President Trump faces major fiscal deadlines as he begins his second term

president Donald Trump His second term began Monday, and his first year in the White House will be marked by a series of fiscal policy battles with deadlines looming this year.

Among the fiscal issues the Trump administration and the narrow Republican majority in Congress will have to confront this year include the debt cap, financing the government to avoid a partial shutdown, along with considering whether to extend expiring spending limits. Tax deductions.

Trump did not discuss these issues in depth during his inaugural address, and it is currently unclear how White House and GOP lawmakers will proceed on issues such as debt control, government funding and spending caps — which would require bipartisan support to pass. Both houses of Congress.

The first of these issues came into focus Tuesday as the United States reached its debt limit and the Treasury Department began using its “extraordinary measures” to continue paying the government’s obligations to avoid defaulting on the national debt.

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The debt cap was in place for about two years until Jan. 2, 2025, when it was technically reinstated — although a scheduled transaction in a federal health care trust fund temporarily reduced the debt to create a margin that lasted until Jan. 21. Janet Yellen He announced on Friday that extraordinary measures will take effect on Tuesday to prevent any interruption in federal debt payments.

It is unclear exactly how long Extraordinary measures taken by the Ministry of Treasury You will continue in this state. The duration of the extraordinary measures depends on the size and timing of federal expenditures as well as the receipt of tax payments. In recent situations when extraordinary measures were deployed, they were expected to last anywhere from four and a half to seven or eight months – putting pressure on lawmakers to raise the debt limit before these measures are exhausted.

While debates over debt limits rage, the federal government faces another fiscal deadline this spring, with government funding set to expire at midnight on March 14, setting up a race to avoid a partial government shutdown. In late December, Then-President Biden Congress reached agreement on a short-term continuing resolution to extend spending until that date at previously agreed upon levels to prevent a holiday shutdown.

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In the second half of 2025, Congress and President Trump He will face the end of the fiscal year 2025 and the necessity of approving the draft appropriations bill for the next fiscal year 2026, which begins on October 1.

The end of fiscal year 2025 will also mark an expiration Spending limits Which were imposed under the bipartisan Fiscal Responsibility Act of 2023, which also included the most recent suspension of debt limits. Although the law included outlines of maximum spending for the next four years, it was not binding and was intended to serve as an optional guideline.

One of the most important deadlines falls at the end of 2025 with the expiration of several key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 — Trump and Trump’s historic tax cuts package. Republicans in Congress Issued during his first term.

Lawmakers used the budget reconciliation process to enact the law, which allows it to bypass the legislative filibuster that the Senate passed by 60 votes, but carries long-term restrictions. Budget deficit He increases. To comply with these rules, Congress often rescinds certain policies to prevent the final bill from increasing the deficit beyond what the process allows.

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Among the key provisions of the tax law that are set to expire are the revised tax brackets that were reduced at certain income levels. The law also doubled the standard deduction, which most taxpayers use to reduce their tax burden, from $6,500 to $12,000 for individual taxpayers and from $13,000 to $24,000 for married couples filing joint returns.

the Child tax credit The TCJA also doubled it from $1,000 to $2,000 per child, while also expanding the availability of the Additional Child Tax Credit and raising the phase-out of the Child Tax Credit so that more families would be eligible to claim it.

To help offset the tax cuts and expand some tax breaks, the TCJA reduced the maximum state and local tax (SALT) deduction to $10,000 — another provision that is on track to expire at the end of the year. The SALT deduction allows taxpayers who itemize their returns to deduct income and property taxes assessed by state or local governments up to a maximum, and is very popular among taxpayers from states with relatively high taxes.

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The daunting list of fiscal deadlines awaiting policymakers in the coming months comes at a time when the country’s fiscal situation has become increasingly tense in recent years.

High spending on entitlement programs such as Social security Medicare in America’s aging population is a long-term trend that shows no signs of abating.

This has worsened in the time since Coronavirus disease pandemic The crisis began after a historic bout of inflation prompted the Federal Reserve to raise interest rates, causing the already rising cost of servicing the more than $36 trillion national debt to rise even faster.

Interest costs have risen to the point where the cost of paying interest on the debt exceeded federal spending on health care and defense last year, making it the second-largest category of federal spending.