By David Morgan

WASHINGTON (Reuters) – Republicans who control the U.S. House of Representatives are grappling with internal differences on funding for President Donald Trump’s extensive tax cuts, as hardline conservatives seek to tackle an annual federal deficit nearing $2 trillion.

With a slim 218-215 majority in the House, achieving unity is crucial as they prepare for a vote on a fiscal 2025 budget resolution, a key step in advancing Trump’s ambitious agenda which includes tax cuts, immigration reform, energy deregulation, and increased military spending.

As they head into a three-day policy retreat in Miami, concerns are rising that House Speaker Mike Johnson’s leadership might hesitate to enforce the spending cuts necessary to support Trump’s $6 trillion tax-cut plan while addressing the national debt exceeding $36 trillion.

Republicans aim to extend tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), set to expire this year, which nonpartisan estimates suggest could cost over $4 trillion over a decade. Additional campaign promises by Trump to eliminate certain taxes could add up to another $1.8 trillion.

Failure to achieve consensus could derail GOP lawmakers’ ambitions to pass Trump’s agenda by the end of May, utilizing a strategy to circumvent Senate Democrats requiring almost complete agreement from their divided majority.

Representative Michael Cloud, part of the hardline House Freedom Caucus, emphasized, “Most of us support the TCJA. We recognize the need to stabilize our fiscal situation.”

Johnson aims to unify various components into a comprehensive legislative package prioritizing Trump’s initiatives. They must also consider raising the federal debt ceiling to prevent a disastrous default and providing disaster relief for communities in Los Angeles affected by wildfires.

House Democratic leader Hakeem Jeffries criticized the Republican strategy as “a contract against America,” asserting it would disadvantage working families, the middle class, children, seniors, and veterans, while undermining Medicaid and the Affordable Care Act.

COST OF TRUMP AGENDA

Republicans recognize the challenge of identifying sufficient spending cuts to finance Trump’s plans while privately fearing that calls for significant deficit reduction could adversely affect constituents, particularly regarding Medicaid and community service funding.

Representative Ralph Norman stated, “This thing cannot be deficit neutral,” stressing that the proposal needs substantial deficit reduction.

Another obstacle is the increasing U.S. deficit impacting the bond market, which raises the nation’s borrowing costs. A significant deficit escalation could exacerbate these issues.

‘THIS IS AN EQUAL BODY’

The unfolding debate will showcase whether Trump’s demands or hardliners’ insistence on traditional deficit reduction takes precedence. Representative Richard McCormick declared, “The president said very clearly what he wants. Now, the question is, what do we want?” He cautioned that a lack of diverse viewpoints would threaten the constitutional republic.

The House Budget Committee has distributed a 50-page list of proposals, spanning widely accepted ideas like repealing green energy tax credits and contentious suggestions such as eliminating the federal mortgage interest deduction.

Trump’s proposal for a 10% tariff on imported goods, expected to raise $1.9 trillion, faces resistance from conservative party members.

Senator Rand Paul articulated his opposition, stating, “I’m not in favor of raising taxes. Tariffs are simply a tax.”

Despite efforts to find common ground, Representative Tim Burchett expressed concern that an additional $200 billion in proposed Pentagon funding could consume savings earmarked for deficit reduction. Yet, he hesitated to declare opposition to the package, indicating, “If I see us trending in the right direction, that might be enough.”

He added, “But again, we’re lying to ourselves and the public… It’s a crazy system.”