🏦 The Vault: Senate floor time for reconciliation?

THE VAULT LOOKAHEAD

Senate GOP’s ultimate reconciliation test

Senate Democrats mount their reconciliation blitz

A decisive week for control of U.S. crypto policy

THE TOP

Senate GOP’s ultimate reconciliation test

Senate GOP leaders are racing to settle political problems and clear procedural hurdles to get the reconciliation bill to the floor this week.

Senate Republicans need to meet this timeline to get the tax and spending-cut bill to President Donald Trump’s desk by July 4. They’re under heavy pressure to deliver.

Votes could begin mid-week — potentially Thursday — though timing is in flux and could slip because significant pieces of the bill have been “Byrded out,” because they didn’t comply with the chamber’s reconciliation rules.

The “Byrd Bath” is still ongoing, so Senate Republicans could be dealt more blows. Bipartisan meetings to argue over the Senate Finance Committee’s tax and health text were pushed a day and will now begin Monday.

Meanwhile, Senate GOP leaders need to settle big policy standoffs creating problems in both chambers.

There’s a key factor working in GOP leaders’ favor, though. The pressure on their members to get to yes is reaching a fever pitch. Trump can drop in and turn it up even higher — though the president has other major crises on his plate this week after he ordered airstrikes on Iran’s nuclear facilities.

Here’s everything you need to be watching this week to track the reconciliation bill’s fortunes.

The dealmaking: Senate Republicans are navigating notable hang-ups with their members, but perhaps more alarmingly, big warning signs from the House.

GOP senators are jumping right in with a meeting scheduled for Monday night after the 5:30 p.m. vote. Republican senators are expecting updated reconciliation text Monday as well, accounting for Byrd changes and other edits. They’ll have to tweak additional language after that, too.

There are three main groups to watch.

1) Medicaid moderates.

GOP moderates in both chambers oppose the Senate Finance Committee’s move to cut hundreds of billions of dollars more from Medicaid with a more aggressive health care provider tax crackdown.

Senate skeptics are coalescing behind a rural hospital relief fund to soften the blow, which GOP leaders are likely to give them. But that won’t necessarily work for many House Republicans. The House GOP leadership team doesn’t think the new provider tax limits can pass the chamber.

2) SALT crew.

The state-and-local-tax deduction is still at a major impasse. Sen. Markwayne Mullin (R-Okla.) and several blue-state House Republicans held a call last week where they discussed a potential compromise of a $40,000 deduction limit with a lower income cap.

But the House SALT holdouts insist that won’t win their votes. They’re dug in behind the full House SALT deal. The problem is GOP senators think this is too rich a bargain for a handful of House members.

3) Conservative hardliners.

Senate conservatives are still pushing for steeper Medicaid cuts and the total repeal of Inflation Reduction Act clean energy tax credits. Both of those changes would almost certainly lose moderates’ votes.

House hardliners are also pressing for deeper cuts, and there’s heartburn about Senate changes. A post from Trump railing against IRA credits had House Freedom Caucus members vowing again to end the subsidies.

Banking scramble. Meanwhile, the Senate Banking Committee has to figure out its reconciliation text after brutal rulings from the parliamentarian knocking out most of the panel’s cuts.

For Banking Republicans, the crown jewel of their reconciliation effort is reducing the budget of the Consumer Financial Protection Bureau. Matching the approach from the House, which lowered the CFPB’s funding cap to 5% rather than zeroing it out, could have a better shot of surviving the Byrd Bath.

But staff for Senate Democrats and House Republicans agree on one point: Banking Chair Tim Scott (R-S.C.) made a mistake by starting this push at zero. Democrats say Scott exposed the funding maneuver as a backdoor attempt to kill the CFPB.

Ben Watson, spokesperson for the Senate Banking Committee, said Scott and other members “continue to engage with the Senate parliamentarian on the Banking Committee’s provisions — including the CFPB — and remain committed to cutting wasteful spending and saving taxpayer dollars.”

Banking has to find more spending cuts to meet its instruction of cutting at least $1 billion, so Scott has no choice but to try other options.

Plus, if you like math: Here’s the Joint Committee on Taxation’s new estimate for the Senate tax package, which says it will cost $441 billion over a decade using the current policy baseline. That doesn’t count the cost of extending the 2017 tax cuts, which adds another $3.8 trillion to the price tag, per this handy JCT doc.

JCT’s analysis shows notable differences from the House bill. Senate Republicans spent less on Trump priorities like no tax on tips, overtime and car loan interest. The Senate’s package of IRA cuts saves $476 billion. Revenue raisers like the so-called “revenge tax” going after “unfair foreign taxes” and the remittance tax bring in substantially less money after Senate changes.

— Laura Weiss, Brendan Pedersen and Andrew Desiderio

THE TAX FIGHT

Senate Democrats mount their reconciliation blitz

Senate Democrats are going on offense to slash whatever they can from Republicans’ reconciliation bill and trash everything that’s left.

This is a huge political moment for Democrats. They’ve struggled at times to navigate a second era of Trump resistance. But the GOP’s tax and spending-cut package presents massive political upside for Democrats.

That will play out on two main fronts this week, which is when Senate Democrats can actually flex some limited power in the reconciliation process.

The procedural fight: The Byrd Bath gives Democratic senators the opportunity to go after pieces of Republicans’ bill and try to force them out. It’s a rare opportunity for the minority party to stop the Trump agenda in its tracks.

Already, Democrats scored significant wins blocking the Senate Banking Committee’s attempts to slash financial regulators, some of the Senate Agriculture Committee’s biggest SNAP cuts and the Senate Judiciary Committee’s limits on federal courts issuing injunctions against the executive branch.

Democrats are using the Byrd Bath to show they’ll take full advantage of any chance to fight the GOP’s plans. Here’s how Sen. Jeff Merkley (Ore.), top Democrat on the Senate Budget Committee, is framing the effort:

The Senate Finance Committee will begin its Byrd Bath tomorrow with Democrats aiming to challenge about 60 health and tax provisions, including arguments against the current policy baseline, gun and silencer provisions, and Social Security Number requirements.

Here’s news on additional provisions Democrats will target:

— A new certification program aimed at cracking down on duplicate earned income tax credit claims. The EITC aids low-income workers and their families. The GOP’s changes would raise $15 billion over a decade, per JCT.

— A new tax credit for contributions to nonprofits that give scholarships to elementary and secondary school students. Republicans spend $26 billion on the incentive, which is one of several measures that would boost private schools.

The messaging front: Senate Democrats have a huge messaging opportunity ahead. Before the reconciliation bill passes the Senate, there’s a vote-a-rama when Democrats can offer unlimited amendments to put Republicans in a tough spot politically.

Democrats will find lots of ways to go after Republicans for deep cuts to social safety net spending — namely Medicaid and SNAP — while spending on tax cuts for the wealthy. This is the crux of Democrats’ political message ahead of the next election.

Just take this new letter from six Senate Democrats who are all former governors. It says the reconciliation bill’s Medicaid and SNAP cuts create “incredible burdens” for state budgets to fund tax cuts for the rich. The letter warns that it could lead states to raise taxes or pursue all manner of program cuts.

The letter is from Sens. Angus King (I-Maine), Jeanne Shaheen (D-N.H.), John Hickenlooper (D-Colo.), Tim Kaine (D-Va.) and Maggie Hassan (D-N.H.).

“Red and blue states alike must balance their budgets, which means every dollar in added federal cost must be made up by either raising new revenues or making harmful cuts,” the senators wrote.

— Laura Weiss and Andrew Desiderio

CAPITOL CRYPTO

A decisive week for control of U.S. crypto policy

Competing visions of American digital asset policy will go head-to-head this week. One is headed by the president, the other led by a former banker from Arkansas.

There are a lot of people in Washington who would like to see the House pick up and pass the GENIUS Act sometime soon. The Senate advanced the stablecoin measure on a 68-30 vote Tuesday.

“I definitely would like them to accept stablecoins as written,” Sen. Kirsten Gillibrand (D-N.Y.) said, referring to GENIUS in the House. “If they want to make some improvements, great, but I hope they do not go backwards.”

But not everyone is House Financial Services Committee Chair French Hill (R-Ark.), whose committee has its own version of stablecoin reform, called the STABLE Act.

The two bills are not miles apart. Hill described them as “substantially similar” but with outstanding areas that need to be “clarified.” Differences include each bill’s treatment of foreign issuers and the state-regulated pathway for nonbank stablecoins. House leaders are still waiting to receive the GENIUS Act.

President Donald Trump’s call for the GENIUS Act to pass the House last week has reordered the political landscape for crypto. The crypto industry is broadly supportive of the Senate’s stablecoin bill. More than one advocate representing different parts of the ecosystem said key parts of the GENIUS Act were “more developed” than STABLE, particularly the bill’s treatment of anti-money laundering controls and ethics requirements.

But the House hasn’t rolled out the welcome mat yet.

As we reported Friday, House leadership hasn’t committed to a floor vote on the GENIUS Act, giving Hill some breathing room. Reconciliation chaos in the Senate and a looming Middle East imbroglio will also take up plenty of ink and oxygen this week. But the clock is running out for Hill and his committee to leave their mark on stablecoin reform.

“I don’t know, if you’re the House Financial Services Committee, how you fight the president on this,” Kristin Smith said, who leads the Solana Policy Institute and previously served as head of the Blockchain Association. “That was as clear of a message as you can get to what the White House wants.”

– Brendan Pedersen

… AND THERE’S MORE

Downtown download

It’s another big week for lobbying filings. Crypto hires continue apace. Merchant advocates are picking up new muscle for the next round of the credit card wars. And the housing finance sector is gearing up for whatever comes next from the Trump administration.

Plus, some big-pocketed groups are pushing back on reconciliation changes to health savings accounts.

Blocks on blocks: LEGO Systems Inc. hired Ballard Partners to lobby on trade and tariffs.

Crypto: The Bitmain Delaware Holding Company hired the Branstad Churchill Group to lobby on issues related to digital mining, “policy fragmentation,” tax policy and more. Figure Markets hired Brownstein to lobby on issues related to a “blockchain-based mortgage.”

Housing: U.S. Mortgage Insurers, a trade group, hired Breakaway to lobby on housing finance.

Credit cards: The National Association of Convenience Stores hired S2R to lobby on “competition in the credit card processing market.”

Plus, an HSA push: Some major groups are fighting Senate Republicans’ decision to scrap all of the House reconciliation tax bill’s boosts to tax-advantaged health savings accounts. The American Benefits Council, Corporate Health Care Coalition and the HR Policy Association are among organizations that wrote to Senate Finance Committee Chair Mike Crapo (R-Idaho) pushing to bring back HSA provisions.

— Brendan Pedersen and Laura Weiss

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