US Senate approves Donald Trump's $4 trillion budget in win for 'massive tax cuts and reform' agenda

Narrow 51-49 vote sets stage for dramatic rates overhaul later tis year

The proposed tax cuts would add up to $1.5 trillion to the US deficit over the coming decade (Getty Images)

Republicans have muscled a $4 trillion budget through the Senate in a major step forward for President Donald Trump's ambitious promise of “massive tax cuts and reform.”

The 51-49 vote sets the stage for debate later this year to dramatically overhaul the US tax code for the first time in three decades, cutting rates for individuals and corporations while eliminating trillions of dollars of deductions and special interest tax breaks.

The tax cuts would add up to $1.5 trillion to the deficit over the coming decade, however, as Republicans have shelved fears about the growing budget deficit in favour of a once-in-a-generation opportunity to rewrite tax laws.

“These are reforms that change incentives and drive growth, and we've never done that before,” said Senator Pat Toomey (Republican-Pennsylvania).

The White House hailed the bill's passage, saying it “creates a pathway to unleash the potential of the American economy through tax reform and tax cuts.”

Divisions within the GOP indicate the process won't be easy despite the political imperative.

The upcoming tax measure, always a top item on the GOP agenda, has taken on even greater urgency with the failure of the party to carry out its longstanding promise to dismantle former President Barack Obama's signature healthcare law. Republicans have said failure on taxes would be politically devastating in next year's midterm elections, when control of the House and Senate are at stake.

When reconciled with the House budget plan, the nonbinding measure would set up special procedures to pass follow-up tax legislation without the threat of a filibuster by Senate Democrats. Pressure is mounting, however, on the House to simply adopt the Senate budget plan rather than risk lengthy negotiations that could delay the tax measure.

The House measure calls for a tax plan that wouldn't add to the deficit, as well as $200 billion worth of cuts to benefit programmes that the Senate has rejected.

Democrats blasted the GOP budget, warning voters that the upcoming tax measure will shower benefits on top-bracket earners, corporations, business partnerships and people inheriting multimillion-dollar estates. Trump promises that the tax plan — still under development — is aimed at the middle class, but previous versions have seen upper-income individuals benefiting the most.

“The bottom line on this budget is that it's a right-wing fantasy document that paves the way for a hyper-partisan process on tax reform and trillions of dollars in handouts to big corporations and the wealthy,” said Oregon Senator Ron Wyden, the top Democrat on the tax-writing Finance Committee.

“The more people learn about this tax bill, the less they will like it,” said Senate Minority Leader Chuck Schumer (Democrat-New York). “That's what led to the demise of healthcare, ultimately, is that it was unpopular with the American people.”

Only one Republican, Rand Paul of Kentucky, voted against the budget. He said the measure permits too much spending and abandons the GOP drive to repeal the Obama health law. An amendment by Paul to revive the “Obamacare” repeal failed by a 2-to-1 margin.

“The American people are sick and tired of Congress spending recklessly with no end in sight,” Paul said, adding that the GOP plan “simply didn't measure up and spent too much.”

Under Capitol Hill's byzantine budget rules, the nonbinding budget resolution is supposed to lay out a long-term fiscal framework for the government. This year's measure calls for $473 billion in cuts from Medicare over 10 years and more than $1 trillion from Medicaid. All told, Senate Republicans would cut spending by more than $5 trillion over a decade, though they don't attempt to spell out where the cuts would come from.

Even so, the measure doesn't promise to balance the budget, projecting deficits that would never drop below $400 billion. Republicans vow that the tax plan would result in a burst of economic growth that will add enough tax revenue to make up for the ambitious rate cuts. Most experts dismiss such promises, however, and Congress' official scorekeepers agree with them.

And Republicans have no plans to carry out the measure's politically toxic proposals to cut Medicare, food and farm programmes, housing subsidies and transportation. Instead, work is under way to add tens of billions of dollars for both the Pentagon and domestic agency operations. And the Senate is poised to send Trump a $36.5 billion hurricane relief bill on Monday.

The budget measure also would revive long-moribund efforts to permit exploration for oil in Alaska's Arctic National Wildlife Refuge (ANWR), permitting legislation opening up ANWR to drilling to catch a ride on the popular tax measure. Otherwise, it would be vulnerable to a filibuster by Democrats. An amendment to strip the drilling provision from the measure was rejected by a 52-48 vote, with moderate Republican Susan Collins of Maine joining with Democrats who oppose opening the refuge.

AP