Because Republicans wield nearly every point of power in the current U.S. Congress, the initial moves on deficit reduction in 2025 will likely come from them. As of late February, the Senate has passed a proposal, and the House is moving towards considering its version. However, given certain divisions within the Republican Party and its narrow majorities in the House and Senate, substantial deficit reduction will likely involve a combination of Republican and Democratic support.

President Trump recently signed an Executive Order to create a United States Sovereign Wealth Fund (SWF). What is a SWF, and why do countries and American states form them?

As Congress navigates the task of reducing the federal budget deficit, the national debt stands at over $36 trillion, with an annual budget deficit of $711 billion. In this brief, we focus on Republican proposals for substantial deficit reduction. We also consider potential opposition within the party to these measures. Our next brief on major spending cuts will focus on proposals from Democrat legislators.