Congressional Republicans Tackle Trump's Agenda

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Congress has undergone a historic change. In short, the executive and legislative branches have, in a sense, merged. President Trump is the true head of Congress, with Republican leaders taking their cues from the White House on most issues, big and small. This is not just unusual, it’s unprecedented.

With that backdrop, unpredictability reigns on Capitol Hill, with GOP leaders suffering from whiplash amid Trump’s frequent changes of mind, forcing them to switch gears at a moment’s notice. That said, lawmakers still have work to do.

Tax cuts and border security
First up is a tax cuts and border security bill that Republicans hope to pass this summer. The bill would extend the 2017 tax cuts that expire at year-end. A hike to the state and local tax (SALT) deduction cap likely will be included, though it’s uncertain how much. The border portion would lift spending for enforcement and deportations. Differences are being hammered out among House Republicans and their Senate colleagues, like possible cuts to Medicaid and other entitlements. Such cost-cutting measures will be politically fraught.

To pass its tax plan, the GOP will use the budget reconciliation process, which allows a few select bills annually to bypass the Senate’s legislative filibuster, meaning that they can pass with a simple majority, not the usual 60-vote threshold. But this tricky process comes with rules that limit the type of provisions allowed. The bill also can’t increase the deficit beyond 10 years. The GOP is considering the use of an unusual accounting maneuver to essentially make the bill deficit-neutral, but the nonpartisan Senate parliamentarian has the final say on what’s included. It’s probable the package will pass in some form in the coming months, though due to reconciliation rules, it likely won’t include everything the GOP wants.

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Raising the debt limit
Lawmakers also must act on raising the congressionally mandated debt limit, which, at $36.6 trillion, was hit in January. The Treasury Department can shuffle money around for a few months to delay defaulting on its loans. But time will expire by late summer, and if lawmakers don’t act soon, an already jittery Wall Street will react negatively. Republican budget hawks loathe debt limit increases without spending cuts, but with the party already pushing cuts elsewhere, they’ll fall in line. GOP party leaders may try to add a debt limit hike to the tax bill, but that could hit procedural obstacles.

Finally, Republicans want to codify into law spending cuts made by DOGE, the Department of Government Efficiency, which is, in effect, run by Trump ally Elon Musk. Congressional Republicans applaud Musk’s efforts, but want the final say on any cuts. Still, GOP lawmakers will push back at a few of the administration’s wishes. There’s zero chance that Congress will agree to the president’s call to impeach judges who rule against him. They’ll also ignore Musk’s calls for deep cuts to Social Security.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Sean Lengell covers Congress and government policy for The Kiplinger Letter. Before joining Kiplinger in January 2017 he served as a congressional reporter for eight years with the Washington Examiner and the Washington Times. He previously covered local news for the Tampa (Fla.) Tribune. A native of northern Illinois who spent much of his youth in St. Petersburg, Fla., he holds a bachelor's degree in English from Marquette University.