According to Refinitiv, the US House of Representatives on Thursday (April 10) narrowly passed the Republican version of the budget plan with a vote of 216-214, paving the way for extending the iconic tax cuts of the Trump era. The fierce victory in this intra party game not only sets the stage for the tax legislation battle at the end of the year, but also pushes the economic policy debate for the 2024 election year to a white hot stage.

1. The political struggle behind the narrow victory

The Republican leadership took two days to barely gather enough votes, exposing the internal divisions between the two parties. Hardline lawmakers boycotted on the grounds of 'insufficient spending cuts', forcing Speaker Johnson to postpone the vote originally scheduled for Wednesday. In the end, two Republicans defected, causing the bill to narrowly pass with only two votes, indicating that there are still variables in the subsequent legislative process.

2. Ten years of profound fiscal impact

This landmark budget contains a hidden "double 5 trillion" bomb: expected tax cuts of $5 trillion over the next decade, while adding $5.7 trillion in government debt. Although the specific implementation plan still needs to be refined, it has been clearly stated that Trump's 2017 tax cut policy will continue, which caused the corporate tax rate to plummet from 35% to 21%, and is seen by the Republican Party as the core legacy of stimulating the economy.

3. Economic Game in Election Year

Johnson called this move a "strong signal to the market," and the Republican Party warned that if tax cuts are not extended, a "trillion dollar tax tsunami" will sweep across the United States. But the Democratic Party questions its economic effectiveness, pointing out that it is still unknown whether the extension of existing tax cuts can generate new stimulus. The Trump agenda, which includes border security and increased energy production, further highlights the Republican Party's policy layout in preparing for the election.

Summary and outlook

This vote is not only a turning point in fiscal policy, but also a microcosm of political games. As the bill enters the Senate, the Democratic Party holds the "tripwire tactic" of obstructing the proceedings, and the tug of war between the two parties over the $5 trillion tax cuts will test the Trump administration's response wisdom. In the balance between debt inflation and economic growth, this tax cut survival war may become a key variable that influences the direction of the US economy.