If you talk to Speaker Mike Johnson or Senate Majority Leader John Thune, one thing becomes immediately evident: they wish they could devote all of their time and energy to passing President Donald Trump’s tax-and-spending-cut agenda.
The only problem is that the world keeps intervening.
— Trump’s global trade war sent markets into a tailspin Thursday. The Dow was down 4%, the Nasdaq composite was down nearly 6% and the S&P 500 gave back 5%. This led to an entire day of Senate Republicans answering questions about a seemingly spiraling economy. Today won’t be much different. Futures markets are in the red again this morning.
— Johnson is in the midst of a major rebellion in the House Republican Conference over proxy voting, a dispute that has frozen the chamber. More on that in a minute.
— Trump’s top national security officials were revealed to have used the encrypted messaging app Signal to discuss sensitive military plans, forcing Republicans to answer for an embarrassing situation. The Senate Armed Services Committee has launched a bipartisan inquiry.
— Government-wide cuts, including those initiated by DOGE, are continuing to infuriate many Republicans. For example, HHS Secretary Robert F. Kennedy Jr. cut 10,000 jobs at his agency, only to say some were a mistake.
The climate in Washington and across the country — both politically and economically — is making it much more difficult for Republicans to pass a massive tax-and-cut plan. Equity markets are getting rocked. Economists are already saying that a recession is possible. It will be difficult for Republicans to make the case that they should cut government spending. One almosts wonders if the president should’ve waited on his tariff regime until after the reconciliation bill was passed.
The last two weeks especially – with Trump’s tariff frenzy and the Signal scandal dominating – have left Senate Republicans exhausted and more grumpy than usual during their closed-door meetings, per our conversations with GOP senators this week.
And for the budget reconciliation package, the costs of failure could not be higher. A vast majority of Americans would see a tax increase. Remember, too, that Republicans are trying to use the legislation to raise the debt limit, which likely needs to be done by late spring or early summer.
“We could create an environment that would rival 2010 — in reverse,” warned Sen. Thom Tillis (R-N.C.), who’s up for reelection in 2026. “Regardless of what people think, almost every election in my life has been driven about how people feel economically.”
Even if Republicans are able to pull it off, Tillis cautioned, the uncertainty surrounding the tariffs could hamper the effectiveness of the overall reconciliation package, which Republicans say is intended to spur economic growth.
“With our [2017] tax reform bill, we saw historic capital deployment… If we pass a tax bill and we have the uncertainties of the tariffs, then you’re not gonna get the same immediate response,” Tillis said. “The capital is gonna wait on the sidelines to figure out the other side of the ledger of whether or not it’s worth making the investment.”
Looking ahead. Thune was able to get his entire conference, with the exception of Sen. Rand Paul (R-Ky.), on board with the compromise budget resolution for the first procedural vote last night. They’re on track to pass it within the next 24 hours.
But passing a budget resolution is the easy part. Once Republicans put pen to paper, there could be multiple Rand Pauls — on potential Medicaid cuts, on spending-cut levels in general, and more.
“It’s not gonna go away just because we will it to go away,” Sen. Lisa Murkowski (R-Alaska) told us of the House-Senate tensions over Medicaid cuts. “We’re just gonna be dealing with it later on.”
That’s not to mention the possible pitfalls surrounding their untested scoring method for making the tax cuts permanent, which could be subject to an unfavorable parliamentarian ruling down the line.
That could force a possible vote to overrule the Senate’s nonpartisan referee — a nightmare scenario for GOP leaders, as we noted on Wednesday. Thune has cautioned against overruling the parliamentarian, saying it would be akin to gutting the filibuster.
The outside distractions may just be a fact of life for Republicans with Trump in the White House. But Johnson and Thune need the president to help them get a reconciliation bill over the finish line. So it’s a balancing act they’ll need to master.
