The U.S. Senate passes budget resolution, Trump's tax cut plan achieves a "key breakthrough"

The U.S. Senate narrowly passed a key budget resolution, clearing the way for the continuation of tax cuts from the Trump era and a significant increase in the debt ceiling.

After an all-night "marathon" voting session, the U.S. Senate passed a bill known as "budget reconciliation" early Saturday morning with a slim margin of 51-48. Two Republican senators, Susan Collins and Rand Paul, joined the Democrats in voting against it. The bill will be sent to the Republican-led House of Representatives for consideration next week.

The strategic significance of this budget resolution lies in unlocking the "budget reconciliation" mechanism, which will allow Republicans to bypass the Senate's filibuster rules. Through this process, Republicans can pass Trump's tax, border security, and military priority bills with a simple majority without Democratic support.

The passage of this resolution marks an important step for Trump's tax agenda and the debt ceiling increase bill, alleviating market uncertainty brought about by Trump's trade policies while avoiding a potential debt ceiling crisis this summer.

Fiscal Suspense: Tax Increase Risks and Debt Issues

Republicans have warned that allowing the 2017 tax cuts to expire would result in an average tax burden increase of 22% for ordinary taxpayers. Notably, the portion of the 2017 tax cut bill that lowered the top corporate tax rate from 35% to 21% will not expire, while the individual tax cuts will.

However, nonpartisan analysts have pointed out that if Trump's agenda is fully implemented, it will increase federal government debt by approximately $5.7 trillion over the next decade. Senate Republicans argue that the cost is only $1.5 trillion, claiming that the impact of extending existing tax policies should not be counted as part of the measure's cost.

Market Background: Trade Policy Clouds and Economic Uncertainty

This debate hangs over the market sell-off triggered by Trump's new trade tariff policies. Economists warn that these tariffs will drive up prices and could lead to an economic recession.

Republican Senator Thom Tillis expressed his concerns to reporters: "If we are still having this kind of conversation three weeks from now, then this distraction will be so great that it will slow down what we are trying to do."

Democratic Opposition: Republicans Stand with the Wealthy

Senate Democratic Leader Chuck Schumer harshly criticized after the vote: "Trump has betrayed the American people. Tonight, Senate Republicans joined in this betrayal. By voting for this bill, Senate Republicans stand with billionaires against the middle class."

Democrats have warned that Republican goals will jeopardize Medicaid programs for low-income Americans. During the six-hour "voting marathon," Democrats proposed dozens of amendments aimed at repealing Trump's trade tariffs and protecting social safety net programs like Medicaid and Medicare, all of which were rejected.

For investors, the outcome of this political game may become clearer before this summer, as whether this budget resolution can be transformed into actual legislation will directly impact the direction of U.S. fiscal policy and market performance