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House Republicans have put themselves in a potential bind. In a razor-thin 217-215 vote on Tuesday, they passed a budget resolution that promises massive tax cuts—but only if they can find $2 trillion in spending reductions to offset the cost. House Republicans are facing a tricky balancing act: finding enough savings to satisfy fiscal conservatives while maintaining the deep tax reductions that Trump and party leadership have promised. If they fall short, the tax cuts will have to be reduced, putting key priorities—including President Donald Trump’s campaign promise of no tax on overtime pay—at risk.
But a potential escape hatch is gaining traction. Instead of sticking with the traditional current law baseline approach, which treats expiring tax cuts as new costs, Senate Republicans are pushing for a switch to “current policy” baseline. This accounting shift would assume tax cuts, like Trump’s 2017 reforms, are already permanent, making their extension technically cost-free in budget terms. “The current policy baseline is the only realistic way to make the 2017 Trump tax cuts permanent,” wrote Jake Sherman in Punchbowl News.
The House’s Budget Gamble To Support Trump’s No Tax On Tips And No Tax On Overtime Policies
A central focus of the Republican tax agenda is to extend the 2017 Trump tax cuts, which are set to expire at the end of this year and accommodate Trump’s campaign promises like no tax on tips and no tax on overtime. The House’s budget framework operates under a current law baseline, meaning that extending these tax cuts would be accounted for as new expenditures, thereby increasing the projected deficit. Because of this, the House budget bill plans a temporary extension of the tax cuts for the next 10 years.
The budget resolution that passed the House is built around a simple but strict condition: Republicans must identify $2 trillion in spending cuts over the next decade. If they don’t, the tax cuts they’ve promised—including making the 2017 Trump tax cuts permanent—will have to be scaled back. Given that “the overriding goal of this year’s bill is to extend the expiring provisions,” according to The New York Times, that may be a tough pill for Republicans to swallow despite the roughly $4 trillion price tag over the next 10 years.
The problem is that finding those savings won’t be easy. Cutting $2 trillion without touching politically sensitive programs like Social Security and Medicare requires deep reductions elsewhere—likely in discretionary spending, which funds everything from education to defense, a Forbes staff report explains. And even if Republicans do find the cuts, they still need to get them through the Senate, where Democrats and some centrist Republicans are likely to push back. “You do start running out of space to do other things,” said Andrew Lautz, a tax policy expert at the Bipartisan Policy Center, told the New York Times.
The Senate’s Budgetary Loophole To Achieve No Tax On Tips And No Tax On Overtime
Recognizing the challenge, Senate Republicans have proposed a workaround: switching to a “current policy” baseline. Under this approach, the budget would assume that existing tax policies—including the 2017 Trump tax cuts—are permanent. Extending them wouldn’t count as new spending, effectively erasing their projected cost on paper.
This change would help extend the 2017 tax cuts and make it far easier to pass Trump’s latest tax proposals, like no tax on tips and no tax on overtime pay. If these measures don’t have to be paid for in the budget, they become much more straightforward to pass without needing deep spending cuts or new revenue sources.
House Speaker Mike Johnson (R-La.) has signaled he’s open to this change, which could remove the need for painful spending cuts and dramatically increase the chances of passing Trump’s tax agenda. Sherman, reported on X that Johnson “is lining up “with Senate Majority Leader John Thune ”in embracing what’s called the ‘current-policy baseline’ for extending the 2017 tax cuts.” “It’s a really important principle, and I hope that we can employ that because it makes a big difference in the [cost] calculations,” Johnson told reporters, according to Politico. “The Senate wants it. I think the House wants it as well,” he added.”
This would be a major victory for Trump. His campaign promises to eliminate taxes on tips and overtime pay, would be far more viable under this budget framework. Without the need to offset their cost, these tax breaks could be passed as part of a broader package without the risk of being cut to satisfy deficit concerns.
A Roadblock To No Tax On Tips And No Tax On Overtime: GOP Deficit Hawks
Johnson may struggle to corral everyone in the GOP. Fiscal conservatives and deficit hawks have long opposed budget gimmicks that obscure the actual cost of tax cuts, warning that shifting baselines doesn’t change reality—it just disguises the actual cost of tax cuts. While the “current policy” approach might make tax cuts easier to pass, it doesn’t change the fundamental math—lower tax revenue still means larger deficits unless spending is cut elsewhere. “Current policy baseline, I consider it to be a made-up term — made up to avoid the difficulty of the fiscal impact,” Rep. David Schweikert (R-Ariz.), who chairs the bicameral Joint Economic Committee, which oversees economic policy, told The Washington Post.
There is also concern that using this accounting method is a dangerous precedent that could lead to even more aggressive tax cuts without any fiscal discipline. Whether Johnson can bridge this divide could determine if Trump’s promise of “no tax on tips, no tax on overtime” becomes law—or falls victim to budget math.
High-Stakes Tax Debate Remains To Get To No Tax On Tips And No Tax On Overtime
The next phase of budget negotiations will determine whether Trump’s tax proposals—including his promise of no tax on tips and no tax on overtime—can proceed as planned. If Johnson fully embraces the Senate’s accounting approach, these tax cuts have a more substantial chance of passing. But if House Republicans can’t find enough support for this shift, they’ll be left with the same challenge they started: identifying $2 trillion in spending cuts or scaling back their tax-cut ambitions.