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THE VAULT LOOKAHEAD

House Republicans’ Budget showdown

Crypto has a date with destiny

Finserv’s wins and losses in the tax bill

Punchbowl News x NAIFA!

THE TOP

House Republicans’ Budget showdown

The House Budget Committee is just over five hours out from a huge test for Republicans’ reconciliation package.

The Budget panel plans to meet at 10 p.m. to vote — again — on the bill containing the 2017 tax cuts and the rest of President Donald Trump’s legislative agenda. Four hardline conservatives voted against the bill in Budget on Friday, blocking its path to the floor and dealing a harsh rebuke to the House GOP leadership.

“We’re a diverse conference and it’s a very tight margin and so it takes a while to work through things,” Rep. Lloyd Smucker (R-Pa.) said Friday after the first Budget vote tanked. “This was a very aggressive timeline that the speaker had put forward, and I think we can still meet that.”

Speaker Mike Johnson’s self-imposed deadline for getting the bill through the House is Memorial Day. That’s eight days away.

If House Republicans can pull off a successful committee vote tonight, the plan is to go to the Rules Committee on Wednesday.

The leadership is working to negotiate changes to satisfy both conservatives and SALT cap opponents threatening to vote against the bill. Those edits would happen at Rules.

But House Republicans’ challenge is finding ways to give to the holdout factions without giving so much that the other side bolts. Plus, there’s the threat of all of these sticking points that the Senate swoops in and eventually rips out everything the House does anyway.

Let’s dive in.

1) SALT. There are six House Republicans threatening to take down the bill if it doesn’t have a higher cap on deducting state and local taxes.

The Ways and Means Committee tried to placate the SALT group, going from a $10,000 cap under current law to a $30,000 limit for people making up to $400,000 per year in the tax bill.

The SALT holdouts rejected that cap and have been warring with Ways and Means ever since. Johnson has stepped in to handle the negotiations.

The SALT six want more relief than what’s in the Ways and Means bill. Conservative hardliners say any additional SALT cuts have to be offset.

The Senate is also a potential challenge for the SALT crew. Here’s Senate Majority Leader John Thune on whether the Senate could strip out an increase in the deduction limit:

2) IRA credits. Reps. Chip Roy (R-Texas), Andrew Clyde (R-Ga.), Ralph Norman (R-S.C.) and Josh Brecheen (R-Okla.) all voted against the bill in Budget last week, in part because they want to scrap every last clean energy incentive from the IRA.

Ways and Means’ bill slashes over $500 billion worth of credits. Moderate Republicans wanted a more limited phase-down of the clean energy incentives. Thirteen have said they think the tax bill goes too far already.

The question is whether there’s a way for House GOP leaders to give to the conservatives without alienating moderates more.

3) Medicaid. The conservative holdouts want earlier implementation dates for Medicaid work requirements and for changes barring undocumented immigrants from receiving benefits.

But all the changes to Medicaid are very politically sensitive for moderates, who fought hard to limit cuts to the federal health program. Some of those Republicans are extremely wary of reopening the conversation.

How about another wrench? A group of House Republicans, including a number of moderates, is making a renewed push to raise the top individual income tax rate, as we scooped this weekend. Rep. Nick LaLota (R-N.Y.) supported the idea on X.

This would face gigantic obstacles and likely couldn’t get through the House, especially without a boost from Trump.

But the interest belies several dynamics. Republicans eyeing the rate hike see a political message they like. They also see a big pot of money that could satisfy conservatives and cover SALT without any more cuts to Medicaid or SNAP.

— Laura Weiss and Andrew Desiderio

CRYPTO CLASH

Crypto has a date with destiny

This week will be hugely consequential for the crypto industry.

The Senate will vote as early as Monday night to revive stablecoin legislation via the GENIUS Act, a bill authored by Sen. Bill Hagerty (R-Tenn.) with bipartisan support.

At this point – barring last-minute drama – we believe it’s likely the GENIUS Act will pass the Senate.

Something to watch: Senate Democrats held a caucus call starting at 4 p.m. today to discuss stablecoin reform, according to two people familiar with the planning. We will see where the party lands.

On Friday, Hagerty predicted the bill would pass this week. “Next week, the Senate will make history when we pass the GENIUS Act,” he said on X.

The upcoming cloture vote is hurdle number one.

The Democrats: Senators in both parties have been working the phones all weekend, but Democrats will be the ones to watch.

If you’re a Democrat considering a vote in favor of the GENIUS Act, you likely got a call in the past 72 hours from Democratic Sens. Kirsten Gillibrand (N.Y.) and Angela Alsobrooks (Md.), both cosponsors of the bill. Sens. Mark Warner (Va.) and Ruben Gallego (Ariz.) have also been making plenty of calls.

There are a lot of Senate Democrats who are open to this bill, and that has made crypto advocates bullish. At least 13 Senate Democrats are up for grabs, by our count. That includes the bloc of nine led by Gallego, who signalled opposition to an older version of the bill in early May.

Many advocates believe Democratic Sens. Elissa Slotkin (Mich.), Adam Schiff (Calif.) and Cory Booker (N.J.) are more potential supporters, along with Senate Minority Leader Chuck Schumer.

Napkin math: Republicans need between seven to nine Democrats to pass stablecoin reform.

Among gettable Democrats, we think Warner’s support is the clearest bellwether. The centrist Virginia Democrat is by far the most senior member at the negotiating table and has helped strike deals like this before, namely a 2018 deregulatory banking package that eased Dodd-Frank-era restrictions.

Don’t expect progressives to go down without a fight. Lawmakers will push for amendments aimed at limiting the ability of President Donald Trump, his family and other public officials from profiting from stablecoins. Sen. Michael Bennet (D-Colo.) will push for this amendment to get a vote along these lines this week.

Quick aside: Over the weekend, we found ourselves re-reading this 2018 story from Politico: “Bank-friendly Senate Democrats fall in midterms, in blow to industry.”

Three Democratic senators who helped Warner pass that deregulatory package lost their reelections to Republicans: Former Sens. Joe Donnelly (Ind.), Heidi Heitkamp (N.D.) and Claire McCaskill (Mo.). Sen. Jon Tester (Mont.) held on by a thread before losing in 2024.

Today, the conventional wisdom on the political risks of an industry-friendly vote like this has flipped. The crypto super PAC network Fairshake stands ready to spend millions in 2026. A vote in favor of the GENIUS Act could protect some Democratic incumbents. Warner, Booker and Sens. John Hickenlooper (Colo.) and Ben Ray Luján (D-N.M.) are all up for reelection this cycle.

The Republicans: Holdout GOP senators could make life more difficult for GENIUS Act supporters to get this bill across the finish line. But Republican detractors don’t represent an insurmountable obstacle yet.

Sen. Rand Paul (R-Ky.) seems unlikely to support the bill after telling us earlier in the month that crypto seemed to be doing “okay without federal regulations.”

Sen. Josh Hawley (R-Mo.) also voted against cloture on the GENIUS Act. It’s not clear whether recent changes to limit Big Tech ownership of stablecoins will sway him – it certainly wasn’t enough for Sen. Elizabeth Warren (D-Mass.).

– Brendan Pedersen

THE TAX FIGHT

Finserv’s wins and losses in the tax bill

House Republicans’ much-anticipated tax bill dropped last week with all the usual fanfare. The reception from K Street was a warm one.

The text that the Ways and Means Committee marked up didn’t include a host of tax hikes corporate lobbyists were fearing. For banks and financial services firms in particular, there’s a lot to celebrate.

Let’s get into how the industry made out in the tax package.

Wins: The business world has been playing a lot of defense on the tax bill, so what fell out was as big of a deal as what got in.

— House Republicans considered raising the stock buybacks tax, which would’ve hit banks especially hard. That didn’t make it in, as we scooped. Neither did a new corporate SALT cap, which corporate America and conservative groups were fighting tooth-and-nail.

— In a huge win for private equity and hedge funds, carried interest escaped unscathed. President Donald Trump pushed congressional Republicans to get rid of special tax treatment for carried interest, a form of pay favored by investment fund managers. It didn’t have the votes.

— The low-income housing tax credit got a boost, which was a priority for certain banks. Some banks are also happy about the provision cutting taxes on car loan interest, a Trump priority.

Losses: It can’t all be good news.

— Banks have a stake in the transferability of clean energy tax credits from the Inflation Reduction Act, though we hear the changes aren’t causing too much concern. This practice allows a company that qualifies for IRA incentives to sell them to another business for quicker cash. The tax bill cuts off the transferability, generally after a couple of years.

— House Republicans included a 5% remittance tax on international money transfers in their bill, as we scooped. The GOP has often looked at the tax to fund border security and crack down on illegal immigration. This is going over okay with the industry from what we hear, but it matters to fintech. Groups like the Financial Technology Association and Electronic Transactions Association hoped to nix it.

— Ways and Means’ bill attempts to crack down on workarounds for the individual SALT cap involving pass-through businesses. This is kicking up concern from different parts of the business world — including hedge funds.

— Laura Weiss and Brendan Pedersen

PROGRAMMING NOTE

Punchbowl News x NAIFA!

This week, Punchbowl News is partnering with the National Association of Insurance and Financial Advisors for the group’s policy summit in D.C.

Catch me, Laura Weiss, at NAIFA’s summit on Monday for a panel and conversation that will include NAIFA CEO Kevin Mayeux. We’ll talk all about the tax landscape on Capitol Hill as Republicans rush to pass their reconciliation bill extending the 2017 tax cuts.

I’ll talk about all the latest on where the tax bill stands in the House and Senate. Then we’ll delve into NAIFA leaders’ role in the tax debate, the status of big industry issues like corporate SALT and what’s ahead when Republican senators work their will on the bill.

— Laura Weiss

DOWNTOWN DOWNLOAD

We’ve got some interesting lobbying nuggets across the entire Vault policy universe. That includes shifts in digital asset lobbying, a big “onshoring” push and a tiny bank that’s sniffing around stablecoin policy.

Crypto: The Solana Policy Institute hired Alpine Group Partners for “congressional engagement.” The nonprofit also recently hired Kristin Smith, the outgoing CEO of Blockchain Association.

Community banks: CBW Bank, $91-million institution based in Weir, Kan., hired H.A. Cumber & Company to lobby on bank policy and “crypto/stablecoin legislation.” This bank was dinged by the FDIC in 2024 for inadequate anti-money laundering controls.

Trade: Nestpoint Associates signed several manufacturing companies, including the Lenox Corporation, Instant Pot Brands, and Live Comfortably, to lobby on “tariff issues and onshoring manufacturing.”

– Brendan Pedersen

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