Thanks to expeditious and disciplined action by House Republicans, the White House is on track to see President Donald Trump’s “big,beautifull bill” pass Congress before the July 4 recess. House Speaker Mike Johnson (R-LA) has told senators he can’t promise final passage if they make serious revisions to the legislation, but Trump has said he expects “fairly significant” changes as the Senate works through June.

While the House bill is a real accomplishment, it is far from perfect and can be significantly improved by the Senate. Unfortunately, there is a danger that the Senate might make it worse, and there appear to be hard limits on Senate improvements. It would be wise for the Senate to tweak what the House has done instead of attempting a full-scale rewrite.

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On the positive side, the House bill achieves what the wildly successful Tax Cuts and Jobs Act of 2017 failed to do: make the lower individual rates permanent, preventing a $4.5 trillion tax increase set for Jan. 1 of next year. The legislation also restores full expensing for businesses, but only through 2029.

In addition to lowering taxes and making it easier for businesses to invest, the House bill includes necessary, additional spending on defense, including $150 billion in defense spending, $51 billion on a border wall, and $6 billion on more Immigration and Customs Enforcement officers and detention space needed to increase the pace of removal of illegal immigrants. The measure also cleverly includes a 5% tax on all remittances, which will lower the deficit and discourage migrants from coming to the United States just to send the money they earn, often illegally, back home.

However, there are also several missed opportunities, notably on Medicaid. While House deficit hawks managed to move up implementation of Medicaid work requirements from 2029 to 2026, more could have been done to equalize Medicaid reimbursement rates that encourage states to care for able-bodied adults before they care for mothers, the elderly, and the disabled. The deficit hawks also rolled back more of former President Joe Biden’s Inflation Reduction Act tax subsidies for green energy than the original bill did, but there is still too much inefficient alternative spending.

There is also outright bad policy in the bill, including new tax loopholes for tips and overtime, and most egregiously, a huge new tax subsidy for high-income earners in high-tax blue states. 

Unlike House Republicans, Senate Republicans do not represent high-income, high-tax states. The most likely way the Senate can improve the House bill is by eliminating the State and Local Tax subsidies that blue state Republicans forced into the bill at the last moment.

Further progress on repealing the IRA is going to be tough since the Senate Republican conference includes many members whose states benefit from green energy tax subsidies. Further progress repealing the IRA is not only unlikely, but deficit hawks will be lucky even to hold the line where it is and avoid measures to make it worse.

Unfortunately, the same is true of Medicaid reform. Sens. Susan Collins (R-ME), Lisa Murkowski (R-AK), and Josh Hawley (R-MO) have said they won’t vote for the Medicaid spending reductions in the House bill and intend to roll them back. It is likely that Sen. Thom Tillis (R-NC) has no desire to push for Medicaid reform, as he is hoping for reelection next year.

WHY DEMOCRATS ARE ADDICTED TO SENIORITY

The best bet for improving the House bill is to undo the new SALT tax breaks and either pocket the money for deficit reduction or plow it into a more generous child tax credit, something Hawley has been pushing for. There may even be a deal possible with Hawley that allows more Medicaid savings in exchange for scrapping SALT and boosting the child tax credit.

Between avoiding a $4.5 trillion tax hike, making the TCJA individual rates permanent, and the defense and border spending, the House legislation would be a huge improvement over current law. But the Senate should try to improve it where possible. It should, above all, not let the perfect become the enemy of the good and fail to pass it before July 4.