled, calls from veterans in crisis have been answered by staff without the training to handle their cases, and basic functions like sterilizing medical supplies and filling prescriptions have been put on the chopping block.
Education plans could mean firing almost 300,000 teachers. As the administration works to (illegally) abolish the Department of Education, it’s also gearing up to end Title I grants. This Civil Rights-era program helps level the playing field for students in underfunded schools in low-income areas. This cut could force nearly 300,000 teachers out of classrooms nationwide.
The House and Senate still need to pick a plan…
Last month, the GOP-run House and Senate passed budget resolutions to tee up the reconciliation process. However, the chambers did not approve the same budget resolution. Think of these budget resolutions like an outline. The House and Senate need to agree to an identical outline before they can start filling it out—and right now, there are a lot of differences between those outlines. You can read about those differences here.
Are the chambers getting closer to a compromise product? Kind of.
For example, Senate Majority Leader John Thune (R-SD) is now onboard with raising the debt ceiling as part of a reconciliation bill—a Trump priority and part of the House-approved proposal. Some of his colleagues, not so much, but we’ll see if that opposition holds if/when the President amps up the pressure.
Notably, using reconciliation to raise the debt limit could force the GOP to get the package through Congress by its self-imposed deadline. The nonpartisan Congressional Budget Office (CBO) announced this morning that the U.S. will default on its debts by August or September without congressional action. I’ll get into timeline questions more below, and you can find a refresher on the debt ceiling here.
On top of agreeing to exactly what they want to pass, congressional Republicans must deal with a hefty math problem.
Reconciliation bills cannot increase the deficit after 10 years. So, if a policy increases the federal deficit without corresponding spending cuts, that policy must wind down or expire to avoid violating this rule.
Why does this matter? The Trump tax package from his first term gave massive tax breaks to billionaires and corporations that are set to expire this year. Extending those tax breaks for the mega-rich will cost at least $4 trillion over 10 years—and the President wants to extend them permanently.
Republicans in Congress know that making cuts deep enough to pass permanent tax giveaways and comply with reconciliation’s rules isn’t politically tenable, because it’s not possible to do without taking away people’s health care. Some Republicans are already uncomfortable with their leaders’ plans to kick people off Medicaid to pay for a decade of tax breaks for the wealthy—let alone permanent ones.
But congressional Republicans have proposed a way to get around this $4 trillion-plus cost: change what “cost” means.
They argue that because the expensive tax breaks are already in-place, extending them is not a new cost for the government—which, they claim, means it’s not a cost at all. And if it’s not a cost at all, they don’t have to make unpopular cuts to satisfy reconciliation’s rules.
The Senate’s parliamentarian will decide whether this argument, often called the “current policy baseline,” passes muster under reconciliation’s rules. If she says no, Republicans could retool their plans, ignore her, or fire her—a rare move, but one with precedent.
Either way, if Congress proceeds with this new approach to, well, math, it will be a lot easier to approve a gargantuan handout to billionaires and corporations—potentially in perpetuity. We’ll keep you posted on how this issue progresses.
One more thing: if you’re confused by the idea that something with a $4 trillion price tag could suddenly be considered free, the New York Times published a series of metaphors to try and make this make sense.
…and a plan to move their plan.
GOP leaders now seem aligned on when they might agree to that compromise budget resolution/outline I mentioned earlier: the week of April 7. Beyond that, things get murky.
House Speaker Mike Johnson (R-LA) has talked about getting a final bill to the President to sign by Memorial Day, while Senate Majority Leader Thune predicts July at the earliest. Some senators are placing their bets on fall. Again: if they want to raise the debt limit as part of this effort, they’re probably looking at an August or September hard deadline to do so.
Is that possible? While your author doesn’t make predictions, I can offer some historical perspective.
During the last Trump administration, Congress used reconciliation to give tax breaks to the rich—the same ones Republicans now want to extend before they expire. That tax package kicked off with a budget resolution that Congress approved on October 26, 2017. President Trump signed the final package into law on December 22, less than two months later.
So, yes, it’s possible to move a reconciliation bill through Congress by Memorial Day (two months from now). That doesn’t mean it’s likely.
First, the 2017 tax package was a lot narrower than what Congress wants to do now. Second, the 2017 package wasn’t paid for with corresponding cuts. This time, deficit hawks are insisting that it must be.
Of course, if the “current policy baseline” argument discussed above wins the day, deficit hardliners could be less of a roadblock. Not to mention, we just saw some GOP lawmakers vote to advance the House proposal to raise the debt ceiling as part of reconciliation despite never supporting a debt limit hike in the past, and vote for a continuing resolution (i.e., a stopgap government funding bill) despite never voting for one previously. Positions seem more malleable this year than they used to be.
Bottom line: comparing today’s reconciliation timeline to the 2017 tax package isn’t apples-to-apples, but it shows what’s possible—if optimistic. We’ll keep you posted on what Republicans’ legislative agenda ends up including, what lands on the cutting room floor, and the big moments to watch.
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