What you need to know
- Republican elected officials begin the 119th Congress with a trifecta: they have majorities in the House and Senate, and control the Presidency.
- One of their central campaign promises was to reduce the budget deficit.
- This brief begins to explore the prospects for deficit reduction, looking at both partisan and bipartisan options and examining policy consequences.
- Our focus here is on reconciliation, the congressional process used to enact budgets.
Introduction to Congressional Budgeting and Budget-Cutting
Under current congressional rules, deficit reductions are implemented by a process called reconciliation. Reconciliation allows Congress to pass budget-related legislation in an expedited manner with a simple majority in the Senate. This process was created under the Congressional Budget Act of 1974. While reconciliation is primarily a tool designed to implement spending controls and deficit reduction, it has also been used to advance significant changes, such as the 2010 Affordable Care Act, the 2017 Tax Cuts and Jobs Act, and the 2022 Inflation Reduction Act.
Under reconciliation, the House and Senate adopt a reconciliation directive that sets the spending levels and deficit reduction targets and a deadline to vote on these proposals. Individual committees then prepare spending proposals for the agencies and programs they oversee. Then, the House and Senate Budget Committees roll the proposals together into one large bill. The rules limit debate to 20 hours, and the bill is not subject to the filibuster, meaning that instead of having 60 Senators in support, reconciliation bills pass with just a simple majority in the Senate.
The impact of reconciliation depends on whether control of the federal government is unified or divided. Americans currently have a unified government, meaning the same party (Republicans) controls both Houses of Congress and the Presidency. Before the 2024 elections, control was divided, with a Democratic President, a Democratic-majority Senate, and a Republican House.
With a divided government, reconciliation generally leads to one of two outcomes: budgets that preserve the status quo (few new initiatives and little deficit reduction) or deals that use ideas from both parties to significantly cut future deficits. With a unified government, deficit reduction tends to be highly partisan, dominated by proposals favored by one party and opposed by the other.
An Example: The House Budget Committee Proposal
The first deficit-cutting proposal released in 2025 was developed by the House Budget Committee, Chaired by Republican Jodey Arrington of Texas. The proposal outlines spending cuts totaling $5.7 trillion over the next 10 years. Some of these cuts involve freezing program spending at current levels, while others mandate real, immediate spending cuts.
Everything Policy’s initial analysis of the Budget Committee document found only three proposals that received Democratic support:
- Medicare Site Neutrality ($146 billion). Hospitals can charge higher fees—sometimes up to five times more—for the same services performed in outpatient settings simply because the hospital owns the facility. Site-neutral payment reform seeks to equalize payment rates for identical procedures for Medicare recipients (seniors), regardless of where they are performed. Senators from both parties have expressed support for this reform.
- Eliminate the TANF Contingency Fund ($6 billion). The Temporary Assistance for Needy Families (TANF) Contingency Fund was established in 1996 to support states during an economic downturn. President Trump proposed eliminating the Contingency Fund, and in 2016, President Obama proposed repurposing it.
- Rescind unspent COVID Money ($11 billion). Members of both parties have made similar proposals. In 2023, House Speaker McCarthy proposed rescinding unspent funds, and though some Democratic lawmakers disagreed, President Biden agreed with this provision.
The important point is that the savings from these three proposals are only a small fraction (about 3%) of the total savings in the House Budget Committee proposal. The rest of the spending cuts are favored by Republicans and opposed by Democrats. This pattern is exactly what is likely to be expected given a unified government.
The Take Away
Under current conditions of unified government, any successful deficit reduction proposal will largely reflect the policy preferences of the Republican party, as they control the House, Senate, and the Presidency.
Democrats may offer deficit-cutting proposals (including tax increases), but these are unlikely to be added to the Reconciliation bill written by the Republican-controlled Budget Committees.
The extent of Republican budget-cutting efforts and the potential impact is not known at this point: Republicans have narrow majorities in the House (217-210) and in the Senate (53-47), giving individual Republican legislators enormous negotiating power over what proposals appear in the final reconciliation bill. Actual spending cuts may be far lower than the Budget Committee’s and others’ ambitious goals.
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Further reading
Center on Budget and Policy Priorities. "Introduction to the Federal Budget Process." https://tinyurl.com/mr3p99nc, accessed 1/24/25.
Hanson, P. (2014). Too Weak to Govern. Cambridge University Press.
Sources
Congressional Research Service. (2023). Reconciliation directives: Components and enforcement. CRS Report R41186. https://tinyurl.com/4672f96w, accessed 1/22/25.
Cooper, Z., Jurinka, E., & Stern, D. (2023). Review of Expert and Academic Literature Assessing the Status and Impact of Site-Neutral Payment Policies in the Medicare Program. https://tinyurl.com/3fr2era8, accessed 1/23/25.
Mitchell, T. (2017). President Trump's Budget Cuts TANF Despite Stated Goal to Reduce Poverty, Boost Work. Center on Budget and Policy Priorities, 22. https://tinyurl.com/3skwdv8c, accessed 1/22/25.
Hanson, P. C. (2014). Abandoning the regular order: majority party influence on appropriations in the US Senate. Political Research Quarterly, 67(3), 519-532.
Contributors
Lindsey Cormack (Content Lead) is an Associate Professor of Political Science at Stevens Institute of Technology and the Director of the Diplomacy Lab. She received her PhD from New York University. Her research explores congressional communication, civic education, and electoral systems. Lindsey is the creator of DCInbox, a comprehensive digital archive of Congress-to-constituent e-newsletters, and the author of How to Raise a Citizen (And Why It’s Up to You to Do It) and Congress and U.S. Veterans: From the GI Bill to the VA Crisis. Her work has been featured in The New York Times, The Washington Post, Bloomberg Businessweek, Big Think, and more. With a drive for connecting academic insights to real-world challenges, she collaborates with schools, communities, and parent groups to enhance civic participation and understanding.
William Bianco (Research Director) is Professor of Political Science at Indiana University and Founding Director of the Indiana Political Analytics Workshop. He received his PhD from the University of Rochester. His teaching focuses on first-year students and the Introduction to American Government class, emphasizing quantitative literacy. He is the co-author of American Politics Today, an introductory textbook published by W. W. Norton now in its 8th edition, and authored a second textbook, American Politics: Strategy and Choice. His research program is on American politics, including Trust: Representatives and Constituents and numerous articles. He was also the PI or Co-PI for seven National Science Foundation grants and a current grant from the Russell Sage Foundation on the sources of inequalities in federal COVID assistance programs. His op-eds have been published in the Washington Post, the Indianapolis Star, Newsday, and other venues.
