House Republicans just rammed through Trump’s $4.5 trillion tax cut blueprint while Democrats and fiscal hawks slam it as a “betrayal” of working Americans — all without mentioning how they’d pay for it.
At a Glance
- House narrowly passed GOP budget resolution 217-215, advancing Trump’s tax agenda
- Resolution outlines $4.5 trillion in tax cuts, including elimination of taxes on tips and overtime
- Budget framework is not law and requires additional legislation to implement
- Republicans face challenges balancing tax cuts with $2 trillion in proposed spending reductions
- Democrats unanimously opposed the measure, calling it a “blueprint for American decline”
Trump’s Tax Cut Vision Takes First Step Forward
The resolution represents the initial framework for Trump’s promised tax cuts, including the elimination of taxes on tips, overtime, and Social Security benefits that he promoted during his successful campaign.
President Trump praised the resolution as a “big, beautiful bill” that aligns with his administration’s priorities on border security, defense, energy independence, and tax relief for working Americans. The budget blueprint outlines $4.5 trillion in tax breaks alongside $2 trillion in spending cuts over the next decade. However, it’s important to understand that this resolution does not change any tax laws or provide funding for federal programs. It merely establishes guidelines for congressional committees to craft detailed legislation.
The Battle Over Baselines and Budget Reality
A major point of contention in the budget discussions involves how to account for the tax cuts in fiscal terms. The House budget framework uses a “current law” baseline, which treats the extension of Trump’s 2017 tax cuts as new expenditures, significantly increasing the projected deficit. Meanwhile, Senate Republicans have proposed switching to a “current policy” baseline, which would assume the tax cuts are permanent and make their extension appear cost-free in budget terms.
“The current policy baseline is the only realistic way to make the 2017 Trump tax cuts permanent.”
House Speaker Mike Johnson has indicated openness to the Senate’s approach, which could eliminate the need for deep spending cuts and increase the likelihood of passing Trump’s full tax agenda. This accounting maneuver has fiscal conservatives up in arms. Rep. David Schweikert criticized the alternative approach, saying, “Current policy baseline, I consider it to be a made-up term — made up to avoid the difficulty of the fiscal impact.” The resolution’s fate ultimately hinges on whether Republicans can find common ground on these accounting methods.
No Tax on Tips: Campaign Promise Meets Reality
One of Trump’s signature campaign promises was the elimination of taxes on tips, a proposal that resonated particularly in states with large service industries. “If you’re a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies … or any other worker who relies on tipped income, your tips will be 100% yours,” Trump declared during his campaign. Several bills have already been introduced to implement this promise, including the No Tax on Tips Act and the Tipped Income Protection and Support Act.
Critics point out that the benefits of eliminating taxes on tips would be narrowly distributed. According to Yale University’s Budget Lab, only about 4 million people, or 2.5% of U.S. workers, received tips in 2023. Furthermore, many tipped workers already earn too little to pay federal income taxes. The average tax cut for benefiting families would be approximately $1,700, raising questions about whether this targeted relief justifies its cost in the broader budget framework.
Democrats Sound Alarm on Program Cuts
Democrats have unanimously opposed the budget resolution, labeling it a “betrayal” and a “blueprint for American decline.” Their primary concern centers on the $2 trillion in spending reductions outlined in the plan, particularly the $880 billion potentially coming from health care programs and $230 billion from agriculture funding. Democrats argue these cuts would harm vulnerable Americans who rely on critical social programs like Medicaid, though Republican leaders insist Medicaid is not specifically targeted in the initial budget framework.
The path forward remains uncertain as the House version must now be reconciled with a more modest Senate version. Additional votes are anticipated, including a crucial deal to prevent a government shutdown when federal funding expires on March 14. The resolution’s passage represents only the first step in a long legislative process that will determine whether Trump’s ambitious tax agenda can be fully realized or if fiscal constraints will force Republicans to scale back their promises.
