Senate Republicans passed budget reconciliation instructions last week that are far weaker on spending cuts than those House Republicans passed in February, which could set up a debt explosion should the Senate get its way when the final reconciliation bill is written later this year.
The top-line budget numbers in the House reconciliation bill call for $4.5 trillion in tax cuts partially offset by $2 trillion in spending cuts. But for every dollar that House committees fail to deliver on spending cuts, the bill also lowers the amount in taxes Congress is allowed to cut. So, if House committees only identified $1.5 trillion in spending cuts, Congress could only cut taxes by $4 trillion. This is a good forcing mechanism to make sure the spending cuts happen. Functionally, for every dollar Republicans cut, they get to cut taxes by that same amount. It’s a strong incentive to cut deep.
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