Senate Republicans' changes to 'big beautiful bill' tee up clash with House
Senate Republicans are considering adjustments to the bill that's a cornerstone of President Trump's second-term agenda, with new provisions that could set up a collision course in the House.
The Senate Finance Committee released the highly-anticipated
legislative text Monday, which tackles issues like Medicaid and clean energy tax credits.
"This bill prevents an over-$4 trillion tax hike and makes the successful 2017 Trump tax cuts permanent, enabling families and businesses to save and plan for the future," said Chairman Mike Crapo, R-Idaho., in a statement.
Senate Democrats blasted the proposal, but their criticism is essentially moot, since Republicans are using a
budget tool called reconciliation that would enable them to pass the bill along party lines.
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said in a statement that "the biggest winners here are wealthy corporations who would get hundreds of billions of dollars in additional tax breaks."
The Finance Committee plan was unveiled a day before the nonpartisan Congressional Budget Office released a long-awaited alternate estimate for a version of the bill that passed the House in May. The updated figure, which includes projections for both economic growth and added costs from interest accrued on the nation's debt, estimates the House bill would add roughly $2.8 trillion to the deficit over a decade— more than originally projected.
House GOP leaders narrowly overcame internal divisions to pass that bill with some members concerned about the impact on the debt and deficit. The new score, combined with the Senate changes, could threaten the delicate coalition leaders amassed to pass the bill in the first place.
Both chambers have narrow majorities. Senate Majority Leader John Thune can only lose three GOP senators. Adding to the challenge is Senate Republicans' self-imposed deadline to pass the bill by July 4. If the Senate passes the bill, it will return to the House for a vote.
Rep. Jason Smith, who chairs the House Ways and Means Committee, displayed a degree of optimism in a
statement Monday night.
He said despite the work that remains to be done, "we will thread that needle to respect the needs of both bodies in the days ahead."
Let's take a look at some of the changes between the House and Senate versions and where some of the potential clashes could surface.
SALT still on the table
A major point of contention during the House negotiations was state and local tax deductions, referred to as SALT. The 2017 tax cuts capped SALT deductions at $10,000. Blue-state Republicans negotiated a plan to lift the cap to $40,000 for married couples with incomes up to $500,000.
There are no Republicans in the Senate who represent high-tax, primarily Democratic states like California and New York, and various GOP senators vowed the House's SALT efforts would be reined in by the upper chamber.
The Senate's language maintains the current $10,000 cap — but senators have said it's a placeholder figure as negotiations continue. Assigning it a value in the text enables the CBO to begin scoring the Senate bill.
But placeholder or not — this will remain a sticking point for the SALT caucus in the House.
New York Rep. Mike Lawler posted on social media that he will "not accept a penny less" than the negotiated $40,000 cap.
"If the Senate reduces the SALT number, I will vote NO and the bill will fail in the House," he
wrote.
Lawler added he's working with the leadership in both chambers and the White House and is "confident the deal as previously negotiated will be in the final bill."
Debt limit
The Senate version would boost the
debt limit by $5 trillion, up from the House's $4 trillion figure. Kentucky GOP Sen. Rand Paul has already said he opposes this.
Congress has to act by late summer to adjust the debt limit, or risk defaulting on the nation's debt.
Taxes
The Senate text permanently extends the 2017 tax cuts, a major priority for President Trump.
Trump also campaigned on no taxes on tips or overtime.
The House-passed bill listed no stated cap on tips or overtime deductions for those earning less than $160,000 a year.
Meanwhile, the Senate text includes deductions of up to $25,000 for tips on income through 2028, phased out for incomes over $150,000 for an individual and $300,000 for a married couple.
It includes up to a $12,500 deduction on overtime pay for individuals or $25,000 for joint filers through 2028, to be phased out when an individual's gross income exceeds $150,000 or a couple's joint income exceeds $300,000.
It also includes a $10,000 deduction for a qualified passenger vehicle loan, to phase out when the taxpayer's adjusted gross income exceeds $100,000 or $200,00 for a couple.
The Senate version makes various business tax breaks permanent, increases a tax deduction for seniors to $6,000 and lowers the child tax credit. Under the House version, the child tax credit is listed as $2,500 per child; the Senate version is $2,200 per child. Neither version would benefit low earning families with no tax liability.
The Senate version also creates school choice tax credits and establishes savings accounts for newborns.
Green energy rollbacks
Like the House version, the Senate language significantly rolls back the clean energy credits signed into law by former President Joe Biden. However, it does so with more flexibility.
The Senate proposal includes language friendly to the geothermal, nuclear and hydropower industries. It would phase out incentives for wind and solar in the Inflation Reduction Act at a slower pace than the House version, enabling more projects to access the credits before they finish their work.
The House bill includes a provision requiring projects start construction within 60 days of the bill's enactment to qualify for the credits, something that
concerned a group of Senate Republicans. The Senate language gives projects more time to start construction.
The Senate proposal has provisions more friendly for companies on transferability, a concern among businesses who eyed the more restrictive House version. This will allow project sponsors to transfer their credits to a third party.
Texas GOP Rep. Chip Roy
has said he won't vote for these Inflation Reduction Act centered provisions.
Medicaid
The Senate bill would match some elements of the House version by implementing work requirements for the
popular joint federal-state health care program for Americans with disabilities, the elderly and low-income people.
The
Senate's provision would require "nonpregnant, nondisabled, childless adults, aged 19-64, to complete a minimum of 80 hours" of work, community service or other qualifying activities in order to qualify for Medicaid.
There would be several exemptions, including for veterans with a "disability rated as total," individuals who are medically frail, young people in foster care through the age of 26, among other groups.
The proposal also increases the frequency of eligibility verifications and boosts requirements for eligibility documentation.
"The Republican Senate Finance cuts to Medicaid are deeper and more devastating than even the Republican House's disaster of a bill," Senate Minority Leader Chuck Schumer said in a statement.
Some Republican senators are also raising concerns about a provision that would incrementally lower provider tax in states that expanded Medicaid under the Affordable Care Act to 3.5% by 2031, down from the current 6%. The cap would be phased in by lowering it 0.5 % annually starting in 2027.
Critics of the provider tax say it's a loophole that drives expenditures — supporters say it's a critical form of funding for hospitals, particularly rural hospitals.
"I'm an optimist — that we're all going to be able to come together and we'll get, you know, some fiscal sanity and we'll also make sure that states like mine that didn't expand Medicaid are not treated unfairly," said Florida Sen. Rick Scott.
Missouri Sen. Josh Hawley, who remains on the fence on the bill, said he was taken aback by the changes to provider tax.
He argued it would hurt rural hospitals in his state.
"It just baffles me. I'd invite them to come explain that to the people of Missouri," he said after a Senate Republican meeting over the plan's latest changes.
