Senate passes budget, setting up showdown with House over Trump agenda

Senate Republicans voted early Saturday morning to pass a budget resolution that will be critical to advancing President Trump’s legislative agenda, but the measure breaks with House Republicans on several big issues, setting the stage for a showdown between the two chambers later this year.

The Senate voted 51-48 to pass the measure after a holding a long series of votes on amendments, which kept senators pacing around the chamber for hours.

Sens. Rand Paul (Ky.) and Susan Collins (Maine) were the only Republican to vote against it.

The resolution, which serves as a blueprint to a final measure, still needs to be adopted by the House before both chambers can begin a difficult negotiation on the bill to beef up border security, expand oil and gas drilling, increase defense spending and extend Trump’s 2017 tax cuts.

Once both chambers agree to a joint budget resolution, it will unlock the reconciliation process that allows Senate Republicans to pass Trump’s agenda with a simple-majority vote and avoid a Democratic filibuster.

Senate Majority Leader John Thune (R-S.D.) rallied his Republican colleagues behind the budget by warning that failure to advance it would risk the expiration of Trump’s tax cuts at the end of the year.

“Let me tell you what, if you vote against this budget resolution, you will be voting for. You will be voting for a $4 trillion tax increase on our economy and on the American people,” he said on the floor before a series of votes on the measure.

During a marathon series of amendment votes that stretched past six hours, Senate Republicans, led by Thune and Senate Majority Whip John Barrasso (R-Wyo.), defeated every Democratic attempt to modify the resolution. 

The budget debate revealed the biggest looming fight between Senate and House Republicans is over Medicaid.  

House Republicans have slated the program for tens of billions of dollars in cuts, something that several Republican senators have warned they would oppose in any final reconciliation bill.

Senate Budget Committee Lindsey Graham (R-S.C.) sought to avoid a fight with the House by keeping its language directing the House Energy and Commerce Committee to reduce the deficit by $880 billion, a target that policy experts say would require making deep cuts to Medicaid, in the Senate budget resolution.

That drew strong protests from other Senate Republicans, who warned that they would not support any reconciliation bill later this year that would cut Medicaid benefits.

Sen. Josh Hawley (R-Mo.) co-sponsored an amendment with Sen. Ron Wyden (D-Ore.) to strip House-drafted language affecting Medicaid from the resolution.

That amendment failed by a vote of 49 to 50.

Other Senate Republicans, including Sens. Lisa Murkowski (Alaska), Jerry Moran (Kan.) and Collins voiced their own strong misgivings about the House language, which they said threatened Medicaid benefits.

“The House instruction on $880 billion troubles me greatly because I believe that it would inevitably lead to significant cuts in Medicaid, which would be very harmful to people in Maine and to our rural hospitals and other health care providers,” Collins said.

Senators voted along party lines, 51-48, to adopt an amendment sponsored by Sen. Dan Sullivan (R-Alaska) that they argued would strengthen and improve Medicaid “for the most vulnerable populations” and extend the life of the Federal Hospital Insurance Trust Fund.

“My amendment says we’ll strengthen Medicaid and Medicare so they’re available for years to come,” Sullivan told colleagues on the floor.

Democrats claimed, however, the amendment opens the door to Medicaid cuts by failing to define who qualifies as members of the most vulnerable populations.  

“He doesn’t define the people who would be covered. He basically redefines the eligibility for vulnerable people to get served,” said Wyden, the top Democrat on the Finance panel. “The word ‘vulnerable’ without any defining language is code for cutting benefits.”

Every Republican except for Sens. Mike Lee (R-Utah) and John Curtis (R-Utah) voted for it.

The budget debate exposed other major differences between Senate and House Republicans.

Fiscal hawks in the House, for example, are balking at the Senate’s proposal to use a current-policy baseline to score an extension of the 2017 Tax Cuts and Jobs Act as not adding to the deficit.

Senate Republicans say it would allow them to make those tax cuts permanent but some House conservatives fear it would ease the pressure on their party to come up with deep mandatory spending cuts to reduce the deficit.

Critics counter that simply deciding not to count an extension of the 2017 tax cuts won’t change the nation’s future deficit projections.

Rep. Chip Roy (R-Texas) last month accused Senate Republicans of trying to avoid spending cuts by concealing the cost of extending the tax cuts, calling the current-policy baseline “fairy dust.”

The language on the budget baseline for scoring the cost of a future reconciliation bill provoked divisions within the Senate GOP conference, as well.

Sen. Bill Cassidy (R-La.) has echoed Roy’s concern about the fiscal impact of extending the tax cuts, which could add an estimated $4.6 trillion to the debt over 10 years, without finding savings to offset their cost.

He warned on Friday that his support for a final bill to extend the 2017 tax cuts isn’t guaranteed if it doesn’t do enough to reduce the deficit.

Asked if he could potentially vote no on a final reconciliation package, Cassidy said: “Of course.”

“That’s what you’re hearing from the House side, too,” he said. “I’m not the only one with concerns. They have a very fine balancing act. I think they understand that’s a risk with everybody.”

Senate Democratic Leader Chuck Schumer (N.Y.) accused Republicans of setting the stage for cuts to popular government programs to pay for tax cuts that would primarily benefit the nation’s wealthiest individuals and families.

“In voting for this bill, Senate Republicans sided with billionaires, against the middle class, in total obeisance to Donald Trump,” he said.

Another major sticking point between Senate and House Republicans is how much to increase defense spending in the reconciliation bill.

The Senate budget calls for $150 billion in direct defense spending while the House budget called for $100 billion in additional defense spending.

Graham, the Senate budget chairman, kept the conflicting instructions to the Senate and House Armed Services Committees to postpone a fight between the chambers on the issue until later in the year.

Senate Armed Services Committee Chairman Roger Wicker (R-Miss.) said last month he wanted to increase defense spending by an amount “north of 175” billion dollars in the reconciliation package.

Wicker told The Hill he’s willing to go along with the $150-billion target Graham included as an instruction to the Senate Armed Services panel.

“It’s not enough but it’s a big step. We have to make compromises,” he said

The House GOP target of increasing defense spending by $100 billion falls well short of what Senate defense hawks want.  

Another significant conflict between Senate and House are the contrasting instructions to the Senate Finance Committee and the House Ways and Means Committee on the size of new tax cuts.  

House Republicans included language in their budget instructing the Ways and Means panel to submit changes in laws that increase the deficit by not more than $4.5 trillion.

The Senate budget kept the House’s instruction but also included a separate instruction to the Senate Finance Committee to report changes in laws that increase the deficit by not more than $1.5 trillion.

One Republican senator said the Senate language has prompted grumbling among House Republicans that the instruction to the Senate Finance Committee sets too low of a deficit cap to accommodate all of Trump’s tax priorities, such as exempting tipped wages and Social Security benefits from taxation.

House GOP leaders hope to take up the budget resolution next week, though Speaker Mike Johnson (R-La.) is facing turmoil within his conference that could hinder floor action on a host of priorities.