WASHINGTON — After a long wait, the Senate launched action on President Donald Trump's "big, beautiful bill” of tax breaks and spending cuts at a risky moment for the U.S. and global economy.
More than a month after House Republicans surprised Washington by advancing their framework for Trump's tax breaks and spending cuts package, Senate Republicans voted Thursday to start working on their version. The 52-48, largely party-line vote set the stage for back-to-back Senate all-nighters spilling into Friday and the weekend.
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Work on the multitrillion-dollar package comes as markets at home and abroad are on edge in the aftermath Trump's vast tariffs scheme, complicating an already difficult political and procedural undertaking.
Senate Majority Leader John Thune, R-S.D., opened the chamber Thursday saying they were expected to begin “as soon as today” embarking on what they hope will become the GOP’s signature domestic policy package.
Senate Majority Leader John Thune, R-S.D., joined by Sen. John Barrasso, R-Wyo., the GOP whip, left, talks to reporters Tuesday at the Capitol in Washington.
Trump says he's on board and Republicans, in control of Congress, are eager to show the party is making progress toward delivering on their campaign promises. Still, it's long weeks, if not months, to go toward a final product.
Democrats, as the minority party, don't have the votes to stop the GOP plan but they intend to use the procedural tools available to prolong the process. Democrats argue that Republicans are focusing on tax breaks for the wealthy at the expense of the programs and services millions of Americans rely on for help with health care, child care, school lunches and other everyday needs.
“They’re mean, they’re nasty, they’re uncaring," Senate Democratic Leader Chuck Schumer of New York said of the Republicans.
Senate Democrats started consuming up to 25 hours of their available debate time, holding the floor into the night and railing against potential GOP cuts to Medicaid, veterans programs, DOGE cuts and the impact of Trump's tariffs.
Sen. Jeff Merkley of Oregon, the ranking Democrat on the Budget committee, repeated a slogan he has shared: “Families lose and billionaires win.”
“That," he said, “is the Republican plan.”
Fundamental to the Senate package is making sure Trump’s first-term tax cuts, which are set to expire at the end of the year, are continued and made a permanent fixture of the tax code. The senators also will consider adding Trump's proposed tax cuts on tipped wages, Social Security income and others.
The Senate package also would bolster border security funds by about $175 billion to carry out Trump’s mass deportation campaign, which is running short of cash, and it would add national security funds for the Pentagon — all priorities the Senate GOP tucked into an earlier version that was panned by House Republicans.
From left, Senate Minority Leader Chuck Schumer, D-N.Y., and Sen. Richard Blumenthal, D-Conn., listen Thursday as Sen. Elizabeth Warren, D-Mass., speaks about the Republican-backed budget plan during a news conference at the Capitol in Washington.
What's unclear is how it will all be paid for, since Republican deficit hawks typically require spending offsets to help defray the lost tax revenue and avoid piling onto the nation's $36 trillion debt load.
While House Republicans approved their package with $4.5 trillion in tax breaks and up to $2 trillion in spending cuts, the Senate Republicans are taking a different tack.
Senate Budget Committee Chairman Lindsey Graham, R-S.C., is making the case that since the existing Trump tax breaks are current policy, they are not considered new and do not need to be offset with reductions in spending — an approach Democrats compare to “going nuclear” with the normal rules. Democrats vowed to put the strategy to the test before the Senate parliamentarian.
Instead, Senate Republicans are considering offsets mostly for any new Trump tax breaks. Raising alarms from the most conservative budget hawks, the senators set a floor of about $4 billion in budget reductions to health and other programs — a fraction of the package's expected $4 trillion-plus price tag for tax breaks.
GOP leaders assure the deficit hawks in their own ranks that the legislation says the cuts can rise to as much as $2 trillion.
After an expected Friday night vote-a-rama, with dozens of amendments being offered to the package, the senators plan to stay into Saturday if needed to take a final vote to approve it, sending it to the House for action.
The House and Senate will ultimately need to merge their frameworks into a final product, expected in May, but House Speaker Mike Johnson's intention to have it all wrapped up by Memorial Day could prove optimistic.
The political environment is uncertain, and the public's appetite for steep budget cuts is being tested in real time, with Trump's Department of Government Efficiency headed by billionaire Elon Musk blazing through federal offices, firing thousands of workers and shuttering long-running government mainstays — from scientific research projects on diseases to educational services for schoolchildren to offices that help with Social Security, tax filing and the weather.
At the same time, the staunchest fiscal conservatives in both the House and Senate, many aligned with the Freedom Caucus, push for even more cuts.
Trump told senators publicly and privately this week he would have their backs, particularly when it comes to standing up for the spending reductions. At a White House announcing the tariffs Wednesday, Trump said the Senate plan had his “complete and total support.”
The president's steep tariffs threw the global economy into a tailspin Thursday.
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Associated Press writers Leah Askarinam and Kevin Freking contributed to this report.
4 strategies to navigate market volatility in 2025
Navigating market volatility in 2025
After reaching all-time highs in February, U.S. markets have experienced notable volatility amidst a flurry of news regarding tariffs and rapid changes in the geopolitical landscape. The S&P 500 is now negative for the year, having declined nearly 9% from its mid-February peak (as of March 31, 2025), while the tech-heavy Nasdaq briefly entered correction territory in early March, and is down over 9%. This pullback has effectively erased the post-election gains, Range explains, and investors have been seeking safe havens like bonds and gold.
Understanding Current Volatility Drivers
Market weakness has been driven primarily by high levels of uncertainty rather than any meaningful change to economic fundamentals. Investors dislike uncertainty in any form, and are experiencing it through multiple channels.
While investors get tariff headlines multiple times a day, they still don't know: Will all the proposed tariffs actually go into place? How long will they last? What might ultimate settlements look like? How will consumers respond? How will manufacturers respond, domestically and abroad?
The past several weeks have made it clear that proposals and threats can change at any moment. Unpredictable policy leads investors to reduce risk exposure and keep capital on the sidelines, at least temporarily until they have a better sense of the playing field.
Contextualizing Market Pullbacks
While there has been impressive performance in equity markets for two consecutive years, pullbacks are normal. On average, the S&P 500 has seen a correction, or decline of at least 10%, every year going back to 1928. Declines of 5% are even more common, occurring over three times per year on average over that period. In spite of these regular drawdowns, the S&P 500 has managed strong double-digit returns over the past 100 years. In many instances, pullbacks can be healthy for durable market returns, curbing.
Portfolio Diversification Demonstrating Value
This volatility has reinforced the benefits that diversification can offer across both asset classes and geographic regions. Thus far this year, while the S&P 500 is down over 4% as of March 31, 2025, the market has seen:
- International equity strength: European equities have delivered their best relative performance to start the year since 2000, with double-digit gains during the first two months of 2025. Emerging markets are also showing gains against U.S. market declines.
- Fixed income outperformance: Bonds are up over 2% for the year while U.S. equities have declined, demonstrating their essential role as portfolio stabilizers during market turbulence.
Foreign markets entered the year in a very different place than U.S. equities. International stock valuations were at historical levels of discount vs. U.S. stock valuations. Many international economies are also significantly earlier in their economic cycle (meaning they have seen recessions more recently) than the U.S., setting the framework for a longer potential period of future economic growth. At the same time, investors have been meaningfully underweight in international equities relative to historical levels. All of these factors are contributing to the outperformance of international stocks seen year-to-date.
Meanwhile, bonds are acting as a hedge against a potential economic slowdown in the U.S. Domestic consumers and businesses are grappling with monetary policy that has been restrictive for an extended period of time and significant uncertainty related to trade policy. As investors grow concerned about the potential impact to the economy, they bet that the Fed may have to ease and bring rates lower in the future than they are today. This causes bond prices to rise, offsetting weakness in the equity markets.
Medium-term, U.S. equity markets can be a great place to be invested. Some of the highest quality companies in the world are in the S&P 500—these businesses can grow earnings regardless of economic pressures. The Fed also has the capacity to stimulate the economy should growth and corporate earnings come under meaningful pressure.
However, other regions of the world can generate attractive returns, especially given relative valuations and greenshoots as it relates to international earnings. And diversification can help ensure balanced returns in periods of temporary weakness in a particular region or asset class.
Strategic Actions for Investors
During periods of elevated volatility, here's what disciplined investors can do:
1. Strategic Tax-Loss Harvesting
Market declines create valuable tax-loss harvesting opportunities. Identifying positions with unrealized losses while maintaining market exposure through temporary substitutes can generate significant tax benefits. Ideally, you've implemented automated harvesting processes to capitalize on volatility without making emotional decisions during market stress.
2. Portfolio Rebalancing
Market movements naturally shift allocations away from targets. Given the recent move lower in equities and appreciation of bonds, you may have experienced drift relative to your target allocations. Rather than relying solely on calendar-based approaches, consider a volatility-based rebalancing strategy that responds directly to market conditions. This approach allows portfolios to systematically "buy low and sell high" by trimming outperformers and adding to underperforming assets.
3. Opportunistic Capital Deployment
For investors with available capital to deploy, you can take advantage of better entry points into U.S. equity markets compared to recent market highs. Historical data suggests that after a 5% pullback, average stock returns one year later are around 12% and markets are higher 75% of the time.
4. Stick to Your Plan
Perhaps most critically, avoid reactive decisions driven by headlines or short-term market movements. If you have a financial plan, remember that it already incorporates scenarios of significant market stress. Stay disciplined—the benefit of having a plan is you aren't forced to sell at inopportune times because you took too much risk or lacked confidence in your positioning.
During volatile times, you can also take a moment to revisit your long-term goals. This helps you stay focused and keep things in perspective. Try to limit how much you're watching the daily market news; it can often lead to knee-jerk reactions.
Conclusion
While market drawdowns can be stressful, data shows that if you are invested for decades, the negative impacts of short-term market movements are dwarfed by the long-term positives of compounding returns. There can be a significant upside in staying disciplined and taking advantage of the opportunities created by market volatility.
This story was produced by Range and reviewed and distributed by Stacker.
