Problems are multiplying for Senate Majority Leader John Thune (R-S.D.) and other Senate negotiators in their bid to pass legislation to enact President Trump’s agenda by July 4.
Some Republican senators are barraging leadership with concerns about spending cuts for Medicaid and the Supplemental Nutrition Assistance Program (SNAP), while budget hawks are demanding more deficit reduction and railing against a House compromise to lift the cap on state and local tax (SALT) deductions.
The latest headache for Thune and other Senate negotiators is a proposal being pushed by fiscal conservatives to root out more than $200 billion in what they’re calling waste, fraud and abuse in Medicare — a controversial prospect giving the program's popularity.
There are also differences between senators and the Trump White House about making permanent corporate tax cuts, such as 100 percent bonus depreciation for short-term investments and immediate expensing for research and development.
Senate Republicans control 53 seats and can only afford three defections on Trump’s “big, beautiful bill.”
Sen. Rand Paul (R-Ky.) says he will vote “no” because it includes language to raise the debt ceiling by $4 trillion. And Sen. Ron Johnson (R-Wis.) says he’s a “hard no” on the House-passed bill because it doesn’t do enough to bring the nation back to a pre-pandemic level of spending.
Here are the issues that threaten to derail the Senate bill.
Medicaid
Sens. Susan Collins (R-Maine), Lisa Murkowski (R-Alaska), Jerry Moran (R-Kan.) and Josh Hawley (R-Mo.) are threatening to vote against the bill if it reduces Medicaid benefits to constituents, and they have yet to see what language the Senate Finance Committee will roll out on the issue.
Senate and House GOP leaders insist the legislation won’t cut Medicaid benefits, but the Congressional Budget Office released a report Wednesday projecting 10.9 million Americans will lose health insurance if the bill passes due to changes to Medicaid and Affordable Care Act coverage.
“I hope not benefit cuts, that’s my bottom line,” Hawley said Thursday afternoon.
GOP senators have raised concerns about proposals to limit states’ ability to use health care provider taxes to collect more federal Medicaid funding and to require people earning between 100 percent and 138 percent of the federal poverty level to pay higher co-pays for Medical services.
SNAP
Several Senate Republicans are also raising concerns over a projected $267 billion in spending cuts to the SNAP, including Collins and Moran.
The Senate Agriculture Committee is hoping to roll out text for its portion of the budget reconciliation bill next week but Agriculture Committee Chairman John Boozman (R-Ark.) says the issue remains unresolved.
“We’re still working on it,” Boozman told The Hill, adding, “I wish it was” resolved.”
Collins says she’s concerned about language in the bill that would shift many of the burdens of administering the programs onto the states and penalize those states that have older systems for monitoring benefits.
Deficit-reduction
A growing number of Republicans are joining budget hawk Sen. Ron Johnson’s (R-Wis.) call for more spending cuts in the bill, which Republicans project will reduce spending by roughly $1.6 trillion over the next decade.
GOP senators, including Sen. Lindsey Graham (R-S.C.), the chairman of the Budget Committee, are calling for bigger cuts.
“I think the bill needs to be more fiscally responsible,” he told reporters Thursday afternoon.
Some Republicans are now looking at a proposal to root out “waste, fraud and abuse” in the Medicare Advantage program and are rallying around a proposal sponsored by Sen. Bill Cassidy (R-La.) to crack down on insurance companies “upcoding” diagnoses to collect more Medicare reimbursement money.
But the idea is dividing GOP senators.
Hawley on Thursday said it would be “insane” to start cutting Medicare, even though proponents of Cassidy’s bill say it would be strictly targeted to waste, fraud and abuse and note that Democrats such as Sen. Jeff Merkley (D-Ore.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) support it.
Spectrum auction
Sens. Mike Rounds (R-S.D.) and Deb Fischer (R-Neb.), members of the Senate Armed Services Committee, are digging in their heels over language in the House-passed bill to auction off government-owned spectrum, which they fear could impede the Defense Department’s use of those frequencies for radar and communications.
Rounds said the House language is a “deal breaker” and urging that negotiators add language in the bill to protect spectrum frequencies used by the Pentagon for as long as the auction period lasts.
“It has to be modified,” he said. “They’ve indicated that they would protect the spectrum [for defense] for the first round of auction items but one day after [the first round of auction] it’s not protected,” he said.
“If they’re serious about protecting that particular part of the spectrum, they just simply protect it until the auction authority expires in 2034,” he said. “I’ve talked to the leadership here in the Senate.”
Language limiting states’ ability to regulate AI
The newest flashpoint in the negotiations is language in the bill that would restrict states’ ability to regulate artificial intelligence for 10 years.
Rep. Marjorie Taylor Greene (R-Ga.) says she would have voted against the House bill had she known that it “strips states of the right to make laws or regulate AI for 10 years.”
Other conservatives are flagging the provision as a major problem.
“I have a lot of concern about normal people who want to keep their job, want to protect their personal information. So we’re just going to say for a decade that nobody can protect people? That’s just nuts to me,” Hawley told reporters Thursday.
Making corporate tax breaks permanent
Senate Republicans and Trump White House officials disagree over making corporate tax breaks, such as bonus depreciation and research and development expensing, permanent.
The House bill phases out some of the most popular corporate tax cuts after 2029, and White House officials see an advantage in letting them expire after Trump’s term in office, say GOP senators familiar with the negotiations.
Republican members of the Senate Finance Committee made a pitch to Trump and his economic team at the White House Thursday to make the business tax proposals permanent, but the issue remains unresolved.
Sen. Roger Marshall (R-Kan.) said that members of the Finance panel expressed their desire to make those tax provisions permanent, but he’s not sure they moved the needle with Trump.
“I’m not convinced that we moved the needle. I think he certainly realizes how important it is to us, and I think he will go back and revisit it with his people,” he said.
State and local tax (SALT) deductions
Republican senators say they’re going to rewrite the deal Speaker Mike Johnson (R-La.) reached with House Republicans from New York, New Jersey, and other high-cost Blue States to raise the cap on SALT deductions from $10,000 to $40,000 for households earning up to $500,000 a year.
The House-crafted SALT deal is projected to cost $350 billion over 10 years, and Republican senators aren’t happy about it.
GOP senators believe they can lower the cap somewhere between $10,000 and $40,000 — or find another way to substantially reduce the cost of the provision — and still get the bill through the House.
“It is too high,” Sen. James Lankford (R-Okla.) of the $40,000 cap on SALT deductions.
Sen. Mike Lee (R-Utah), who is pushing for deficit reduction in the bill, called the SALT compromise a giveaway to “an exceptionally wealthy, exceptionally small group of really high-income earners from a small handful of very highly taxed states.”
“We’re subsidizing those states that impose high taxes,” he said.
He said an “overwhelming share of Republican senators” don’t support the $40,000 cap level.
“There’s a lot of support for setting that back down to some lower number, perhaps back down to $10,000,” Lee noted.
Speaker Mike Johnson (R-La.) has warned Senate Republicans that they risk imperiling passage of the bill if they blow up the SALT deal. If the Senate modifies the legislation, it would need to pass the House again before heading to Trump’s desk.
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