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(1) HOUSE PASSED (216-214) THE SENATE’S REVISED 10-YEAR BUDGET PLAN, beginning the filibuster-proof budget reconciliation process to extend expiring tax cuts, enact new tax cuts, increase spending for defense and immigration enforcement, cut Medicaid and other entitlements, and raise the public debt ceiling.
(2) TRUMP TARIFFS TRIGGER US-CHINA TRADE WAR, BOND SELL-OFF, AND PLUNGE IN CONSUMER SENTIMENT: Reciprocal tariffs have been paused, but a major trade war with China is underway, investors are wary of U.S. bonds, consumer sentiment has plunged, and many of the Trump tariffs of the last two months remain in place on steel and aluminum, autos and parts, the global 10% tariff, and non-USMCA imports.
(3) MAJOR DEVELOPMENTS ACROSS GOVERNMENT: DOGE takes over Federal Grants; Deepening Problems at Social Security Administration; SCOTUS rules against Trump deportation and for Trump on probationary workers; Cancer breakthroughs slow due to NIH layoffs; APRIL 9 White House memo directs agencies to repeal regulations without public notice; Illegal Impoundment of Radio Free Europe funds.
(4) TRUMP TAX POLICIES WILL DOUBLE THE PULIC DEBT while tariffs, mass expulsions, and IRS cuts will make a bad fiscal situation even worse.
1. HOUSE ON THURSDAY PASSED A REVISED 10-YEAR BUDGET RESOLUTION by a nearly party-line vote of 216-214, unlocking the filibuster-proof budget reconciliation process to advance the Trump Agenda:
$4.5 to $6 trillion in tax cuts;
$1.5 to $2 trillion in entitlement spending cuts (likely to include Medicaid);
$300+ billion of spending increases for defense and immigration enforcement; and
A public debt ceiling increase of $4 or $5 trillion.
Under the expedited budget reconciliation procedures, House and Senate committees are instructed to draft the following legislation by Friday, May 9, 2025:
The House Ways & Means Committee is instructed to increase deficits by $4.5 trillion over 10 years in order to extend the 2017 individual and estate tax cuts and certain business provisions which expire at the end of this year.
However, the Senate Finance Committee is instructed to increase deficits by less -- $1.5 trillion. That reduced amount reflects the Senate’s intention to “score” the 2017 tax cut extensions as having “no cost” despite the $4.6 trillion price tag calculated by the Congress’s nonpartisan revenue estimators.
The Senate’s $1.5 trillion instruction to the Finance Committee is intended to be used for new tax cuts, on top of the extensions, which could include tax reductions on overtime, tip income, and Social Security benefits, and an increase in the cap on state and local tax deductions. The Senate’s justification for ignoring the $4.6 trillion cost of extending the 2017 tax cuts is a much criticized claim that the extensions would simply permit current policies to continue—even though, in the real world, the Treasury will lose trillions in revenues from the extensions.The House and Senate Armed Services, Homeland Security, and Judiciary Committees are instructed to increase spending by $300-500 billion to build a new missile defense system and pay for mass immigration arrests, detentions, and deportations.
The House Energy & Commerce Committee is instructed to cut spending by $880 billion over 10 years, which is most likely to come out of Medicaid because the only other program the Committee could tap to generate that level of cuts is Medicare (which is politically less likely to be cut). However, the Senate Finance Committee, which has Senate jurisdiction over Medicaid and Medicare, is not instructed to make similar cuts—due to the opposition of moderate Senate Republicans. In order to secure the votes of budget hardliners in the House, Senate Republican Leader John Thune said he will push for similar levels of cuts in the Senate (although this is unenforceable without a reconciliation instruction to the Finance Committee).
The House Agriculture Committee is instructed to cut spending by $230 billion over 10 years, likely to come out of Food Stamps (SNAP) and/or farm programs. (The Senate Agriculture Committee is required to reduce spending by only a token $1 billion over 10 years.)
The House Education and Workforce Committee is instructed to cut spending by $330 billion over 10 years, to come out of student aid or other education or training programs in the committee’s jurisdiction. (The Senate Health, Education, Labor, and Pensions Committee is required to reduce spending by only a token $1 billion over 10 years.)
The House Ways & Means and Senate Finance Committees are also instructed to raise the debt limit by $4 trillion and $5 trillion, respectively. (However, the Treasury may run out of borrowing authority as soon as May—before a reconciliation bill is enacted).
Additional reconciliation instructions to other committees can be found in Title II of H.Con.Res. 14.
Each of the above committees will draft their tax or spending legislation at committee meetings called “mark-ups.” This is where the precise programmatic details of the tax and spending legislation will be developed. Because budget reconciliation bills are VERY difficult to amend on the House and Senate Floors due to germaneness (relevancy) requirements, the decisions made at the committee level are of critical importance.
Following committee action, the various House committees’ language will be packaged by the House Budget Committee—without change—into a single House reconciliation bill; and the same for the Senate committees’ language.
If the two chambers pass their respective reconciliation bills in May, they will appoint a House-Senate conference committee to resolve their differences. It is here that the process could grind to a halt because the House and Senate remain far apart on Medicaid cuts, food stamp cuts, certain tax issues (for example the SALT deduction), and how to measure the deficit impact of the tax cut extensions.
On the other hand, reconciliation bills are filibuster-proof so the GOP will require only 50 votes for Senate passage—with no Democratic votes required—and, as we have seen repeatedly, threats of political retribution (well-funded primary opponents) from the White House have been keeping Republicans in line on key votes.
The author worked on multiple reconciliation bills for the Senate Finance and Senate Budget Committees and the White House Office of Management and Budget. See GovBudget.com for daily updates on Reconciliation Committee Action. Call (202) 818-8578 for media interviews and speaking engagements on budget reconciliation.
2. TRUMP TARIFFS TRIGGER US-CHINA TRADE WAR, BOND SELL-OFF, AND PLUNGE IN CONSUMER SENTIMENT:
Quick recap of the Trump tariff chaos:
Feb 1: 25% tariffs imposed on imports from Canada and Mexico (except 10% on Canadian energy).
Feb 3: Canada and Mexico tariffs suspended until March 4.
March 4: 20% tariffs (up from the previous 10%) imposed on imports from China.
March 7: USMCA-compliant products* exempted from Canada and Mexico tariffs, and potash tariffs reduced to 10%. (*US-Mexico-Canada Agreement)
March 12: 25% tariffs imposed on steel and aluminum (and apply to Canada and Mexico).
March 25: 25% tariffs on imports from countries buying Venezuelan oil.
April 2: 10% global tariffs imposed on all imports and Trump announced reciprocal tariffs on goods coming from 60 specific countries, to be effective 4/9, including: EU-20%; China-34%; Japan-24%; Vietnam-46%; South Korea-25%; Taiwan-32%; India-26%; UK-10%; Switzerland-31%; and Thailand-36%.
April 3: 25% tariffs imposed on imported cars and parts.
April 4: China retaliated with 34% on all imports from US starting 4/10, restricted exports of rare earths, added US companies to unreliable entity list.
April 8: Trump said “major” pharmaceutical tariffs are coming.
April 9: A few hours after “reciprocal tariffs” took effect, Trump announced he was pausing the tariffs for most nations for 90 days, while simultaneously raising tariffs on imports from China by 125% for a total tariff of 145% (including the earlier 20% tariff).
April 12: China retaliates against Trump’s tariffs raising its own tariffs from 84% to 125% on all imports from U.S.
Bottom line—what is currently in effect?
25% tariffs on Canada and Mexico remain in effect for non-USMCA goods
10% global import tariffs remain in effect
145% tariffs on U.S. imports from China in effect
125% tariffs on U.S. imports to China go into effect today, Saturday
25% steel and aluminum tariffs remain in effect
25% auto and auto parts tariffs remain in effect
Despite the reciprocal tariffs having been paused, the tariffs remaining in effect will raise prices for businesses and consumers over the coming months. The Wall Street Journal reports that “small companies account for one-third of U.S. imports; many owners say they can’t absorb price hikes or shift production.”
In addition to inflationary concerns, the uncertainty accompanying higher, volatile tariffs has triggered a sell-off of US bonds and the second-lowest reading of consumer sentiment on record. According to the University of Michigan which conducts the sentiment survey, consumer “sentiment has now lost more than 30% since December 2024 amid growing worries about trade war developments.”
National security also suffers when economic ties with potential military adversaries decreases. The trade war with China is strategically dangerous, particularly for Taiwan.
The Constitution gives Congress authority over tariffs, but Congress has enacted laws delegating its authority to the President to facilitate negotiation of free trade agreements and to respond to “emergency” situations.
Trump’s tariff actions claim that trade deficits are an “emergency,” but they are not. Unlike budget deficits which are dangerous because of rapidly accelerating interest payments (already $1 trillion per year), trade deficits simply reflect healthy consumer demand and a growing economy.
Drill down: Trump’s trade math ignores a major export: American services | Fed official calls tariffs ‘stagflationary shock’ | The U.S. and China Are Going to Economic War—and Everyone Will Suffer.
For daily updates see Bloomberg tariff tracker, NYTimes Tariff Tracker, Washington Post Tariff Tracker, GovBudget.com/tariffs and GovBudget.com/economic-news.
3. MAJOR DEVELOPMENTS ACROSS GOVERNMENT: DOGE takes over Federal Grants; Deepening Problems at Social Security Administration; SCOTUS rules against Trump deportation and for Trump on probationary workers; Cancer breakthroughs slow due to NIH layoffs; APRIL 9 White House memo directs agencies to repeal regulations without public notice; Illegal Impoundment of Radio Free Europe funds.
DOGE TAKES OVER FEDERAL GRANTS: The Washington Post reported late Friday that DOGE employees have taken over Grants.gov, inserting themselves into the long-established process to alert the public to available grant opportunities—which will allow DOGE to review and approve proposed grant opportunities across the federal government. “Nonprofits, universities and local governments respond to these grant opportunities with applications to receive federal funding for activities that include cancer research, cybersecurity, highway construction and wastewater management…. ‘(I)t could effectively shut down federal-grant making’ said one federal official.”
UNDER TRUMP’S TEAM, SOCIAL SECURITY WEBSITE IS CRASHING AND PANICKED SSI RECIPIENTS WERE INCORRECTLY TOLD THEIR BENEFITS ENDED: The deepening problems at SSA come as Musk’s DOGE team pushes for massive cuts at the agency, imposes untested software changes, and fires SSA workers who oversee the SSA website. However, in the wake of a public outcry, the agency this week backed away from plans to cut phone services.
SUPREME COURT RULES AGAINST TRUMP ON DEPORTATION: The Supreme Court ruled late Thursday that Trump officials must “facilitate” the return of Kilmar Abrego Garcia, a Salvadoran immigrant who is married to a U.S. citizen, but was wrongly deported to a Salvadoran mega-prison despite a court ruling forbidding his removal.
SUPREME COURT HALTS ORDER TO REHIRE PROBATIONARY WORKERS finding that the District Court’s injunction was improperly based on the allegations of the nine nonprofit plaintiffs, which did not have “standing,” that is, a direct stake in the firings.
NIH CANCER BREAKTHROUGHS ARE SLOWED DUE TO NIH LAYOFFS. The Washington Post reports that a big step forward in cancer therapy has been slowed by layoffs and new restrictions at the National Institutes of Health.
APRIL 9 WHITE HOUSE MEMO DIRECTS AGENCIES TO REPEAL REGULATIONS without public notice—incorrectly applying a 2024 Supreme Court ruling that shifted the primary authority to interpret federal regulations from agencies to judges.
REFUSAL TO DISBURSE FUNDS FOR RADIO FREE EUROPE VIOLATES IMPOUNDMENT CONTROL ACT: As reported by the New York Times, Trump officials have not funded radio free Europe, despite a court order. “The delay in disbursement has forced the news organization, which relies almost exclusively on congressional funding, to furlough some of its staff and cut parts of its programming.... In March, a federal judge in Washington temporarily halted President Trump’s efforts to shut down the news organization, ruling that his administration cannot unilaterally close a news group that Congress established by law.” (This illegal “deferral” of funds is a clear violation of the Impoundment Control Act.)
Other Key Court Actions of the Week Impacting Agencies and Programs, Immigration, and Civil Rights: See the Just Security website or WP Tracker).
4. TRUMP TAX POLICIES WILL DOUBLE THE PUBLIC DEBT: Tariffs, Mass Expulsions, and IRS cuts will make a bad situation even worse.
During his first term, President Trump increased the public debt by 50%. The damage during his second term will be even worse. He is on track to doubling the public debt and placing future generations under the crushing burden of exploding annual interest payments (already $1 trillion per year).
In an analysis released yesterday by the nonpartisan Congressional Budget Office, the CBO estimates that the Trump proposal to permanently extend the 2017 tax cuts and add another $150 billion per year in new tax cuts would see debt held by the public increasing from $30 trillion this year to $60 trillion within 10 years, reaching 220% of GDP* over the long-term (30 years). (*Gross domestic product measures the size of the U.S. economy overall.)
Put another way, Trump’s tax proposals—compared to current law—would increase the public debt by nearly $8 trillion over 10 years and $52 trillion over 30 years. Annual deficits would nearly double from the current 6.7 percent of GDP to 12% of GDP over the long-term, and annual interest payments would double from the current $1 trillion per year to nearly $2 trillion per year within 10 years.
About the author: Charles S. Konigsberg, J.D., served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee; Minority Chief Counsel at the U.S. Senate Rules Committee; Staff Attorney at the U.S. Senate Budget Committee; Director of Congressional Affairs at CFPB and CNCS; and Staff Director of a national bipartisan budget task force.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. (Contact the author for the 2024-25 edition. The 2025-26 edition will be published by Amazon.com after release of the Trump FY 2026 budget this spring.)
He is also Publisher of Appropriations.com which tracks appropriation bills; and GovBudget.com which tracks major federal developments, by subject area, each day.
Speaking engagements and press interviews can be scheduled by calling: (202) 818-8578 or (301) 509-5688. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.
