House Passes Key Budget Bill, but Senate Republicans See Need for Major Changes

Last week, the House of Representatives (the House) narrowly passed, a budget proposal that includes the Trump Administration’s policy priorities (deficit reduction, tax cuts, domestic energy production, national security, and border security/immigration). However, the House budget faces significant challenges in the Senate, where Senate Republicans are signaling that substantial changes will be necessary before any final agreement is reached. While Senate Republicans are open to the House’s “one big, beautiful bill” approach, they are pushing for modifications.

A major sticking point is the fate of the 2017 Tax Cuts and Jobs Act (TCJA). Senate Republicans, led by Majority Leader John Thune, are advocating for making these tax cuts permanent. However, the House budget blueprint, which includes $4.5 trillion in net tax cuts, may not provide enough revenue to fully extend the TCJA while also addressing other tax priorities. This debate could influence the availability of tax credits, including the Low-Income Housing Tax Credit (LIHTC).

Additionally, the House plan includes provisions requiring at least $880 billion in spending cuts from committees overseeing healthcare and social programs. Some senators warn that this could lead to deep reductions in Medicaid and other safety net programs that low-income renters rely on. While some Senate Republicans, like Sen. Josh Hawley, support work requirements for Medicaid, they oppose drastic cuts that could negatively affect working families. Others, like Sen. Ron Johnson, are pushing for even deeper federal spending reductions, complicating negotiations.

The Senate is also weighing whether to include the House’s proposed $4 trillion debt ceiling increase in the final package. Some Republican senators argue that such a large increase is a “non-starter,” while others suggest tying it to broader government funding negotiations. With Senate Republicans preparing for extensive revisions, the timeline for passing a final budget remains uncertain. This uncertainty heightens concerns for the affordable housing industry, as key funding for programs and tax incentives may be at risk during negotiations. NAHMA will provide updates as this process unfolds and advocate for policies that support the development and preservation of affordable housing across the country, while opposing cuts to key housing programs and tax provisions.