Senate Republicans took a major step toward enacting President Donald Trump’s tax cut agenda and increasing the US debt ceiling, potentially injecting a small degree of certainty into financial markets roiled by the president’s tariff policies.
The Senate early Saturday morning passed the budget resolution by a 51-48 margin after an overnight marathon of votes on amendments. Two Republican senators, Susan Collins of Maine and Rand Paul of Kentucky, joined all Democrats in opposing the budget resolution.
The measure allows congressional Republicans to craft legislation to extend Trump’s 2017 tax cuts for individuals and closely held businesses that expire at the end of 2025. Even so, spending cuts remain caught up in a lingering dispute between House and Senate GOP members.
It also permits for $1.5 trillion in new tax cuts over a decade, and calls for a $5 trillion increase to the federal borrowing limit to avert the Treasury Department hitting the debt ceiling this summer.
The vote comes at a perilous moment for the economy after Trump unveiled tariffs on nearly every country this week, causing global stock markets to tumble and sparking fears of a worldwide recession.
Republicans have described the tax cuts — a proposed total of $5.3 trillion over 10 years in the Senate version and $4.5 trillion in the House’s — as the next phase of Trump’s two-part economic agenda after the tariffs. The president’s allies argue that a fresh round of levy reductions will boost markets and provide certainty for businesses to invest. However, it’s not clear if the scope of the tax package counter the tariff fears gripping investors.
Congressional Republicans say renewing the expiring portions of Trump’s first-term cuts are imperative to avert a tax hike on US households next year.
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