Dueling budget bills in the House and Senate.

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Quick hits.

1. BREAKING: Sen. Mitch McConnell (R-KY) is set to announce he will not seek reelection in 2026. (The announcement)
2. President Donald Trump called Ukrainian President Volodymyr Zelensky a “Dictator without Elections” in a social media post, adding that Zelensky had misused U.S. aid and mismanaged the war with Russia. Separately, President Zelensky told reporters that Trump is “living in this disinformation space.” (The comments)
3. Hamas returned the bodies of four Israeli hostages held in Gaza, including two children, the first time that deceased hostages have been returned since the start of the Israel-Hamas war. (The return)
4. Transportation Secretary Sean Duffy sent a letter to New York Gov. Kathy Hochul (D) expressing his intent to revoke federal approval of New York City’s congestion pricing program, though he did not specify a timeframe for this action. (The letter) Separately, Defense Secretary Pete Hegseth directed senior leaders at the Pentagon to develop plans for cutting 8% from the defense budget each year for the next five years. (The order)
5. The Senate voted 52-46 to confirm former Sen. Kelly Loeffler (R-GA) to lead the Small Business Administration. (The confirmation)
6. Brazil’s prosecutor general charged former Brazilian President Jair Bolsonaro with attempting a coup to remain in office in 2022, a plot that allegedly included plans to poison his successor, President Luiz Inácio Lula da Silva, and murder a Supreme Court judge. (The charges)

Today's topic.

The Senate and House budget plans. Republicans in Congress are moving to pass a budget plan to advance President Donald Trump’s domestic agenda. On Wednesday, the Senate voted 50-47 to take up the outline of a budget that would increase immigration and military spending but does not include an extension of the 2017 Tax Cuts and Jobs Act. The vote is a key step in the budget reconciliation process, which allows a party to bypass the Senate's 60-vote filibuster rule to pass eligible budget legislation with a simple majority vote. However, Republicans in the House and Senate are advancing separate bills and will need to approve identical resolutions to use the reconciliation process. 

Senate Republicans’ budget plan is narrower in scope, focusing on increasing defense and border security spending by $150 billion and $175 billion, respectively, as well as permitting new offshore drilling leases. Sen. Lindsey Graham (R-SC), chairman of the Senate Budget Committee, said that Senate Republicans’ plan is to pass this bill, then extend the 2017 tax cuts with a second bill. 

The House GOP’s budget includes all of President Trump’s spending priorities in one bill. Specifically, it provides $300 billion in new funding for border security, defense, and the judiciary; calls for $4.5 trillion in tax cuts; and raises the debt limit by $4 trillion. The plan also directs House committees to advance proposals to cut federal spending through $880 billion in cuts from the Energy and Commerce Committee, $330 billion in cuts from the Education and Workforce Committee, $230 billion in cuts from the Agriculture Committee, and approximately $62 billion in smaller cuts from all other committees.

On Wednesday, Trump endorsed the House’s plan, posting on Truth Social, “The House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it! We need both Chambers to pass the House Budget to ‘kickstart’ the Reconciliation process, and move all of our priorities to the concept of, ‘ONE BIG BEAUTIFUL BILL.’” 

However, also on Wednesday, Senate Republicans met with Vice President JD Vance and emerged from the meeting resolved to continue with their plan. “[Trump has] made it clear for a long time that he would prefer 'one big, beautiful bill,' and we’re fine with that, too. If the House can produce one big, beautiful bill, we’re prepared to work with them to get that across the finish line," Senate Majority Leader John Thune (R-SD) said. 

Both chambers must pass the same version of a spending bill before President Trump can sign it into law. The government will partially shut down if a bill is not passed and signed by March 14.

Today, we’ll explore the latest on the competing budget plans, with perspectives from the left and right. Then, Managing Editor Ari Weitzman gives his take while Executive Editor Isaac Saul is on paternity leave.

What the left is saying.

• The left criticizes Republicans’ approach to the budget process, arguing the proposed spending cuts would hurt average Americans.
• Some say the budget plans rest on flawed assumptions. 
• Others say Democrats should refuse to bail out Republicans if they can’t win support for the budget within their own ranks. 

In The Washington Post, Catherine Rampell wrote “to pay for tax cuts, the GOP’s budget plan goes full Scrooge.”

“Republicans have been trying for years to reduce federal health programs and nutritional assistance, including their disastrous attempts to repeal Obamacare in 2017. But now that they’re desperate to extend and expand the Trump tax cuts, they are especially motivated to shred the safety net because they need to find cost savings somewhere,” Rampell said. “Republican lawmakers seem inclined to give him most of what he wants. So how do they plan to fill their gaping budget hole? They claim they’ll do it through a combination of fake math, nonbinding promises and shanking the poor.”

“Exactly how committees will slice and dice these programs is not specified. Republicans might cut programs under the guise of new or stricter ‘work requirements,’ for example. This idea often polls well, but when Medicaid work requirements were briefly tried during Trump’s first term, they ended up backfiring,” Rampell wrote. “The White House is explicitly trying to ‘flood the zone’ with distressing developments: constitutional crises, trade wars, data deletions, law enforcement purges, gutted agencies. It all deserves your attention. But don’t take your eye off Congress.”

In Bloomberg, Kathryn Anne Edwards argued “House Republicans’ budget plan gets poverty all wrong.”

“House Republicans released a budget proposal that effectively calls for a $4.5 trillion tax cut funded by $1.5 trillion in reduced spending and borrowing the remaining $3 trillion… proponents of the bill say it’s not about spending ‘cuts’ but making programs less vulnerable to waste, fraud and abuse — in particular wasting benefits on people not worthy of them,” Edwards wrote. “Such thinking exposes a fundamental misunderstanding of poverty, one that disregards the economic reality of being a low-income American in favor of broad judgement and harsh policy.”

“Enduring poverty myths propel misguided policy like a tax cut financed via lower spending envisioned by Republicans. If the myths were true, the reasonable conclusion is that policy needs to fix these people. The economy is fine, the labor market is fine, the housing market is fine, health insurance is fine — it’s these people and their choices that need addressing,” Edwards said. “But these myths aren’t true, which means that instead, policy needs to address the economic and labor market shortcomings that generate poverty and hardship. It puts into perspective just how much is lost with yet another sprawling, multi-trillion-dollar debt-financed tax cut.”

In MSNBC, Michael A. Cohen said “Trump and the GOP have boxed themselves into a corner” on the budget.

“One of Trump’s first moves as president was an attempt to freeze federal spending that had been authorized and appropriated by Congress… Why should Democrats support another funding measure if they can’t be sure Trump will spend the money they give to the executive branch,” Cohen wrote. Furthermore, “with an extraordinarily narrow two-seat majority in the House — and a track record of GOP iconoclasm regarding government funding measures — there’s a real question as to whether House Speaker Mike Johnson, R-La., can cobble together enough Republican votes.”

“At this point, the potential for a government shutdown is pretty much the only arrow in the Democratic quiver to stop the damage that Trump and Musk have wrought in just three weeks,” Cohen said. “Moreover, Trump’s extremism has given Democrats little choice. If Republicans need Democratic votes to keep the government open, how could Democrats explain to their supporters giving them away without getting a king’s ransom in return — especially after the White House’s blithe dismissal of congressional prerogatives?”

What the right is saying.

• The right varies in its response to the budget proposals, with many saying Republicans should do what it takes to renew the Trump tax cuts.
• Some worry that Republicans aren’t committed to reducing the federal deficit. 
• Others say the House and Senate have a challenging road ahead despite the GOP controlling both chambers.

The New York Post editorial board wrote “Republicans need to make tough choices to save the Trump tax cuts.” 

“The nation urgently needs Congress to save the Trump tax cuts, but Republicans in Congress are going to need some fancy footwork to make that happen. To get any budget items passed, GOP lawmakers — and President Donald Trump himself — will need to accept compromises,” the board said. “For starters, cementing votes will be a monster hurdle, since GOP control in each house is dangerously thin. Equally problematic: If all the Trump tax cuts pass, revenue won’t cover spending — and the last thing Republicans will want to do is increase red ink.”

“Dems, meanwhile, have threatened to block GOP budget bills they’re not happy with, even if it means shutting down the government. No wonder House Republicans hope to dispense all their tax-and-spend issues in ‘one big, beautiful bill,’ as Trump calls it: They fear they’ll only get one chance to muster a majority,” the board wrote. “The key House committee passed an initial blueprint calling for a maximum $4.5 trillion in tax cuts — well short of what’s needed to cover all of Trump’s asks… GOPers added a provision to up that maximum under certain conditions, but something will still likely have to give.”

In The Dispatch, Jessica Riedl explored “Republicans’ underwhelming budget.”

“The new House budget resolution would likely add $3.3 trillion to 10-year deficits. These costs will dwarf the largely symbolic DOGE budget savings and show a Republican government once again dramatically driving budget deficits upward,” Riedl said. “The Congressional Budget Office’s latest baseline projections show Washington running $21 trillion in budget deficits over the 2025-2034 period covered in the Republican budget proposal, pushing the federal debt held by the public from $29 trillion to $50 trillion.”

“All signs point to steeply rising budget deficits. Baseline annual deficits were already headed toward $3 trillion within a decade due to growing Social Security, Medicare, and interest payments on the national debt,” Riedl wrote. “Even the $1.2 trillion mandatory program savings assigned to various committees assume a combination of Republican unanimity and aggressive budget cutting that has never before occurred. The most likely outcome is that Congress ultimately reduces taxes, shelves most spending cuts, sees interest rates rise further, and brings deficits approaching $4 trillion within a decade.”

In National Review, Dan McLaughlin wrote that Republicans are “unreconciled on spending.” 

“If they can keep their slim caucuses united, Republicans have the votes to pass without Democratic support, anything that is properly channeled through reconciliation,” McLaughlin said. “If Republicans can reach a budget they all agree on, Trump should be willing to give ground on impoundment authority, because such a budget can be written so that it accomplished what impoundment is supposed to be aimed at: spending money only on the things that either Congress explicitly authorizes or the president approves. But there are two major problems.

“First, Trump’s real goals extend to other things as well, such as reshaping programs previously authorized by Congress or bending agency staff to his will. The latter of those ought to be easier within the executive power; the former involves improperly sapping the power of Congress,” McLaughlin wrote. “Second, getting the budget just right is a lot of work, and it will take a lot of time, and it’s far from clear that the current House and Senate Republican caucuses can stay united enough to agree on it. This whole process is including the Democrats because Republicans can’t get all of that done through the proper budget channels in time to fund the government by mid-March.”

My take.

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• To understand the budget process, it’s vital to understand where most spending comes from.
• Neither of the Republican budget proposals lays out a credible plan for reducing spending.
• Congress is failing us. 

It’s federal budget season, which means a lot of head-spinning numbers and congressional dysfunction. Before we can truly appreciate the depth of the latter, we need to really understand the former. Here are some facts about the budget:

In fiscal year 2024, the federal budget deficit was $1.8 trillion. That’s 1,800 billion dollars, or 35 Departments of Energy. Again, that’s just the deficit.

For more perspective, the entire discretionary federal budget — or, everything that can legally be controlled through the reconciliation process — was $1.7 trillion in FY2024. That’s 2,125 Consumer Financial Protection Bureaus.

The mandatory spending for the federal budget — Medicare, Medicaid, Social Security, income security programs, VA benefits, and retirement plans — was $3.9 trillion in FY2024. That’s over double the entire discretionary spending budget.

Lastly, interest on the national debt accounted for a full $700 billion, or a bit less than three times the cost of the entire federal government workforce (about $270 billion).

I think laying all those numbers out in clear terms is essential to understanding what balancing the budget means. If you want to substantivelymeaningfully cut the deficit, you have to either bring those numbers down or significantly raise revenues (federal taxes) — which were roughly $4.4 trillion in FY2023. 

Leaving revenue increases aside for a moment, if you’re looking to cut spending, these are the biggest areas of the budget (again, all in FY2023 numbers):

• Healthcare (Medicare and Medicaid), mandatory spending: $1.5 trillion
• Social Security, mandatory spending: $1.3 trillion.
• Defense, discretionary spending: $800 billion.
• Interest on federal debts: $660 billion.

That’s not to opine on what ought to be cut or how to prioritize these items over one another; it’s only to state the plain fact that these four areas comprise 70% of all federal spending — if you delete the entire rest of the federal budget, and these four areas remain the same, the budget is only balanced.

These top-line numbers are essential to keep in mind when Congress talks about responsible spending cuts — or Elon Musk and DOGE claim they’re going to do anything meaningful to the federal budget by pulling contracts, funding, or worker salaries — to truly appreciate the depths of their unseriousness.

The Senate wants to pass a spending bill first, then a funding bill second. Alright, what do they want to enact? A $345 billion total increase in three places: $175 billion for border security, $150 billion for defense, and $20 billion for the Coast Guard. I’d love to do a breakdown of each of those items and judge them as a matter of policy, but let me first address how Republicans intend to pay for these increases. To get a sense of that, we should look at the House bill. 

The House wants to pass spending and funding at the same time. This gets a bit complicated because they’re using a time span of a decade rather than breaking it out over a fiscal year, but this is a common practice. In that context, the House GOP is proposing $4.5 trillion in tax cuts over the next decade, dependent on finding $2 trillion in cuts to mandatory spending at the same time. 

To their credit, the House is looking for cuts in at least one meaningful place: Medicaid — specifically, by paying for Medicaid based on population instead of the current open-ended entitlement system. To repeat, I’m not opining on the merits of this plan (or cutting Medicaid spending in general) — I’m just bluntly stating that this is one of the biggest areas where there is funding to cut, and the House is right to look there. However, proposed increases to discretionary spending from the House more than cancel out the changes to Medicaid spending and cuts to other federal programming — not to mention the fact that President Trump directed Congress not to touch Medicare or Medicaid.

So, that’s a decidedly mixed signal on what Republicans are actually going to cut.

Furthermore, the topline math on revenue cuts paired with budget cuts doesn’t make a ton of sense at first glance, since $4.5 trillion in revenue cuts is greater than $2 trillion in spending cuts. However, Republicans believe that tax cuts encourage economic stimulus that spurs more revenues over time, so they argue this spending is net neutral. Even totally ceding that point (which many economists don’t), and even assuming these cuts to mandatory spending are enacted, the House’s plan will still increase the deficit over the span of a decade by about $3 trillion. The House knows this. A balanced budget for five years, somewhat maddeningly, means an increasing debt and a federal deficit because of our fourth-largest spending item: interest on existing debt.

That brings me to congressional dysfunction. To be frank, the whole back and forth between the chambers — Should it be two bills or one? Is Mike Johnson outmaneuvering John Thune? Is Trump undermining the Senate? Is the House Freedom Caucus increasing its influence? Should we increase offshore drilling? Can Republicans include all their priorities before a government shutdown? Will Democrats play ball? — it’s all tedious. It’s a fight for control of the captain’s wheel while the ship is sinking. It’s a high school putting on a school play while the building’s on fire.

It’s another melodrama from a party with control of both chambers of Congress and the White House, squabbling over how they’re going to keep the government from shutting down and the deficit neutral after years and years of sounding the alarm that what we truly need is a harsh look at reality and some stiff cuts. 

I feel the urgency; I’m 37 years old. I’m going to be inheriting the debt that our increasingly aging Congress is increasingly saddling me with. I’ve been compelled by the conviction that every Congressional Republican directed at President Biden’s trillion-dollar pandemic-recovery spends — conviction that they have now seemed to abandon for a fun game of “who can curry the president’s favor the most,” with the exception of the blessedly idealistically consistent Sen. Rand Paul (R-KY).

Congress: Where is your urgency? What are you doing?

I really want to do a deeper analysis here. I would love to do an analyst’s job and get into the numbers and compare what each budget item does and where the cuts make the most sense, but I just can’t. It’s an obviously fruitless exercise. The House can pass their bill as advertised, the Senate can pass theirs and pair it with some similarly tough-but-feckless-budget-cuts and tax-cuts balancing act, they can meet in the middle — it just doesn’t matter. The deficit isn’t going to decrease. The national debt is going to get worse.

Congress is failing us.

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Your questions, answered.

Q: There have been a lot of resignations in the news re: Trump’s actions as well as with the Eric Adams situation. What do these people accomplish by resigning? Won’t Trump just replace these people with someone loyal to him? How does it help in any way?

— John from Charlotte, NC

Audrey Moorehead, Associate Editor: You’re right that, at a small scale, an individual resignation doesn’t mean much. Take the example of Danielle Sassoon: She left her post as acting attorney for the Southern District of New York in protest of the Justice Department’s directive to dismiss the Eric Adams case. However, Sassoon was only fulfilling the position in the interim while Trump’s pick for the position, Jay Clayton, awaits confirmation. Trump will need to find someone else to assume the interim posting, but in the grand scheme of things, Sassoon’s departure is a small, temporary setback for the government.

That said, there are several reasons why Sassoon and others feel the need to resign — and why they believe their resignations could do some good. For one thing, Sassoon likely would have been fired if she hadn’t resigned, which would have allowed the DOJ to control the initial narrative on her departure. Instead, she published her resignation letter and defined a moral case for her decision, attracting more attention to her situation and to the case itself. It also set a precedent for other prosecutorial resignations in protest of DOJ orders, including Sassoon’s colleagues in the Southern District.

History also provides evidence of cases where resignations like these can effect change, especially when they happen on a larger scale. The most prominent example is probably the “Saturday Night Massacre,” a series of high-profile resignations during the Watergate scandal that was the tipping point leading to President Nixon’s resignation. While I don’t think the resignations happening now will have quite the same effect, they’ve undeniably caught public attention, and — combined with pushback from the judge considering the case dismissal — it’s not unreasonable for these officials to hope that their resignations might make the DOJ and the Trump administration reconsider some of their decisions.

Want to have a question answered in the newsletter? You can reply to this email (it goes straight to our inbox) or fill out this form.

Under the radar.

On his first day in office, President Donald Trump issued an executive order designating cartels as foreign terrorist organizations; this week, the State Department officially added eight Latin American gangs to its terror list. The named gangs include six Mexican drug cartels, Venezuela’s Tren de Aragua, and El Salvador’s Mara Salvatrucha (MS-13) — they join roughly 60 Islamic militant groups on the list. The designation, which fulfills one of Trump’s campaign promises, will enable stricter sanctions against members of these gangs, as well as potential military action. The Wall Street Journal has the story.

Numbers.

• 112.26%. The U.S. debt as a percentage of GDP in 2023, according to the International Monetary Fund.
• 49.92%. Canada’s debt as a percentage of GDP in 2023. 
• 1974. The year the budget reconciliation process was created by the Congressional Budget and Impoundment Control Act. 
• 23. The number of budget reconciliation bills passed by Congress and signed into law to date.
• 4. The number of budget reconciliation bills passed by Congress but vetoed by the president. 
• $4 trillion. The projected increase in primary deficits over the next decade on a conventional basis if the provisions in the 2017 Tax Cuts and Jobs Act are permanently extended, according to a study by Penn Wharton. 
• +16%. The projected increase in the federal debt by 2054 (relative to current law) if the tax cuts are permanently extended.
• +0.2%. The projected increase in GDP by 2054 relative to current law if the tax cuts are permanently extended.

The extras.

• One year ago today we covered the Fani Willis testimony.
• The most clicked link in yesterday’s newsletter was our “Have a nice day” story about a donkey playing with a yoga ball.
• Nothing to do with politics: Ice hockey’s never been hotter. What to know about, and how to watch, tonight’s Four Nations Face Off Final between the United States and Canada.
• Yesterday’s survey: 3,962 readers answered our survey on the Department of Government Efficiency with 69% saying DOGE is wrongly cutting government contracts or employees. “The attempt to reduce waste and corruption is a good thing, but the process is lacking. It would be great if better technology systems would be put in place to make each department more efficient and transparent,” one respondent said.

Have a nice day.

At the age of 15, Ted Midgely left school when he couldn’t find support for his dyslexia. Consequently, he never learned how to read and spent the next 40 years of his life only knowing how to spell his name. When an opportunity arose for Midgely, now 58, to be a manager for a professional motorcycle racer, his lifelong passion for Speedway motivated him to learn to read. Needing to be able to read emails, Midgely applied himself to the challenge, working one-on-one with a tutor and eventually achieving his goal. In addition to enjoying new job prospects, Midgely can now read a Speedway Star magazine that he had kept for 40 years. The BBC has the story.

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