Trump’s massive tax cut bill passes key US House committee vote

United States President Donald Trump’s sweeping tax-cut bill has won approval from a key congressional committee to advance towards possible passage in the House of Representatives later this week.

The rare Sunday night vote marks a big win for Trump and House Speaker Mike Johnson, after hardline Republican conservatives on Friday blocked the bill from clearing the House Budget Committee over a dispute involving spending cuts to the Medicaid healthcare programme for lower-income Americans and the repeal of green energy tax credits.

Four hardline members of the committee’s 21 Republicans allowed the legislation to advance by voting “present”. The bill passed in a 17-16 vote, with all Democrats voting against it.

The hardliners had spent much of the day in closed-door negotiations with House Republican leaders and White House officials.

Johnson met with Republican lawmakers shortly before the meeting, telling reporters that the changes agreed to were “just some minor modifications. Not a huge thing.”

Republican House Budget Chairman Jodey Arrington said he expects deliberations to continue on into the week, “right up until the time we put this big, beautiful bill before the House”.

Nonpartisan analysts say the bill, which would extend the 2017 tax cuts that were Trump’s signature first-term legislative win, would add $3 trillion to $5 trillion to the $36.2 trillion national debt over the next decade.

Credit ratings agency Moody’s cited the rising debt, which it said was on track to reach 134 percent of gross domestic product (GDP) by 2035, for its decision on Friday to downgrade the US’s credit rating.

US Treasury Secretary Scott Bessent said in an interview with CNN on Sunday that the bill would spur economic growth sufficient to offset any growth in the debt, adding that he did not put much credence in Moody’s downgrade.

Economic experts have warned that the downgrade – following previous downgrades by Fitch Ratings and S&P – is a clear sign that the US has too much debt and lawmakers need to either increase revenues or spend less.

Trump’s Republicans hold a 220-213 majority in the House, and are divided over how deeply to slash spending to offset the cost of the tax cuts.

Hardliners want cuts to Medicaid, which some Republican senators have pushed back against, saying it would hurt the very voters who elected Trump in November, and whose support they will need in 2026 when control of Congress is again up for grabs.

The bill’s cuts would kick 8.6 million people off Medicaid.

It also aims to eliminate taxes on tips and some overtime income – both Trump campaign promises – while boosting defence spending and providing more funds for Trump’s border crackdown.

Democratic US Senator Chris Murphy of Connecticut said the credit rating cut spelled trouble for Americans.

“That is a big deal. That means that we are likely headed for a recession,” Murphy told NBC’s Meet the Press.

“These guys are running the economy recklessly.”