With the adoption of the FY25 budget resolution on April 10, 2025, eleven House committees went to work on legislation to meet that budget resolution’s reconciliation instructions. On May 14, the three remaining committees completed their markups. The House Budget Committee met on May 16 to compile the 11 committees’ submissions and report an omnibus bill to the House, but the bill failed on a 16-21 vote. Among the “no” votes were House Freedom Caucus members who argued that the bill included insufficient mandatory spending reductions.
The Committee reconvened on May 18, Sunday night, and successfully reported the bill on a 17-16, party-line vote, though fiscal hawks aren’t completely satisfied—negotiations aren’t over. Speaker Johnson (R-LA) wants the House to pass the reconciliation bill by Memorial Day. However, a series of crosscurrents put achieving the Republican votes necessary to pass the bill at significant risk. In addition to Republican conservatives’ objections, Republican moderates oppose potential reductions in Medicaid and Supplemental Nutrition Assistance Program (SNAP) benefits, Republicans in high tax states insist on boosting the 2017 tax law’s cap on state and local tax (SALT) deductions, and President Trump wants tax cuts well beyond the limits provided in the budget resolution.
Chart I lists the 11 committees that were reconciled, their reconciliation instructions targets and current estimates of the budget impact of Committee approved legislation.
*The House Ways and Means instruction was reduced from $4.5 trillion to $4.0 trillion because other House committees fell short of the goal to achieve at least $2 trillion in mandatory savings. Chart I. Sources: FBIQ, Congressional Budget Office, Joint Committee on Taxation, and the Committee for a Responsible Federal Budget.
HOUSE WAYS AND MEANS TAX LEGISLATION
On May 14, the Ways and Means Committee reported Chairman Smith’s (R-MO) 387 pages of tax legislation. The Chairman attempted to thread the needle among competing concerns, generally extending 2017 tax cuts, making some temporary expansions to those tax cuts for items such as the child credit and modifying others (increases the cap on SALT deductions from $10,000 to $30,000 for those with income of $400,000 or less). To address the President’s priorities, it includes proposals to reduce taxes on income from tips, overtime, and Social Security benefits. To bring down the cost of the legislation and address fiscal conservatives’ concerns, it offsets revenue losses by repealing or phasing out energy tax credits provided in the Inflation Reduction Act, increasing a tax on college endowments, limiting tax benefits for undocumented immigrants, shutting down a pandemic era employee retention credit that was fraught with abuse, along with other revenue raisers. Those offsets bring the 10-year cost of his proposal down to $3.8 trillion, within the $4 trillion modified reconciliation instruction for the committee.
HOUSE ENERGY AND COMMERCE RECONCILIATION LEGISLATION
On May 14, the House Energy and Commerce Committee reported Chairman Guthrie’s (R-KY) legislative proposal. Based on a preliminary CBO estimate, his proposal would save $917 billion over 10 years, exceeding his instruction to achieve at least $880 billion. The majority of the savings ($715 billion) would come from Medicaid and other health programs. Congressional Democrats have been hammering Republicans for Medicaid spending cuts. Guthrie’s legislation dropped earlier Medicaid proposals that alarmed Republican moderates and achieved most of the saving by imposing work requirements, requiring states to review eligibility requirements every six months, and eliminating benefits for undocumented immigrants. Additional savings come from reducing or repealing energy and environmental mandatory funding provided in the Inflation Reduction Act and authorizing new spectrum auctions. Importantly for federal contractors, it includes $500 million in new mandatory spending for modernizing federal information technology systems with advances in artificial intelligence and other technologies.
HOUSE AGRICULTURE COMMITTEE
The Agriculture Committee reported Chairman Thompson’s (R-PA) legislation on May 14 after two days of markup. It would meet the committee’s $230 billion 10-year instruction through changes to the SNAP program by requiring states to pay 5% of the cost of the program and 75% of its administrative costs (the federal government currently pays 100% of the benefits and 50% of the administrative costs of this state-administered program).
GETTING VOTES FOR HOUSE PASSAGE
With the completion of these three committees’ markups, the House Budget Committee assembled the submissions into an omnibus reconciliation bill. On May 16, it failed to report the bill but plans to reconvene on May 18. Securing the necessary committee votes to report pieces of the bill does not necessarily translate into the 217 votes needed to pass the full House. Remember, the Speaker only holds a three-vote margin.
The Senate is awaiting House passage of its reconciliation legislation before it begins work on the bill. The budget resolution did not resolve the different approaches the House and Senate took on reconciliation and the instructions to the two sets of committees differ significantly. As a result, what emerges in the Senate will differ from the House bill.
A BIG POLITICAL MOMENT
Despite these obstacles, Republicans cannot afford to let the reconciliation bill fail. It represents the heart of the President’s and their agenda to extend tax cuts, secure the border, increase defense spending, and reduce non-defense spending. Another key motivator for the bill will be the debt limit. On May 9, Treasury Secretary Bessent wrote Congress that Treasury expects to exhaust its administrative tools to comply with the statutory debt limit by August or September. We expect the bill to be enacted before Congress recesses for the August break but with less than the $5.5 trillion in tax cuts (relative to CBO’s baseline) called for in the Senate’s reconciliation instructions and less than the $2 trillion in mandatory spending reductions called for in the House’s reconciliation instructions.