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Donald Trump is increasing the pressure on House Republicans to pass his sweeping bill to extend trillions of dollars of tax cuts and slash government spending, after internal divisions threatened to delay it in Congress.
The president visited the US Capitol on Tuesday morning to urge Republican lawmakers to strike a deal on his “one big, beautiful bill”, warning them that if they fail, the tax cuts he delivered in 2017 would expire at the end of the year.
“This is the biggest tax cut in the history of our country,” Trump said. “Or you’ll get a 68 per cent tax increase.”
With Republicans holding a slim majority of 220 to 213 in the House, the president can only afford to lose the votes of a few congressional lawmakers if the budget bill is to pass.
Hardline conservatives and moderates have fought over Biden-era climate tax credits, work requirements for Medicaid — the US healthcare scheme for the poor — and the federal state and local tax deduction, which benefits Democratic states such as New York.
The bill will extend individual income tax cuts, as well as an increased standard deduction and child tax credit. It would cut taxes on tips and overtime pay, as Trump pledged on the 2024 campaign trail. It would also boost military and border security spending, while cutting hundreds of billions of dollars from Medicaid and clean energy tax credits.
The legislation would also increase taxes on university endowments’ investment income and private foundations, but does not include some things that Trump has wanted, including increased taxes on hedge fund managers and the private equity industry.
The non-partisan Committee for a Responsible Federal Budget estimates the bill will increase US national debt by more than $3.3tn over the next decade. Investors have expressed concern over the sustainability of the country’s public finances and whether the world will continue to finance the government in Washington.
Moody’s last week stripped the US of its triple-A credit rating and long-term Treasury yields have risen.
Trump has tried to appeal to moderates by saying that the bill doesn’t cut anything “meaningful”, just “waste, fraud and abuse”. Russell Vought, director of the Office of Management and Budget, has said that the legislation includes the most significant spending cuts in the past three decades.
However, conservatives have pushed for further cuts. Ahead of the president’s meeting, Thomas Massie, a Kentucky Republican, blasted a new offer from Speaker Mike Johnson to increase the so-called Salt deduction, which allows people to deduct certain taxes paid to state and local governments.
“Republicans [are] going to bat for tax deductions that will primarily benefit limousine liberals in blue states,” posted Massie on X. “This carve-out for affluent people in states like NY and California will increase the deficit substantially and is a reversal of Trump’s first-term tax policy.”
During his meeting with the lawmakers Trump “made it clear he wants us to pass this bill”, Dusty Johnson, a South Dakota Republican, told the Financial Times. “He wants us to quit screwing around.”
But the private messaging apparently failed to quell the infighting. After the meeting, New York Republican congressmen Mike Lawler and Nick LaLota, said the offer on Salt wasn’t good enough.
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