Republican leaders are aiming for quick negotiations over needed changes to the newly unveiled Senate tax bill which lacks the votes to secure majorities in both chambers as written.
The prospect of prolonged talks with holdouts in both the conservative and moderate wings of the party threaten Senate Majority Leader John Thune’s goal of passing President Donald Trump’s tax-cut legislation by July 4.
The Senate bill makes much more aggressive cuts to Medicaid spending than the version the House passed last month, an aspect that is already drawing pushback from moderate Republicans and lawmakers concerned about the political ramifications of restricting health benefits for their constituents.
Finance Chair Mike Crapo told reporters he’s “not surprised” by the reaction so far to the Medicaid changes, and said they are vetting the bill with colleagues. Those provisions will likely score as saving several hundreds billions of dollars more than the House bill, he said.
Vice President JD Vance met with Senate Republicans at the Capitol on Tuesday to urge them to support the bill and said he’s confident they are on track to pass the bill around July 4.
“We have got to work through some issues,” Vance told reporters following the meeting. “It’s part of the legislative process.”
The Senate bill takes a hardline stance against raising the $10,000 cap on the state and local tax deduction, earning it an immediate thumbs-down from a faction of New York, New Jersey and California House members who have threatened to block the bill if it doesn’t include the $40,000 SALT cap deal they struck with House Speaker Mike Johnson.
Crapo also told reporters that the SALT provisions will have to be worked out with the House and the White House. The cap in the Senate bill is considered a placeholder.
“That’s a very big piece obviously,” he said.
Generous tax breaks for tips, overtime and pass-through businesses were also scaled back to reduce the price tag of the bill. Even still, conservatives say they aren’t satisfied with these efforts to reduce the overall cost and are plotting to delay a planned Senate vote next week to August.
“This is just the opening shot,” said Texas Senator John Cornyn, a leadership ally, adding that many Republicans just saw the bill for the first time on Monday.
The Senate can only pass the bill if a minimum of 50 out of 53 Republican senators vote for the measure and Vice President JD Vance breaks the tie. There are already more than three Republican senators who have said they have problems with the bill.
“This bill needs a lot of work,” Missouri Senator Josh Hawley said after learning the bill restricts a tax on Medicaid providers, a move that would reduce reimbursements to states and he says would mean the closure of rural hospitals.
H.R.1, Senate Finance Committee
Senators Susan Collins of Maine, Lisa Murkowski of Alaska and Jim Justice of West Virginia had already objected to the less stringent Medicaid cuts in the House bill. They are likely to prove a challenge to passing the Senate bill.
A group of moderates who advocate for clean energy tax breaks, including North Carolina’s Thom Tillis and Utah’s John Curtis said they are still studying the bill and suggested they may need more tweaks to lengthen the phaseout of tax credits for renewable energy.
Conservative demands
Wisconsin Senator Ron Johnson said he is a hard “no” on the proposed bill both because he wants steeper spending cuts and because the Senate draft scales back a proposed 23% tax deduction for pass-through business income to 20%.
“I’m confident enough that we have a group of senators that will delay this until at least the August recess so we can look at this,” Johnson said Tuesday on CNBC.
Johnson counts Florida’s Rick Scott, Utah’s Mike Lee and Kentucky’s Rand Paul in his camp of bill opponents. Scott has also said he wants more spending cuts.
Paul said Tuesday he opposes the bill if it includes a debt ceiling increase. Senate leaders want to raise the debt ceiling by $5 trillion so that Congress does not have to deal with the issue again before the 2026 midterm elections.
“I can’t vote to raise the debt ceiling $5 trillion because really what that means is we’re going to get more of the same,” Paul said Tuesday on Fox Business.
SALT debate
The Senate bill has a placeholder of a $10,000 cap on the SALT deduction, setting up a negotiation with the House which passed a $40,000 cap. The inclusion of the $10,000 cap drew howls of protest from a group of swing-district House Republicans for whom SALT is a top political priority.
New York Representative Nicole Malliotakis described it as “a slap in the face to the Republican districts that delivered our majority and trifecta.”
Thune has said that he believes a compromise between the two positions will be found and Tillis has said the Senate is mulling accepting a $30,000 cap in the end, something initially proposed by House GOP leaders before SALT-focused members negotiated an increase.
