US Senate clears way for Trump's tax and spending cuts

The US Senate has approved a Republican budget blueprint that aims to extend trillions of dollars worth of President Donald Trump's 2017 tax cuts and sharply reduce government spending. Login or signup to continue reading The vote early on Saturday following an all-night legislative session, unlocks a manoeuvre that will allow Republicans to bypass the Senate's filibuster and pass the tax cuts without Democratic votes. Analysts say the measure, if enacted, would add about $US5.

7 trillion ($A9.4 trillion) to the federal government's debt over the next decade. Senate Republicans contend the cost is $US1.



5 trillion, saying the effects of extending existing tax policy that was scheduled to expire at the end of 2025 should not be counted in the measure's cost. The measure also aims to raise the federal government's debt ceiling by $US5 trillion, a move Congress has to make by June or risk defaulting on $US36.6 trillion in debt.

It aims to partly offset the deficit-raising costs of tax cuts by cutting spending. Democrats have warned that Republican targets would imperil the Medicaid health insurance program for low-income Americans. Republican Senate budget committee chairman Lindsey Graham warned that allowing the 2017 tax cuts to expire would hit Americans hard.

"The average taxpayer would see a 22 per cent tax hike," Graham said. The 2017 cuts, Trump's signature legislative achievement in his first term, cut the top corporate tax cut to 21 per cent from 35 per cent, a move that is not set to expire. The balance of the cuts, for individual Americans, were set to expire, a decision made to limit the 2017 bill's deficit-raising effects.

"The Republican bill that now sits before the Senate is poison," Senate Democratic leader Chuck Schumer said on Friday. "But as Americans learn that Republicans are doing it simply to give tax cuts to the ultra-rich, an electric shock is going to go through the American people." Hanging over the debate was a brutal share market sell-off following Trump's sweeping new trade tariffs, which economists warn will drive up prices and could trigger a recession.

Democrats offered dozens of amendments affecting issues ranging from social security to veterans' care, but most were blocked by Republicans. The measures now go to the House. Republicans have maintained that Medicaid will not be cut, but they will achieve savings by improving efficiency.

If House Republicans get their way, there could be net spending cuts in the range of $US2 trillion. The budget blueprint would also make room for increased security measures at the border with Mexico and administration efforts to significantly ramp up immigrant deportations. Australian Associated Press Daily Today's top stories curated by our news team.

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