Senate Republicans released the budget resolution on April 2 that they hope to put through the Senate this week and then try to muscle it through the House next week.  Congress leaves after April 11 for a two-week recess.

If the resolution clears both houses on schedule, then the market may have a clearer picture by May 9 about what parts of the Inflation Reduction Act will be rolled back this year.

The budget resolution has different House and Senate targets for spending and tax adjustments. 

The two houses have been unable to reach agreement on top-line numbers.  The differences will have to be ironed out at a later date.

The Congressional committees that must do the hard work of hammering out details would be given until May 9 to complete their work.  

A copy of the resolution can be found here: HEN25509.loc.

The main differences between the House and Senate targets are as follows.

The House would instruct the House tax-writing committee to cut taxes by up to $4.5 trillion.  (All figures are over a 10-year budget window through 2034.)  The main priority is to extend the 2017 tax cuts that expire at the end of this year.  A full extension of the 2017 tax cuts would cost $4.3 to $4.6 trillion before tackling the other tax reductions that Trump promised during the campaign.

The Senate tax committee would be directed to cut taxes by $1.5 trillion.  Republican leaders have been urging the Senate parliamentarian to allow the bill to be scored using the “current policy baseline,” meaning by assuming that the 2017 tax cuts can be made permanent without any reduction in revenue for the government, but they changed tack last night and now plan to take the position that Lindsay Graham (R-South Carolina), who chairs the Senate Budget Committee, can decide on this own to adopt such an approach to Senate scoring.  This strategy runs the risk of an adverse ruling by the parliamentarian when the reconciliation bill reaches the Senate floor.

Most of the House spending cuts would come from three areas:

      Energy and Commerce (includes Medicaid) - $880 billion

      Education - $330 billion

      Agriculture - $230 billion

The largest spending increases would be authorized in the following areas:

      Judiciary - $110 billion

      Defense - $100 billion

      Homeland Security (US Customs and border security) - $90 billion

The Senate is proposing four spending increases, but only minor spending cuts:

      Defense - $150 billion

      Commerce (includes air traffic control) - $20 billion

      Homeland Security - $175 billion

      Judiciary - $175 billion

The resolution gives Lindsay Graham authority to count spending cuts through “executive action, or rescissions by Congress,” such as projected revenue from import tariffs imposed by Trump and cost savings from Elon Musk’s DOGE effort, toward the Senate scoring with a goal of reaching at least $2 trillion in spending reductions.

The House would authorize a $4 trillion increase in the federal debt limit.  The Senate would authorize $5 trillion.  Such increases have been challenging in the past for many Republicans to support.

The House instructions say that if the House fails to reduce spending by at least $2 trillion over the 10-year budget window, then there will be a commensurate reduction in the amount the House tax-writing committee is authorized to cut taxes.  The committee would either have to shorten the 2017 tax cut extension or look harder for offsetting increases in other taxes.