To help you understand what is going on in politics our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related content
- Hurdles for Trump's Tax Bill
- SALT Cap Repeal? What to Expect in 2025 Tax Reform
- What Trump Isn’t Telling You About His 2025 Tax Plans
- Social Security Is DOGE's New Target: What You Need to Know
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
The '8-Year Rule of Social Security' — A Retirement RuleThe '8-Year Rule of Social Security' holds that it's best to be like Ike — Eisenhower, that is. The five-star General knew a thing or two about good timing.
-
Ask the Editor, May 30: Questions on the One Big Beautiful BillAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the House-passed “One Big Beautiful Bill.”
-
Will State Laws Hurt AI’s Future?The Kiplinger Letter Republicans in Congress are considering a moratorium on state AI laws. But it’s likely a growing patchwork of state AI regulations will be here for a while.
-
Ask the Editor, May 23: Reader Questions on Gifts, Estate TaxIn this week's Ask the Editor Q&A, we answer tax questions from readers on gifts, the estate tax and stepped-up basis upon death.
-
AI Goes To SchoolThe Kiplinger Letter Artificial intelligence is rapidly heading to K-12 classrooms nationwide. Expect tech companies to cash in on the fast-emerging trend.
-
Ask the Editor, May 16 — Reader Questions on Capital GainsIn our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers three questions from readers on capital gains.
-
The IRS is in ChaosThe Tax Letter DOGE, departures, data agreements and more are creating havoc at the IRS.
-
Trump's Second 100 DaysThe Kiplinger Letter President Trump's agenda faces legal and legislative roadblocks.
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
