Fissures have emerged over the scale of spending cuts and how to address Medicaid.
Days after House Republicans released the text of their mammoth tax-and-spend bill, Senate Republicans look poised to pick up the legislation with an eraser in hand.
One of the most vocal critics of the current bill in the right side of the U.S. Capitol is Senator Ron Johnson (R., Wisc.), a fiscal hawk elected during the Tea Party era who believes congressional Republicans are not prioritizing sufficient spending cuts in the border security, defense, energy, and tax-cut legislation. In interviews this week, he told reporters the party needs to return to “pre-pandemic” spending levels and even resurrected talk of splitting the bills in two so that Republicans can work through complicated disagreements on the tax portion of the bill.
“’I keep being told ‘that ship’s already sailed,’” the Wisconsin Republican told reporters this week. “And my response is, ‘well, call it back to port. The other ship might be like the Titanic—it may be going down.’”
Fissures have also emerged over how to address Medicaid. While the GOP is broadly on board with new requirements for the entitlement program, a vocal minority of Republican lawmakers are worried about the bill’s provider tax and cost-sharing provisions, warning that Medicaid cuts will strip working-class families of health insurance and cause rural hospitals to close their doors. Earlier this week, Senator Josh Hawley (R., Mo.) penned a New York Times op-ed calling the GOP’s Medicaid-cut plan “morally wrong and politically suicidal.”
“It seems like what we’re going to do is we’re going to realize that really, those people that are really deserving, we don’t need to cut into the bone and hurt those folks,” Jim Justice (R., W.V.) said in a brief interview with NR on Wednesday, clarifying that he supports the bill’s crackdown on federal funding for states that provide health insurance to illegal immigrants. He said he thinks Republicans are making “progress” but that he remains “concerned” about the bill’s Medicaid provisions for the time being.
Inside the U.S. Capitol, the protect-Medicaid caucus’s concerns are as loud as the frustrations being raised by fiscal hawks, who say that the GOP’s new work requirements on adult beneficiaries without children – set to kick in in 2029 in the current legislation – should begin earlier. The new legislation would require those adults to file paperwork proving they worked at least 80 hours per month to get coverage.
Amid Trump’s tariff war, the president’s team has worked behind the scenes to help congressional Republicans craft an extension of the 2017 Tax Cuts and Jobs Act (TCJA), many provisions of which are set to expire in December. House Republicans are hoping to pass their version of the bill before Memorial Day ahead of the White House’s July 4 target for Trump to sign the bill.
Many Republican lawmakers are particularly pleased that the House bill includes some of Trump’s populist campaign proposals, such as temporarily raising the standard deduction and child-tax credit and scrapping taxes on tips and overtime pay. But rank-and-file Republicans are also losing patience with the blue-state House Republicans’ obsession with drastically increasing the state and local tax (SALT) deduction, which allows individuals and married couples to deduct $10,000 in state and local taxes from their federal income taxes.
Pro-SALT Republicans from states like New York and California are pushing for an increase in the expiring deduction far beyond the proposed plan to increase the deduction to $30,000 for married couples, while paring down the write-off for incomes that exceed $400,000. As National Review has reported, the pro-SALT caucus has spent weeks pressuring House GOP leaders to increase the write-off, arguing that a meager increase on the $10,000 baseline will imperil their reelection prospects in high-tax swing-districts.
The debate has turned ugly. “He wouldn’t have a f—ing gavel without the members of the SALT caucus,” Representative Mike Lawler (R., N.Y.) told reporters earlier this week of Ways and Means Chairman Jason Smith (R., Mo.), who is urging blue-state New Yorkers to get in line with the current proposal.
Most Republicans view the tax deduction as a fiscally irresponsible proposal that doubles as a subsidy on Democratic politicians’ high-tax schemes.
“I’m not a fan of giving rich people additional tax breaks with the ability to deduct more state local taxes. I think we’re good at $10,000,” Senator Bernie Moreno (R., Ohio) told NR in a brief interview, adding that any increase “is just a giveaway to people who are wealthy.”
“If they don’t like their state and local taxes, they should freaking move,” Moreno added.
Other Senate Republicans are skeptical about the scope and timeline for phasing out clean-energy tax credits President Joe Biden signed into law in 2022 in the Inflation Reduction Act, which grant tax credits to companies producing solar, nuclear, and wind energy. Pressed by reporters on Wednesday about what changes she’d like to see in the final bill, centrist Senator Lisa Murkowski (R., Alaska) says the legislation is “still evolving.”
Some Senate Republicans say it’s far too early to even comment on what changes they’ll make to the legislation given House Republicans need to clear different sections of the legislation in their committees before the final bill can make it to the House floor.
“They’re a long ways off from a final version,” says Senator Jim Banks (R., Ind.).
What’s more, any bill will have to comply with the upper chamber’s arcane rules laid out by the parliamentarian and enforced by Senate Republicans, the final arbiters in the budget reconciliation process. While reconciliation allows lawmakers to circumvent the Senate’s 60-vote threshold, congressional Republicans can still only afford a handful of no-votes in both chambers for the bill to reach Trump’s desk.
“It has to go through the Byrd rule process over here, which may cause some items to fall off the House proposal, and so I’m sort of withholding spending taking a deep dive into it,” says Senator Cynthia Lummis (R., Wyo.), adding that she “was really pretty pleased” with what she’s seen in the House bill so far.