Policy Backgrounders

Congress Agrees to Budget Resolution to Unlock Reconciliation

April 16, 2025

Last week, Congress passed a concurrent budget resolution with instructions for House and Senate Committees to proceed with the reconciliation process. Republicans in Congress plan to use reconciliation to advance the President’s legislative agenda of extending the expiring provisions of the Tax Cuts and Jobs Act (TCJA) and increasing border security and defense spending.

• The Senate amended the House’s budget resolution to provide different budget instructions for House and Senate Committees, effectively delaying the difficult decisions needed to develop one reconciliation bill that can pass both chambers.
• While the instructions for House Committees remain the same, the instructions for the Senate include a lower floor for spending cuts, a larger deficit impact for tax cuts, the use of the current policy baseline, higher defense and border security spending targets, and a bigger increase of the debt ceiling.
• The amended budget resolution passed the Senate by a vote of 51-48, with two Republican Senators joining all Democrats in opposition.
• Despite concerns from hardline fiscal conservatives in the House, the House also ultimately adopted the amended budget resolution by a vote of 216-214, with only two Republican Representatives voting against, officially unlocking the reconciliation process to advance the President’s legislative agenda.

Senate Amends House Budget Resolution

In February, the House passed its version of the budget resolution to continue the budget reconciliation process that would allow Congressional Republicans to pass the President’s legislative agenda without negotiating with Senate Democrats (see CED’s Solutions Brief for more information on the budget resolution and the reconciliation process). The House budget resolution adopts a one-bill approach for the President’s legislative priorities of extending the expiring provisions of the TCJA, increasing border security and defense spending, and making changes to energy policy. The resolution includes a floor of $1.5 trillion in spending cuts with a target of $2 trillion in cuts, a ceiling of $4.5 trillion in tax cuts, and an increase in the debt ceiling of $4 trillion. The resolution allocates more than half of the spending cuts ($880 billion) to the House Energy and Commerce Committee, which has jurisdiction over Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Additionally, the House budget resolution includes $300 billion for increased defense and border security spending.

Different Instructions for House and Senate Committees

Given the President’s preference for the one-bill approach, the Senate spent the following six weeks crafting amendments to the House’s budget resolution that could pass the Senate. On April 2, Senate Republicans released their amended resolution, which has several key updates. The amended resolution includes different instructions for House and Senate Committees, effectively delaying future the necessary compromises to achieve an identical bill that can pass both chambers. While the instructions for the House Committees align with the original budget resolution, the Senate has a vastly different floor of $4 billion in spending cuts across four key Senate Committees: Agriculture; Banking; Energy and Natural Resources; and Health, Education, Labor and Pensions.

The Senate’s amended instructions also adopt a “current policy baseline” for the permanent extension of the expiring provisions of the TCJA instead of the more commonly used “current law baseline.” The current policy baseline assumes that permanently extending the expiring provisions of the TCJA would have no deficit impact across the ten-year budget window. The Senate Parliamentarian has yet to issue an opinion regarding this accounting tactic, which Democrats have labeled as a budget gimmick. Senate Budget Committee Chair Lindsey Graham (R-SC) replied that the Congressional Budget Act provides him the authority to determine baseline numbers for spending and revenue. Senate Majority Leader John Thune (R-SD) also contended that Democrats have used the current policy baseline in the past.

Because of the current policy baseline, the instructions to the Committee on Finance allow for a deficit impact of $1.5 trillion for additional tax cuts that the President has promised, including eliminating taxes on tips, overtime, and Social Security benefits. This leads to a disparity of approximately $900 billion with the instructions for the House Committee on Ways and Means, since the Congressional Budget Office (CBO) estimated that the total cost of extending the expiring provisions of the TCJA would be roughly $3.9 trillion over the next decade.

Another important difference between the Senate and House instructions in the amended budget resolution is the increase in the statutory debt limit. The Senate’s instructions include an increase of $5 trillion in the debt ceiling compared to $4 trillion in the House. The higher increase in the Senate is a tacit acknowledgement that the Senate’s proposed policies will have a greater impact on the deficit and the national debt. The inclusion of a debt limit increase in the budget resolution is crucial for the timeline that Congress has to complete the budget reconciliation process. CBO has projected that if the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures will probably be exhausted in August or September 2025, though the date could move earlier to late May or sometime in June depending on tax collections and the timing of outlays. Ominously, the Treasury Department reported that the Federal  deficit between October 2024 and March 2025 was more than $1.3 trillion, the second highest fiscal year-to-date deficit the US has ever experienced. Coupled with recent turmoil in the bond market after the President’s tariff announcements, there is a growing risk that the debt ceiling “X” date will be earlier than CBO projects.

Finally, the amended resolution includes higher spending increases for defense and border security in the Senate than in the House. The instructions allow a $150 billion increase in defense spending for the Senate Committee on Armed Services compared to a $100 billion increase for the House Committee on Armed Services. For border security, the instructions allow a spending increase of $350 billion for the Senate Committees on Homeland Security and the Judiciary compared to an increase of $200 billion for the relevant House Committees.

Passage in the Senate

After the unveiling of the amended budget resolution, divisions began to emerge between Republican moderates concerned about cuts to social safety net programs and hardline fiscal conservatives who desire stronger action on the deficit and debt. Senator Rand Paul (R-KY) was the only Republican to vote against advancing the amended budget resolution to a floor vote, citing the instructions to increase the debt ceiling by $5 trillion. On the other side of the debate, centrist Republican Senators such as Susan Collins (R-ME) and Jerry Moran (R-KS) remained concerned about the level of potential spending reductions affecting constituents and rural hospitals that rely on Medicaid, facing cuts of up to $880 billion.

Nevertheless, the Senate ultimately voted to pass the amended budget resolution on April 5 by a vote of 51-48, with no Democrats in favor and Senators Paul and Collins voting against it. As part of the final consideration on the measure, Democrats had the opportunity to offer and force a vote on multiple amendments to the budget resolution as part of a “vote-a-rama” that is a facet of the reconciliation process. Several of these amendments related to protecting funding for Social Security, Medicare, and Medicaid received Republican votes, though not enough to be approved. Senators Murkowski and Bill Cassidy (R-LA) also raised concerns about adopting the current policy baseline during and after the final vote.

House Adopts Senate’s Amendments

Once the amended budget resolution moved to the House, a similar split developed there between the competing preferences of moderates and hardline fiscal conservatives, though the opposition from the latter was the bigger threat to the budget resolution’s passage in the House. Even House Budget Committee Chair Jodey Arrington (R-TX) criticized the level of spending cuts in the Senate and the use of the current policy baseline, calling the amended budget resolution “unserious and disappointing.” Rep. Arrington added, “We are at a fiscal inflection point and failure to rein in our runaway deficit spending and unsustainable debt could prove catastrophic for our economy, security and global leadership.”

To persuade hardline fiscal conservatives, the President lobbied potential House GOP holdouts via social media and speeches and met with Speaker Mike Johnson (R-LA) and some of the holdouts last Tuesday. Coming out of the meeting, the President committed to putting pressure on Congress to achieve significant spending cuts. The President stated, “I let them know that, I AM FOR MAJOR SPENDING CUTS! WE ARE GOING TO DO REDUCTIONS, hopefully in excess of $1 Trillion Dollars, all of which will go into ‘The One, Big, Beautiful Bill.’” However, this lobbying campaign from the President did not fully convince all House Republican opponents to support the bill, forcing Speaker Johnson to delay a planned vote.

Last Thursday morning, Speaker Johnson and Senate Majority Leader Thune held a press conference at which Senate Majority Leader Thune said the Senate was “aligned with the House in terms of what their budget resolution outlined in terms of savings.” While this was not a firm commitment on a specific number for spending cuts and maintained the Senate’s negotiating leverage, this statement was enough to convince all but two House Republicans to vote in favor of the amended budget resolution later that day. On April 10, the House passed the concurrent budget resolution by a vote of 216-214, with all Democrats voting against and Reps. Thomas Massie (R-KY) and Victoria Spartz (R-IN) joining them.

Conclusion

The difficult task of putting pen to paper on the details of the reconciliation bill now begins. Given the separate instructions for House and Senate Committees in the concurrent budget resolution, Republicans will have many more arduous negotiations ahead to align on a bill for the President’s legislative agenda that can pass both chambers of Congress. Of note is the level of Medicaid cuts that could be included in the final reconciliation bill. Senator Murkowski alluded to these tensions between the House and Senate instructions last week, saying, “It’s not gonna go away just because we will it to go away. We’re just gonna be dealing with it later on.” Reducing the Federal match for Medicaid spending or eliminating the ability to raise Medicaid provider taxes would have a significant impact on Medicaid beneficiaries, rural and safety net hospitals, and state governments. With the looming deadline to raise or suspend the debt ceiling in the background, the next few months will be a challenging period for Republicans in Congress to resolve their differences and pass the reconciliation bill, including the extensions of expiring provisions in the TCJA.