US House Republican leaders postpone vote on Trump-backed tax-cut bill

By Richard Cowan and Bo Erickson

WASHINGTON (Reuters) -The Republican-led U.S. House of Representatives on Wednesday postponed a planned vote on a measure that would advance President Donald Trump's tax cut agenda, as some within the party complained that the budget blueprint did not contain enough spending cuts.

House Speaker Mike Johnson said he hoped the House would try again on Thursday to pass the legislation, but left open the possibility of a delay until next week, in remarks to reporters.

Downplaying the dissension within his rank-and-file, Johnson told reporters: "Everything is moving along just fine. We have a little bit of room here to work, and we're going to use that." He made the remark following an hour-long private meeting with far-right Republicans.

Republican Representative Lloyd Smucker of Pennsylvania, one of the hold-outs, told reporters that discussions were underway on the possibility of an amendment to the Senate-passed budget plan, which would aim to force spending cuts closer to the $2 trillion range the House had been seeking.

Passage of any changes to the current version of the bill would send the bill back to the Senate for a potentially protracted process to win final passage.

House Budget Committee Chairman Jodey Arrington, a Republican, urged passage of the measure saying, "We must advance a budget resolution bill that doesn't just include tax cuts or deregulation or good energy policies. All that is good. But also admittedly the difficult part but the most necessary, which is reining in the runaway spending."

Wednesday's cancellation of the vote came after a full day of behind-the-scenes wrangling by far-right conservatives angered by the Senate-passed budget resolution that they say was sorely deficient in spending cuts. The House voted 216-215 earlier in the day to authorize a vote on the bill.

House conservatives are demanding $2 trillion in federal government spending cuts over a decade - an amount that senators rejected.

The intra-party fight in the House over this sweeping measure to shrink the federal government and extend tax cuts that would add trillions of dollars to the nation's debt comes amid chaos in financial markets set off by Trump's imposition of tariffs on imported goods.

Prospects of a shrinking U.S. economy as a result of a world trade war, as some economists have projected, spilled over into Congress' budget debates because of the possibility of falling revenue in an economic downturn.

The stakes are high, as the U.S. economy has been rocked by Trump's back-and-forth tariff threats, which sparked wild swings on Wall Street and raised fears of surging prices.

Republicans were under intense pressure from Trump to fall in line.

"It is IMPERATIVE that Republicans in the House pass the Tax Cut Bill, NOW! Our Country Will Boom!!!" he posted on Truth Social.

MEDICAID CONCERNS

In addition to extending Trump's tax cuts - his primary first-term legislative achievement - the measure would stiffen border enforcement and could be used to enact the Republican president's promises to eliminate taxes on overtime pay and tips.

Congressional Republicans so far have not rejected any of Trump's requests.

The Committee for a Responsible Federal Budget said the measure would "allow twice as much borrowing as the House, while requiring only 0.2 percent as much in spending cuts and reforms."

Further complicating matters in the House, some moderate Republicans are squirming over prospects of $880 billion in cuts to health and energy programs that Democrats and health advocates say could take a heavy toll on Medicaid, the federal healthcare program for the poor and disabled.

Democratic Representative James McGovern of Massachusetts called the legislation a "steaming pile of Medicaid cuts" that he said Republicans "are trying to hide from the American people."

Multiple Republican lawmakers have said they will not vote for a bill that substantially cuts Medicaid.

Failure to approve this early step would be a setback for the centerpiece of Trump's agenda, as both chambers of Congress are set to begin a two-week recess on Friday.

Citing analysis by the non-partisan Congressional Budget Office, the Committee for a Responsible Federal Budget said that extending the 2017 tax cuts "would increase the size of the economy by an average of 0.3% through 2027" but would "begin subtracting from growth in 2028 and overall shrink the economy in 2034 and beyond."

(Reporting by Richard Cowan and Bo Erickson; Editing by Caitlin Webber and Christopher Cushing)