With a budget resolution now in place, congressional Republicans are forging ahead with crafting their major fiscal overhaul. However, leadership is facing some major dilemmas over spending cuts and tax policy.

Republicans are looking to extend the 2017 Tax Cuts and Jobs Act through budget reconciliation, a legislative process that allows bills to bypass the filibuster and pass with only a simple majority in the Senate. They also want to add new tax cuts proposed by President Donald Trump to the mix.

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However, given some Republicans’ contradictory desires regarding the fiscal legislation, there will have to be some major trade-offs if the party wants to push through such big tax and spending cuts with the slim Republican majority in the House and demands from Republicans in the Senate.

“I have a very strong feeling we’ve got a lot of problems here that Republicans are going to have to work out between the House and the Senate,” G. William Hoagland, senior vice president at the Bipartisan Policy Center, told the Washington Examiner.

For one, extending the 2017 tax cuts, also known as the Trump tax cuts, would have a big impact on the Treasury.

The Congressional Budget Office said this week that making the 2017 tax cuts permanent and adding other tax breaks sought by Trump would add $6 trillion to the deficit over the next decade. That’s a huge cost and an addition to the national debt that would give fiscal conservatives heartburn.

In passing the budget resolution for reconciliation, which Republicans in the House narrowly approved, House Speaker Mike Johnson (R-LA) and Senate Majority John Thune (R-SD) indicated that some $1.5 trillion in spending cuts might be included to appease those fiscal conservatives.

However, finding those cuts could end up isolating other more centrist members of the House and Senate. Senators such as Susan Collins (R-ME) and Lisa Murkowski (R-AK) have indicated they don’t want to see cuts to Medicaid and food stamps.

Thune has acknowledged the challenges the Senate will face getting his party on board with legislation they can agree on or at least vote for. He noted that some senators might see $1.5 trillion in cuts as too much.

“We got folks on both sides of that issue. We’ll have to sort it out,” Thune said, according to the Hill.

Another difficulty in the budget math for reconciliation is the repeal of green tax credits enacted by Democrats in the 2022 Inflation Reduction Act. This week, Murkowski, along with Sens. John Curtis (R-UT), Thom Tillis (R-NC), and Jerry Moran (R-KS), sent a letter to Thune arguing that the full repeal could threaten jobs and capital allocation.

They urged Thune to consider a variety of factors before choosing to scrap a tax credit.

“While we support fiscal responsibility and prudent efforts to streamline the tax code, we caution against the full-scale repeal of current credits, which could lead to significant disruptions for the American people and weaken our position as a global leader,” the lawmakers said.

In order to pass the bill, there will have to be some give-and-take. If a bill isn’t approved by the end of the year, it would be politically disastrous for Republicans because the majority of voters would see a net tax increase.

“Not everybody can get what they want at the end of the day,” Alex Muresianu, senior policy analyst at the Tax Foundation, told the Washington Examiner.

Then, there are issues with the tax policies.

For instance, given the razor-thin majority, House Republicans can’t afford to lose a single vote on the pending tax legislation. Given the numbers at play, Republicans from high-tax states such as New York and California seized on the opportunity, hoping to use it to exact major concessions on lifting the $10,000 cap on federal deductions for state and local taxes.

Again, Johnson can’t afford to lose those centrist Republican votes over SALT, but lifting the SALT cap would mark a major loss in revenue that would have to be found elsewhere. Doing so is also highly unpopular among most rank-and-file Republicans, who have noted that it largely benefits wealthy taxpayers in Democrat-led states.

“You’re taking away one of the key base broadeners from TCJA, and so you’re adding that cost to the cost of extending TCJA, which was already expensive,” Muresianu said.

The Tax Policy Center found that the highest-income 20% of households would receive more than 96% of the tax cut if the cap were fully repealed.

The biggest issue is the small Republican majority in the House and the fact that a small coalition could refuse to vote on the legislation unless it gets its demands.

“They have a very big agenda, but the thinnest of pathways to getting it through,” Alex Conant, a GOP strategist and a partner at Firehouse Strategies, told the Washington Examiner. “And the Republican Conference is ideologically pretty diverse. Any party that is a coalition of populists and conservatives is going to have big internal disagreements.”

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In order to get the legislation across the finish line, which could take months, Trump will likely have to intercede and strong-arm some members on various provisions and issues with the reconciliation bill. Conant noted that he has already shown he isn’t afraid to pressure individual lawmakers over votes.

“The only way for Johnson to get his agenda through is with Trump’s support,” he said. “Trump’s night job is being the House whip.”