WASHINGTON — President Donald Trump’s expansive tax-cut bill, which had been stalled due to internal Republican disagreements over spending reductions, secured approval from a key congressional committee on May 18. This marks a significant step forward as the bill moves toward potential consideration by the full House of Representatives later this week.
The approval represents a major victory for Trump and House Speaker Mike Johnson, following a setback on May 16 when hardline conservative Republicans blocked the bill in the House Budget Committee. The dispute centered around proposed cuts to Medicaid, a healthcare program serving low-income Americans, and the repeal of green energy tax credits.
During a rare May 18 session, four of the committee’s most conservative Republicans chose to vote “present,” allowing the legislation to advance. The bill ultimately passed by a narrow margin of 17-16, with all Democrats opposing the measure.
Nonpartisan analysts estimate that the bill, which would extend the 2017 tax cuts that marked Trump’s signature legislative achievement during his first term, could increase the national debt by $3 trillion to $5 trillion over the next decade. Moody’s cited this growing debt—projected to reach 134% of GDP by 2035—as a key factor in its decision on May 16 to downgrade the U.S. credit rating.
Treasury Secretary Scott Bessent downplayed concerns about the rising debt during two television interviews on May 18, arguing that the bill would stimulate economic growth at a rate that surpasses the increase in the nation’s obligations.
I don’t put much stock in Moody’s downgrade,” Bessent told CNN’s State of the Union program, reflecting similar criticism from the White House.
Meanwhile, economic experts caution that the downgrade—the last from the three major credit rating agencies—signals that the U.S. debt level is unsustainable. They urge lawmakers to respond by either increasing revenue or cutting spending.
In 2017, Congressional Republicans also claimed the tax cuts would pay for themselves by boosting economic growth. However, the nonpartisan Congressional Budget Office estimates that the changes added nearly $1.9 trillion to the federal deficit over ten years, even after accounting for positive economic impacts.
On May 18, House Speaker Mike Johnson affirmed that the chamber remains “on track” to pass the bill, with the House Budget Committee scheduled to vote on it during a 10 p.m. hearing.
“We’ve had many discussions and will have more today,” Johnson told Fox News Sunday with Shannon Bream, responding to concerns from hardline Republicans such as Representatives Chip Roy of Texas and Ralph Norman of South Carolina, who are pushing for additional spending cuts.
Medicaid Cuts Under Consideration
With a narrow 220-213 majority in the House, Republicans remain divided over the extent of spending cuts needed to offset the cost of the tax cuts.
Hardline members are pushing for reductions to the Medicaid health insurance program, but moderates and some Republican senators have pushed back. They argue that cutting Medicaid could harm the very voters who helped deliver Trump’s victory in November—support they will need to retain when Congress faces reelection battles in 2026.
The bill’s proposed cuts would remove 8.6 million people from Medicaid, the joint federal-state program serving low-income Americans. It also seeks to eliminate taxes on tips and certain overtime income—both key promises from Trump’s campaign—while increasing defense spending and allocating more funds toward Trump’s border enforcement initiatives.
Republicans remain divided over the deductibility of state and local taxes (SALT), a critical issue for several incumbents from states like New York and California, which are essential to maintaining the party’s slim House majority.
Moody’s downgrade, arriving amid ongoing economic uncertainty fueled by Trump’s tariffs that have unsettled global markets, could further unsettle investors when Wall Street reopens on May 19.
Since returning to office in January, Trump and his administration have pledged to achieve a balanced federal budget.
However, Trump’s efforts to reduce government spending through Elon Musk’s Department of Government Efficiency have fallen well short of expectations. Additionally, uncertainty remains over how much revenue tariffs will generate, as Trump shifts between raising rates and negotiating trade deals.
House Speaker Mike Johnson acknowledged that the Moody’s downgrade underscores the necessity of the tax bill.
“Moody’s is not wrong,” Johnson said. “We are talking about historic spending cuts. This legislation will help alter the trajectory of the U.S. economy.”
Johnson aims for the bill to pass the House this week, ahead of the Memorial Day holiday on May 26. However, lawmakers face a more urgent deadline this summer to address the U.S. debt ceiling, with failure potentially triggering a catastrophic default.
Democratic Senator Chris Murphy of Connecticut warned that the credit rating downgrade signals serious trouble for Americans.
“That is a big deal. It means we are likely headed for a recession,” Murphy told NBC’s Meet the Press.
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