Legal and Fiscal Analysis of President Trump’s Reconciliation Bill
An Examination of its Legislative Framework & Economic Implications

Introduction

The Reconciliation Bill proposed under President Trump’s administration has triggered significant discussion among lawmakers and the public. While the bill aims to solidify measures such as making the 2017 tax cuts permanent, it presents critical fiscal challenges by failing to address the nation’s ballooning debt and deficit. This paper delves into the legal structure and fiscal consequences of this bill, addressing the criticisms from key policymakers and analyzing its long-term implications.

The Regular Annual Government Funding Process
•Regular government funding occurs through the passage of 12 appropriation bills covering "discretionary" spending, which should be voted on annually by September 30.
•Excludes "mandatory" spending programs like Social Security, Medicare, and Medicaid that drive most of the annual deficit.
•The 12 appropriations bills, totaling about $1.6 trillion, fund:
•Agriculture
•Defense
•Education
•Energy
•Foreign Aid
•Health & Human Services
•Homeland Security
•Justice
•Labor
•Transportation
•Most spending outside Defense and Homeland Security is considered inappropriate or unconstitutional at the federal level and is funded through borrowing.
•A simple House majority can pass appropriation bills, but they require 60 Senate votes, allowing Democrats to block them through filibuster.
•Instead of passing all 12 bills, Congress often uses an “omnibus bill,” combining those into one massive package filled with new policies and increased spending, lacking transparency.
•Omnibus bills typically include thousands of earmarks and "pork barrel" spending.
•Alternatively, Congress may issue a continuing resolution (CR), extending previous government spending levels into the next fiscal period to avoid a shutdown when new spending agreements can't be reached.
•A CR also requires 60 Senate votes and a House majority.
Key Provisions of the Special Reconciliation Bill

The Republicans have a tremendous opportunity with the reconciliation bill. They have full control of the federal government: they have the White House, the House, and the Senate. A reconciliation bill is unique in that it only requires a simple majority to pass the Senate. They do not need Chuck Shumer and 60 votes; they have all the votes they need to pass whatever they want.

The federal government fiscal year runs from October 1 to September 30. Over the past 2.5 years since Republicans gained control of the House, despite multiple campaign promises to cut spending and work on the national debt, the Republicans have instead repeatedly “kicked the can” down the road.

In September of last year, they passed yet another CR (Continuing Resolution) through December, keeping in place the policies and spending levels from when Democrats had full control of government, with the promise to cut spending “next time”. However, in December, they passed another CR through to March, with the promise to cut spending in 2025, now that they had full control of the federal government. But they then passed the latest CR in March, funding the government through the end of this fiscal year (September 30), once again at post-COVID Democrat levels (Biden, Pelosi, and Shumer spending levels), with yet another promise to cut spending with the 12 appropriations bills that are due before October 1.
The reconciliation bill is a special opportunity to address our nation’s fiscal crisis outside of the regular annual appropriations process. But that is not what this “big beautiful” bill accomplishes. The CBO (Congressional Budget Office), reported on June 4, 2025, that the “big, beautiful bill” would increase the national debt by approximately $4 Trillion over the 10-year period covered by the bill. That is in addition to the $2 trillion the debt is already increasing on an annual basis, or about $20 trillion over 10 years. Furthermore, the reconciliation bill raises the debt limit, which is essentially the nation’s credit limit, by an additional $5 trillion. This enables the government to keep borrowing beyond its current debt limit of $36.2 trillion. If the government did not raise the debt limit, it would force the government to significantly reduce spending, prioritize payments for essentials, and operate within its budget.

The bill’s primary focus is to extend the benefits of the Tax Cuts and Jobs Act of 2017, ensuring that measures like reduced corporate tax rates and individual income tax brackets remain permanent. Additionally, the bill introduces several campaign-driven provisions, including:
•No tax on tips
•No tax on overtime

These provisions appeal to the electorate but come with substantial fiscal costs. By forgoing revenue streams tied to these exemptions, the bill deepens concerns about the sustainability of its promises without corresponding measures to reduce government spending.
Fiscal Challenges: $2 Trillion Deficit & Rising National Debt

Critics argue that the bill does little to mitigate the annual $2 trillion deficit currently burdening the United States. Without significant cost-cutting measures, the bill risks exacerbating the national debt, projected to surge from $37 trillion to an alarming $60 trillion over the next decade. This issue is compounded by the absence of structural reforms aimed at curbing government expenditure.

Imagine a Church that has a $100,000 yearly budget, which covers all their necessities: staff, property payment, insurance, curriculum, etc. But it will also cover new ministries they would like to be able to have and other things that the Church would like to be able to purchase. However, the Church only brings in $80,000.00. What is the Church to do? Well, the smart and responsible thing to do is to reduce or eliminate the extra things that the $20,000 deficit would have funded. But, if the average church operated the way that the government does, they would go out and borrow the $20,000 to be able to do all the things that they want to do. If they were able to borrow that money, the lender would designate a credit limit. However, all the church has done is to create a new debt without the money to pay it, because the $20,000 deficit created a new $20,000 debt that the church must pay back. If the church kept operating that way for 10 years, overspending and borrowing to fund a $20,000 annual deficit, they would have $200,000 in accumulated debt. Of course, setting aside the irresponsibility of their borrowing and spending habits, they could not do this unless they had a credit limit of that amount.

The federal government has been operating with a $2 trillion annual deficit for the past few years, and has reached the credit limit, or debt ceiling. The United States has a credit limit of $36.2 trillion. Now, when you and I want a credit limit increase, we must call the bank or other loan institution and ask them to raise that limit. The lending institution makes that determination, even if we have a great payment history, or a solid debt-to-income ratio.

However, the government can decide to give themselves a credit increase. Now because the United States has the debt that we have and has not demonstrated a willingness to reduce spending or implement fiscal reforms, the credit rating of the country has been downgraded by the ratings agencies. This means that the debt of the country is of greater risk, which requires us to pay higher interest rates to attract investors who finance the debt. This negatively impacts all consumer and business borrowing, as those interest rates also increase.
Senator Rand Paul’s Perspective

Senator Rand Paul has been vocal about his concerns regarding the fiscal irresponsibility embedded in the bill. In a recent statement, Paul emphasized, "You cannot have massive tax cuts without massive spending cuts. Just like any household, the government must live within its means." He criticized the bill for its failure to align tax relief with sustainable fiscal policies, highlighting that unchecked growth in debt undermines the economic stability of future generations.

Congressman Bob Good’s Take
Echoing similar sentiments, former Congressman Bob Good remarked, "The bill is a massive, missed opportunity to address the nation’s debt crisis when Republicans control the entire federal government. It is a betrayal to the voters to fail to significantly reduce spending and implement fiscal reforms when only a simple majority is needed in the Senate." Good’s critique underscores the need for cost-cutting strategies to offset the tax relief measures and ensure we do not worsen our fiscal situation over the next 10 years.

Legal Considerations

From a legal standpoint, the bill’s permanence of the 2017 tax cuts raises questions about equity and distribution. Critics argue that while these cuts provide immediate relief to middle-class families, they disproportionately benefit higher-income individuals and corporations, further widening income inequality. Additionally, the exemptions on tips and overtime pay, though appealing, may face challenges in implementation, as they require modifications to existing tax codes and oversight mechanisms. This will be a tax code nightmare. The IRS will have to implement all kinds of restrictions and rules to the “no tax on tips.” I have even had employers throw around the idea that they will call their “salaried” employes tipped employees so that they do not have to pay any taxes. While this campaign gimmick sounds good, the IRS will have to write code that will protect the government from citizens being able to “work the system.”  

Conclusion

President Trump’s Reconciliation Bill, while ambitious in its promises, fails to address the core fiscal challenges facing the United States. Without substantial cost-cutting measures, the bill risks deepening the deficit and national debt, jeopardizing the economic stability of the nation in the coming decades. As Senator Rand Paul and former Congressman Bob Good have aptly pointed out, fiscal responsibility must accompany tax relief to ensure that the campaign-driven provisions stand the test of time. Policymakers must prioritize sustainable economic strategies that balance public welfare with prudent fiscal management.

Just to give perspective, it took the federal government about two hundred years to amass $1 Trillion in national debt, about 1981. Since then, we have amassed a national debt of around $36 Trillion over the last 44 years, which is about $1 Trillion a year. Unfortunately, that has accelerated to about $2 Trillion a year. And the national debt is not longer an abstract notion for the American people. We feel the national debt, and government spending too much because of inflation and things costing more. So, as we conclude, what are the things that we need to understand and what are the things that need to be cut?

Many things the federal government does, and takes our money for, are improper or even unconstitutional, and not an appropriate role or function of the federal government.  Defense and national security are obvious exceptions, but they represent only about a trillion of the $7 trillion for which the federal government takes $5 trillion of our money and borrows $2 trillion more.

Even "mandatory" spending on Social Security, Medicare, and Medicaid, which together cost about $4 trillion annually, and are immensely popular, must be reformed because the exploding cost is unsustainable.  

For example, when Social Security first came into being, you had thirty-two people paying for every one person receiving benefits. Now, you have three people paying for every two recipients of benefits. How would you fix that problem? One way would be by raising the retirement age. This is especially true of Medicaid, which was designed about 60 years ago to help poor disabled, young children, and pregnant mothers; but has expanded to included millions of able-bodied working-age adults with no children. Medicaid costs about $1 trillion now and is about 50% bigger and more expensive than it was before COVID.

In the $1.6 trillion+ "discretionary" part of the budget, which is funded via the annual appropriations process, there are lots of opportunities to cut hundreds of billions from things like education, energy subsidies, climate stuff, EPA, farm subsidies, foreign aid, etc. Much of this spending is popular, and discussions like this often reveal that those who think of themselves as fiscal "conservatives" like the government providing things.

However, almost everything they do:
•Isn't an appropriate, justified or even constitutional role of the federal government.
•Almost always makes things worse, as the federal govt is the most ineffective and inefficient way to distribute $$
•Always comes with mandates, regulations, and strings attached that further empower the federal govt.
•Trample on constitutional state, local, and individual rights and freedoms
•Even if it is not so bad---We do not have the money!

It is a little like if a family is overspending, it may not be for drugs, gambling, prostitutes, etc. It might be for nice and popular "good" things like vacations, fancy cars, Christmas gifts, or a boat. These are not necessarily bad or evil things, but it is wrong to overspend and be a bad steward of His resources.
It must be understood that while we agree with a lot that President Trump has been able to accomplish, this reconciliation bill is filled with problems, starting and ending with its failure to sufficiently cut government spending.

You simply cannot, for the long term, provide tax cuts without cutting government spending and think that the tax cuts will be sustainable. The Republicans need to keep their campaign promise to the American people and significantly cut government spending. If they do not, and if this bill in its present form passes, the national debt will continue to grow at an even faster pace. It is past time for the federal government, like every household, to begin “living within their means.”

This reconciliation bill fails to help accomplish that objective.

Some have asked about the impact that tariffs will have on the national debt and help off-set the lack of spending cuts. There is a lot of debate, discussion, and disagreement about the impact. They can increase revenue, as we tax imports (costs of which are passed on to consumers), but this can be negated by fewer imports and fewer exports as other nations tax/tariff us. In addition, the President keeps changing the policies, so it is anyone's guess what will be in place a year or 4 years from now. I support the president's intention to level the playing field, prevent unfair competition, keep us from being taken advantage of, open more foreign markets to our exports, increase and bring manufacturing back home, and achieve true "fair" trade. The estimates I have seen, which again do not have a single consensus, seem to be in the range of potential for a few hundred billion in revenue over a decade (during which we will spend upwards of $70 trillion).