Here’s what stands in the way of Trump’s ‘big, beautiful’ tax and border bill

President Trump wants Congress to pass “one big, beautiful bill" that would extend expiring tax cuts and provide money for border enforcement. As House Republicans concluded a three-day meeting at a Trump resort in Florida, that legislation is nowhere near done. Lawmakers are wrestling with their slim majority and internal disputes over the size of spending cuts.

House Speaker Mike Johnson (R., La.) was keeping any details close to his chest when asked Tuesday if House Republicans made final decisions on cuts, costs or savings.

“We’re in the process of working through this," Johnson said, adding that he was aiming to have a blueprint for a budget soon and is sticking to his aggressive timeline to finish the bill within a few months.

Here are some obstacles and choices Republicans face between today and the moment a bill lands on Trump’s desk for his signature.

One bill or two bills?

Republicans have been stuck for weeks on this basic question.

Many House members and Trump want to combine everything—border money, military spending, cuts to social-safety programs, tax reductions—into one piece of legislation. The idea is that the House, with a slim majority currently at 218-215, works best if everyone’s priorities ride together in a pass-fail test.

Senators haven’t bought in, however, and Trump has stayed open to their two-bill plan, telling House Republicans this week that he didn’t care how they did it. The two-bill idea: Move quickly on border money, defense expenditures and energy policy and save messy tax-and-spending debates for later in the year.

Lawmakers likely have to decide this question soon. The House and Senate must agree on a budget resolution before moving a party-line fiscal bill, and that budget would look different if designed to enable a one-bill or two-bill plan. The House Budget Committee could vote on a budget resolution as soon as next week.

Do tax cuts cost zero or over $4 trillion?

The tax cut’s size depends how you look at it, and Republicans have to pick their yardstick.

Normally, Congress measures policies against “current law," or what would happen if lawmakers do nothing. In that case, because Republicans scheduled most of Trump’s 2017 tax cuts to expire at year’s end, a permanent extension would cost more than $4 trillion over a decade.

Some Republicans, particularly Senate Finance Committee Chairman Mike Crapo (R., Idaho), say that is the wrong way. He prefers what is called a current-policy measurement, in which Congress would just assume that expiring tax cuts are all extended. That would make an extension appear cost-free. The actual budget deficit due to extending tax cuts would be the same no matter which way they count, but Crapo’s approach just bakes those higher deficits into Republicans’ assumptions.

Politically, it might be easier for Republicans to sell tax cuts that they can claim have no cost. Procedurally, a current-policy baseline could make it easier to make the cuts permanent, but it hasn’t been done before and looks like Republicans are shifting the goalposts. One senior GOP aide said that isn’t “fully decided."

How much to spend and cut?

Many Republicans are willing to increase budget deficits somewhat while saying they are concerned about deficits being too large. The coming budget resolution will, roughly, set a cap on the deficit increase by providing spending-cut minimums for some committees and a tax-cut maximum. The net result, the maximum possible deficit increase, is a big number that lawmakers will watch for.

Republicans willing to accept some deficits highlight two factors. One is Trump’s tariffs. Those likely won’t be formally included as a revenue source, but Republicans can point to them as offsetting tax cuts.

The second factor is expected economic growth. Lower taxes do spur growth, and that growth does generate tax revenue, but economists affiliated with both parties don’t expect that effect to be anywhere near large enough for tax cuts to pay for themselves.

There is disagreement among Republicans about how much deficits should go up. Some lawmakers, such as Rep. Chip Roy (R., Texas), say they want deficit reduction. Roy, who didn’t attend the retreat, warned on X this week that GOP leaders were going to “jam through massive deficits."

Lawmakers will settle this dispute preliminarily in the budget resolution, then again in a final bill. More guaranteed cuts could satisfy deficit hawks but prompt objections from moderates. A budget resolution with fewer guaranteed cuts could still allow for bigger cuts in the subsequent bill—if the House Republicans most concerned about deficits are willing to delay the spending fight.

“That’ll be the challenge," said House Majority Whip Tom Emmer (R., Minn.). “How low can we write it to give us enough flexibility?"

Where will Congress reduce spending?

Trump has promised not to touch Social Security or Medicare benefits, so that means a big focus on Medicaid and the Affordable Care Act, health programs that cover tens of millions of Americans.Other programs could be affected, too.

“There’s very tangible, real cuts, to the point where some of our moderates are complaining, which is what happened in previous Congresses," said House Majority Leader Steve Scalise (R., La.).

Scalise said one committee alone could have $200 billion to $700 billion in cuts, though that is less than the $1 trillion or more in possible cuts discussed earlier for the Energy and Commerce Committee, which governs Medicaid.

While some Republicans say health programs such as Medicaid can be cut back significantly, others are less eager. Local hospitals and doctors might push back, and Republicans are already facing Democratic criticism about the trade-offs between healthcare for the poor and tax reductions for higher-income households.

House Majority Leader Steve Scalise said one committee alone could have $200 billion to $700 billion in cuts.

Who gets tax cuts?

Even once Republicans agree on their fiscal targets, the tax choices will be tricky.

House Republicans from New York and New Jersey are demanding an increase in the $10,000 cap on deductions for state and local taxes. Trump and some Republicans want to repeal clean-energy tax credits enacted by Democrats in 2022, but other Republicans are wary of curtailing home-state investments tied to those credits.

Lawmakers will contend with Trump’s own ideas which could, if fully implemented, add trillions more to the tally. His “no tax on tips" pledge seems likely to survive in some form. But he also wants a 15% corporate tax rate on domestic manufacturing and favors tax-free overtime pay, tax-free Social Security benefits and new deductions for auto loan interest and home generators.

How will they pass the bill?

Republicans plan to use the process known as budget reconciliation, the same way that they moved the 2017 tax cuts and Democrats passed bills in 2021 and 2022. They can dodge the 60-vote Senate filibuster threshold and pass a bill without any Democratic support.

But reconciliation comes with strings attached. Bills can’t increase budget deficits beyond the 10-year budget window. They must be primarily fiscal; Democrats’ past attempts to use reconciliation to raise the minimum wage and change immigration policy were nixed by the Senate parliamentarian.

Write to Richard Rubin at richard.rubin@wsj.com and Olivia Beavers at Olivia.Beavers@wsj.com