Your Money
For those following the latest from Washington, DC, trade talk is just the tip of the iceberg. Congress returned from Easter recess to advance the GOP’s major budget bill, focused on tax and spending cuts. Lawmakers are now moving from broad goals to detailed negotiations.
Key developments:
- Spending cuts: House committees will draft $1.5 trillion in cuts. The Energy & Commerce Committee must find $900 billion—likely requiring controversial Medicaid reductions, despite Trump’s opposition.
- Tax policy: Republicans aim to extend all 2017 tax cuts, but since they only prevent hikes, the move may lack voter appeal. Additional ideas include:
- Temporary tax breaks on tips, overtime, and Social Security income
- Possible changes to the SALT deduction cap
- Timeline: GOP leaders hope for House passage by Memorial Day, though Senate differences may push final approval into summer.
- Debt ceiling: The bill includes a $5 trillion increase, expected to cover borrowing through 2026. Treasury will soon update the default “X date”; if it comes sooner than expected, Congress may need a separate action to avoid default.
- Fed chair tensions: Markets steadied after Trump backed off threats to fire Fed Chair Jerome Powell. Public criticism may continue, but Powell is likely to remain in place until his term ends next year.
Expect the stock market to act like a real-time scorekeeper, cheering or jeering each headline out of Washington as the budget battle unfolds.
Washington: What to Watch Now
by Michael Townsend
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