Behind the market rally and inflation headlines, Washington is locked in gridlock. On Friday, Trump’s sweeping tax-and-spending package—meant to be the centerpiece of his second-term economic agenda—was blocked in the House Budget Committee. The bill aimed to bundle tax cuts, expanded work requirements for Medicaid, and rollbacks of Biden-era green subsidies into one reconciliation package. But four Republican hardliners—Reps. Chip Roy, Ralph Norman, Andrew Clyde, and Josh Brecheen—voted with Democrats to sink the bill, citing insufficient spending cuts and a lack of deficit reduction.

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The failed markup exposed growing fractures inside the Republican party. Fiscal hawks are demanding faster rollbacks of clean energy incentives and immediate Medicaid reforms to cut costs. Moderates from high-tax states are fighting for expanded state and local tax deductions. Speaker Mike Johnson now faces the daunting task of reworking the package over the weekend, with Trump himself pressuring holdouts to fall in line. The clock is ticking: without republican party unity, the bill risks dying in committee.

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