April 14, 2025: How the Senate plans on rigging the rules to give corporations tax cuts
Good afternoon, all,
My last update covered the House’s latest moves on Trump’s agenda. Today, I’ll focus on the Senate.
You may have heard rumblings about Senator Lindsey Graham’s (R-SC) announcement regarding how Republicans plan to count the cost—or, more aptly, not count the cost—of extending tax policies from President Trump’s first term. Below, I’ll dig into those plans and how they might play out.
In the interest of putting the bottom line up top, I’ll underscore that, yes, Congress’ cost-counting methodology and the reconciliation process are incredibly wonky—but they also matter a lot when it comes to protecting the programs Americans depend on.
If Republicans can use the fast-track reconciliation process to pass bills that don’t adhere to a key rule of reconciliation, what’s to stop them from violating others? For example, Congress is prohibited from making changes to Social Security using the reconciliation process—but if reconciliation’s rules are now flexible, who’s to say that prohibition will remain ironclad?
Again, this is going to be a wonky one—but given the stakes, I hope you’ll bear with me!
Quick refresh on reconciliation
Senate Democrats are unified in opposition to the President’s agenda, which includes defunding Medicaid, widening tax loopholes for corporations and the mega-rich, and surging funds for the Pentagon and mass deportations. Republicans lack sufficient votes in the Senate to move that agenda without any Democratic support, since it takes 60/100 votes to pass most bills in the Senate. Republicans hold just 53 seats. So, they’re using a process called “reconciliation” that lets them pass bills with just 51 votes—and in doing so, bypass Democrats.
You can dig into the details in The Basics of Budget Reconciliation.
Reconciliation’s rules make permanent tax loopholes for the rich hard to pass
A reconciliation bill cannot increase the deficit after 10 years. So, if a provision in a reconciliation bill is costly, the bill must offset that cost or the provision must expire to avoid violating this rule. But the President wants to extend the tax breaks for the rich from his first term permanently. That will cost an estimated $4 trillion over the next 10 years alone. The only way to accomplish this without running afoul of reconciliation’s rules is to enact corresponding cuts to services American families depend on.
Cuts of this magnitude would be catastrophic for the public. They’d also undoubtedly aggravate Republicans’ internal disagreements: Senate Republicans already won’t commit to making the $1.5 trillion in cuts House Republicans want. Others in the GOP are uneasy about a proposed $880 billion Medicaid cut that is projected to kick at least 36 million Americans off their health insurance.
In short: Republican leaders know making even deeper cuts to achieve their tax objectives isn’t tenable.
The workaround: “current policy baseline”
When Republicans unveiled their latest plan for moving Trump’s agenda, Senate Budget Committee Chairman Lindsey Graham said, “I have determined that current policy will be the budget baseline regarding taxation.” Here’s what that means.
Because the tax breaks for corporations and the mega-rich from Trump’s first term are already in place—in Graham’s terms, they are “current policy”—extending them isn’t a new cost for the government. The government is just continuing to do something it’s already doing. If it’s not a new cost, he claims, it’s not a “cost” at all. And if it’s not a cost at all, those tax breaks can be made permanent without enacting even bigger cuts to popular programs like Medicaid to satisfy reconciliation’s rules.
More succinctly: Senate Republicans are changing the definition of “cost” so they can give tax cuts to the wealthy and corporations and pretend doing so doesn’t cost the government trillions of dollars.
Can Senate Republicans actually do this?
It’s less a question of can and more a question of will they actually do this, because much of the Senate’s “rules” are really precedents that the Senate itself sets as it considers legislation.
So, will the Senate create a new precedent here?We don’t know yet, but here are a few ways things could play out. Hat tip to CAP’s Bobby Kogan for helping me—only ever a House person—think through Senate scenarios. This is going to get in the weeds, so stay with me!
Senate scenario planning
Let’s say the reconciliation bill makes it to the Senate floor for a vote. A senator—presumably a Democratic senator—might raise a point of order arguing that a provision in the bill violates reconciliation’s rules. Think of this like an “objection” in a courtroom.
Specifically, they might argue that using this “current policy baseline” to erase the cost of the bill’s tax loopholes violates the rule that a reconciliation bill must change how much the government spends or collects in revenue. After all, if it’s “cost-free,” it doesn’t meet that requirement!
The Senate’s presiding officer—a member of the Senate’s GOP majority—gets to decide whether that point of order has merit and whether the provision is, indeed, violating the Senate’s rules. However, the Senate’s parliamentarian advises the presiding officer on how to interpret Senate rules and precedents to make that decision.
Here’s what could happen.
Option A: The parliamentarian OKs the current policy baseline. Let’s say the parliamentarian greenlights the current policy baseline, allowing Senate Republicans to ignore the cost of extending tax loopholes from Trump’s first term. The presiding officer will presumably adhere to the parliamentarian’s guidance and rule that the point of order doesn’t have merit. At this point Senate Democrats could do nothing, or appeal the presiding officer’s ruling. This would trigger a vote with a simple majority (51/100) threshold on whether to sustain the presiding officer’s ruling. Republicans hold 53 Senate seats—enough to quash this effort.
Option B: The parliamentarian does not OK the current policy baseline. If the parliamentarian advises that using the current policy baseline violates reconciliation’s rules, the presiding officer—again, a Republican—will either ignore that advice and rule against the point of order, or adhere to the parliamentarian’s guidance. Here’s how things could go in either case.
Option B.1: The presiding officer ignores the parliamentarian’s guidance. Say the presiding officer determines that the point of order does not have merit, disregarding the parliamentarian’s guidance. Democrats could appeal that ruling and trigger a vote to override it—but, again, that requires 51 votes to succeed, and Republicans hold 53 seats.
Option B.2: The presiding officer follows the parliamentarian’s guidance. The presiding officer could adhere to the parliamentarian’s guidance and say the point of order does have merit and current policy baseline violates reconciliation’s rules. In this case, Republicans could appeal the presiding officer’s ruling, again setting up a vote that requires 51 senators to overrule the presiding officer. Here, too, the GOP would be poised to prevail.
But, the filibuster?
If senators don’t have to adhere to reconciliation’s strict rules to pass bills with 51 votes instead of 60, isn’t that de facto eliminating the filibuster? That’s in the eye of the beholder—but, from my perspective, it’s hard to argue otherwise.
So, what happens if the parliamentarian says “current policy baseline” amounts to a rules violation, as in the examples above? Do GOP senators who pledged to preserve the filibuster stand by that commitment? It’s too soon to tell.
Here’s what we do know: several GOP lawmakers recently voted for the House proposal to raise the debt ceiling despite never supporting a debt limit hike in the past, and voted for a stopgap government funding bill despite never voting for one previously. Positions have gotten more malleable—especially when the President amps up the pressure.
So, will senators really be able to resist that pressure at the end of the reconciliation process, when they could be the last thing standing in the way of the President’s priorities becoming law? Time will tell. We’ll keep you posted no matter what.