Following the Senate’s completion of its review of the $3.3 trillion, 940-page agenda bill, the legislation now returns to the House of Representatives for final reconciliation. The House passed the bill in late May by a single vote, making the reconciliation process crucial before it can be signed into law. The process allows Republicans, who hold the majority in the Senate, to pass fiscal measures with fewer votes, effectively bypassing the Democratic minority.
Key changes to the legislation include stricter work requirements for recipients of government assistance, which are seen as the crown jewel for the GOP. The Senate version of the bill requires able-bodied, childless adults aged 18 to 64 to work at least 80 hours per month to retain their benefits, or participate in community service, school, or work programs. These provisions are consistent with the House version, which also included similar requirements.
Another major change involves the Medicaid provider tax rate. The Senate version introduces a gradual reduction in the tax rate in Medicaid expansion states from 6% to 3.5%, starting in fiscal year 2028. In contrast, the House version would have frozen the current tax rates and placed a moratorium on new provider taxes. This discrepancy has raised concerns among moderate House Republicans, who fear that states may face increased financial burdens, potentially leading to cuts in the Medicaid program.
The Senate bill also addresses the debt ceiling by proposing an $5 trillion increase, surpassing the House’s $4 trillion plan. This adjustment is a critical component for Trump, who has emphasized the importance of avoiding a national credit default, particularly as the U.S. national debt is currently just over $36 trillion. A failure to raise the debt limit before the country runs out of cash could lead to a credit rating downgrade and financial market turmoil.
Congressional Republicans are leveraging the budget reconciliation process to pass Trump’s agenda, which includes tax and immigration reforms. The process allows for faster passage of fiscal legislation, sidestepping the need for bipartisan support. This has led to tensions with Democrats, who argue that the process undermines the Senate’s traditional rule of requiring 60 votes for passage.
Additionally, the Senate version provides greater corporate tax benefits compared to the House version. It also includes provisions that eliminate taxes on tips and overtime pay, a key campaign promise of Trump. The Senate bill makes permanent some corporate tax breaks while extending the standard deduction for personal income taxes. In contrast, the House version only temporarily expands some tax benefits and extends the standard deduction until 2028.
Despite these efforts, the reconciliation process is facing challenges. The Senate bill’s inclusion of a $50 billion fund for rural hospitals has been a point of contention for some Republicans, while the House version of the bill includes a provision that would block states from implementing their own AI regulations, a measure that was removed after negotiations with critics.
Overall, the reconciliation of the House and Senate versions of Trump’s agenda bill remains a pivotal step in the legislative process. The outcome of this process will determine whether the bill can move forward without further delays or modifications, highlighting the complex interplay between partisan dynamics and fiscal policy in Congress.