GOP tax rift grows as clock ticks

IN THIS EDITION

The Senate and Trump have some big tax differences

Rogers gets crypto backing in Michigan Senate bid

Craig, Flanagan want to bring the fight to D.C.

Cruz looks to close spectrum deal

Bipartisan duo take on Trump’s security clearance revocations

THE TOP

The Senate and Trump have some big tax differences

Happy Thursday morning.

News: Senate Republicans and the White House are at odds over potential changes to tax-cut provisions in the massive House-passed reconciliation package, throwing a new wrench into Republicans’ bid to get the bill to President Donald Trump’s desk by July 4.

After Speaker Mike Johnson spent weeks exhorting Senate Republicans to change as little as possible in the House’s version of the “One Big, Beautiful Bill” Act, new rifts have emerged. The Senate GOP is gearing up to change major components of the package.

With the Senate Republican leadership under pressure from deficit hawks, there’s only so much the GOP can spend. And Republicans still need to settle whose priorities will win out.

A White House meeting with Trump and his senior aides on Wednesday underscored the difficult path ahead, according to multiple sources in the room.

Here’s some news that illustrates Republicans’ problems:

— The White House isn’t sold on Senate Finance Committee Republicans’ case for making permanent a slate of business tax breaks that would sunset after five years under the House bill.

— Senate Republicans want to put additional limits on several key Trump priorities, including “no tax on overtime” and new savings accounts for kids.

— There’s no resolution yet on SALT, which Senate Republicans want to change significantly. We’re told Trump didn’t object when GOP senators reiterated their desire to water down the House’s $40,000 deduction cap.

Today is June 5. There are 29 days until Johnson and Senate Majority Leader John Thune’s July 4 deadline. Bridging these differences will be a herculean task.

Inside the WH meeting. Making the business tax breaks permanent is a red line for many Finance Committee members. Sen. Steve Daines (R-Mont.) has been especially vocal that he’ll vote no without permanence. These provisions include the full upfront research and development deduction, bonus depreciation and interest expensing.

This would add an extra cost to the overall bill, spurring the White House’s hesitance. But Senate Republicans are demanding permanence because they fear a sunset would create uncertainty for businesses down the road. Senators made that argument during the White House meeting, but we’re told there remains some resistance from Trump and his aides.

Finance Republicans are meanwhile looking at lowering the cost of some of Trump’s priorities. The House bill’s tax cuts on overtime pay, for example, would cost $124 billion over four years. The “Trump accounts” total $17 billion.

Senators made the case to Trump that some of these tax cuts should be scaled back with extra limits on top of what the House included, such as tweaking eligibility requirements.

On SALT, Senate Republicans are discussing multiple ways to overhaul the House’s language, which raises the deduction cap to $40,000 for those making less than $500,000.

Here’s Senate Finance Committee Chair Mike Crapo’s (R-Idaho) analysis of the issue after Wednesday’s White House meeting:

The House’s SALT caucus is already up in arms over the prospect that their deal could change. Senate GOP leaders are acknowledging the need to keep House members happy. But finding a compromise will be difficult.

“It’s this $350 billion tag where, if we did away with it totally, we’d go from $1.6 [trillion] to dang-near $2 [trillion]” in offsets, said Sen. Markwayne Mullin (R-Okla.), a key bicameral liaison. “But what we don’t want to do is do something that’s going to kill the bill in the House.”

After the meeting, Thune said that while the SALT language will have to change, “we understand it’s about 51 and 218” — referring to the number of votes required for passage in both chambers with full attendance.

Paging the House. SALT isn’t the only problem that senators could drop in Johnson’s lap.

Finance Republicans are also working on a new plan for repealing clean-energy tax credits from the Inflation Reduction Act. It involves slower phase-outs of the incentives than what the House passed. It would also include bigger variations in how different forms of energy are treated.

This could certainly enrage the House Freedom Caucus. Hardline conservatives want a total repeal of IRA credits, which GOP moderates won’t accept.

Johnson struck deals to satisfy the SALT crew and HFC members before the reconciliation bill passed the House. Both groups could revolt if they lose ground during Senate negotiations.

Also: Johnson will meet this morning with House Appropriations Committee Chair Tom Cole (R-Okla.) and cardinals to discuss subcommittee spending allocations for the FY 2026 spending bills.

The House Appropriations Committee will begin markups today at the subcommittee level, largely at Trump-proposed spending levels, setting the stage for a spending clash with Democrats and the Senate.

— Laura Weiss, Andrew Desiderio and Jake Sherman

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CRYPTO CASH

Rogers gets crypto backing in Michigan Senate bid

Scoop: Former Rep. Mike Rogers (R-Mich.) will have an ally in his second Senate run that he didn’t have in his first: crypto campaign cash.

First Principles Digital, a new pro-crypto super PAC that supports Republicans, is endorsing Rogers’ 2026 bid and committing to a “multi-million-dollar” campaign spend in the primary and general election.

Jason Thielman, the group’s executive director, called Rogers “the type of pro-crypto champion we need in Washington.” Here’s Thielman:

This endorsement is a shot across the bow to Rep. Bill Huizenga (R-Mich.), who has been staffing up ahead of a potential Senate run. The NRSC has urged Huizenga not to run — so far to no avail.

Republicans would love to avoid a messy Senate primary in Michigan, which is one of their best pickup opportunities. Sen. Gary Peters (D-Mich.) is retiring and Democrats have a crowded field of candidates.

Thielman was the executive director of the NRSC during the 2024 cycle when Republicans took back the majority. Under his tenure, the committee aggressively played in primaries to secure their preferred candidates.

This spend is notable for two reasons: First, crypto forces were united against Rogers in 2024 — albeit different crypto forces.

The Fairshake super PAC network backed Sen. Elissa Slotkin (D-Mich.) over Rogers, throwing more than $10 million behind her campaign. The only candidate who benefited more from crypto spending was Sen. Bernie Moreno (R-Ohio), who toppled former Sen. Sherrod Brown (D-Ohio) with more than $40 million in Fairshake support.

Two, it’s interesting to see a different crypto super PAC making moves in a Republican primary. Fairshake has given no indication it plans to spend in Michigan anytime soon.

Huizenga is the vice chair of the House Financial Services Committee and has often mentioned his support for the crypto industry. It’s feasible he could have tapped into this kind of funding.

Rogers has also expressed crypto support at least since 2024, telling Stand With Crypto during the election that policymakers “must ensure American innovation in crypto is not hampered by regulation while protecting consumers.”

Maine Senate news: Cognizant of upcoming Democratic attacks, the NRSC is running a digital ad and website to defend Sen. Susan Collins (R-Maine) on Social Security. The ad touts Collins’ support for the Social Security Fairness Act, a bipartisan bill that boosts Social Security payments for public workers with government pensions.

– Ally Mutnick, Brendan Pedersen and Max Cohen

MINNESOTA WATCH

Craig, Flanagan want to bring the fight to D.C.

The Minnesota Senate Democratic primary is pitting two rising stars — Lt. Gov. Peggy Flanagan and Rep. Angie Craig (D-Minn.) — against each other in a battle to replace retiring Sen. Tina Smith (D-Minn.).

On paper, the primary appears to be an ideological battle between Craig, a more moderate candidate who represents a purple district, and Flanagan, a progressive who’s served as Gov. Tim Walz’s governing partner.

But in interviews with Craig and Flanagan, the candidates both preached a willingness to disrupt business as usual to back populist policies.

“Old labels don’t apply anymore in this economic populist moment where voters are looking for, ‘who are you fighting for?’” Craig said.

“You should be able to afford your life, and you should have people in Washington who are fighting for you,” Flanagan added.

The primary is a useful encapsulation of the intense angst festering in the Democratic base. Voters are fed up with their elected leaders, and candidates are trying to prove they’re willing to shake up the establishment.

Craig, who flipped a Republican-held seat in 2018 and has won several tough races since, is rejecting the D.C. label. Craig noted she was one of the first Democrats to call for new presidential leadership well before former President Joe Biden’s debate debacle. Plus, Craig noted she took on “the two most senior members” to become the top Democrat on the House Agriculture Committee.

No love for Schumer: Neither Craig nor Flanagan would commit to supporting Sen. Chuck Schumer (D-N.Y.) for leader, the latest sign that candidates view the top Senate Democrat as a toxic entity.

“We are a long way off for me being able to weigh in on that decision,” Flanagan said before pivoting to saying she won’t accept corporate PAC donations.

The dueling pitches: Flanagan made a bold pitch for progressive policy change, calling for a minimum wage of $15 an hour, widespread affordable child care and Medicare covering vision, dental and hearing.

Flanagan also took a shot at Craig’s experience in the House:

Craig is portraying herself as “a battle-tested leader” and “the experienced legislator” who is best positioned to win a general election in a state that’s trending right. Former Vice President Kamala Harris won by four points in November.

“I outperform almost every other Democrat in the state on the ballot, I outperform in rural areas in greater Minnesota and I’m going to help us win back voters,” Craig said.

Endorsement watch: Smith and Sen. Amy Klobuchar (D-Minn.) told us they wouldn’t be endorsing in the race, with both saying Craig and Flanagan were strong candidates. Craig has received a number of labor union endorsements, while Flanagan is backed by Attorney General Keith Ellison and former Sen. Al Franken (D-Minn.).

— Max Cohen

Cruz looks to close spectrum deal

Senate Commerce Committee Chair Ted Cruz (R-Texas) is getting close to a deal on his top priority for reconciliation.

Cruz will release the much-awaited text for his committee’s portion of the GOP party-line bill today. He has struck an initial agreement with Republican military hawks on spectrum auctions that’s been months in the making.

The auctions would likely raise tens of billions of dollars for the government and allow telecom companies to strengthen their wireless platforms. Republicans are hoping to raise as much money as possible because that revenue would go toward reducing the debt impact of the overall bill.

GOP Sens. Mike Rounds (S.D.) and Deb Fischer (Neb.), who were the leading holdouts, said the agreement with Cruz would protect the national security frequencies they care about.

That could include the lower 3GHz band controlled by the Defense Department and parts of the 7GHz and 8GHz bands, which are used by the intelligence community. Rounds said the agencies have “indicated” they’d approve of what’s being discussed.

But the “fine print,” as Rounds put it, will be key here. The GOP hawks opposed the protections to the lower 3GHz band in the House-passed bill. They said the language wasn’t strong enough.

President Donald Trump and the wireless industry want to make 600 MHz of spectrum available for auction. Cruz supports that goal but we’ll have to see how the carveouts sought by the hawks affect getting to that level.

AI. While there has been progress on spectrum, there hasn’t been as much on whether to include the moratorium on state AI laws that was in the House bill.

Sens. Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.) oppose the provision outright and Sen. John Curtis (R-Utah) declined to say whether he supports the policy. Instead, Curtis said the Byrd Rule, which requires policies in reconciliation bills to have a direct impact on spending or revenue, “would take care of it.”

Cruz has declined to say whether the AI moratorium would make it into today’s text. But his thoughts on its compliance with the Senate rules aren’t too encouraging for the provision’s backers.

“It will surely be challenged under the Byrd Rule and it’s not clear if it would survive,” Cruz said.

– Diego Areas Munhoz

THE SENATE

Bipartisan duo take on Trump’s security clearance revocations

News: A bipartisan pair of senators will unveil legislation today aimed at preventing President Donald Trump from revoking security clearances of his perceived enemies.

Senate Intelligence Committee Vice Chair Mark Warner (D-Va.) and Sen. Susan Collins (R-Maine), a senior member of that panel, are reviving legislation they first introduced in 2019 that would establish specific criteria for granting, denying or revoking clearances.

Democrats and some Republicans have taken issue with what they’ve characterized as Trump’s weaponization of the security clearance process for political retribution.

In recent months, Trump has revoked the clearances of former President Joe Biden and top officials in his administration, in addition to those involved in Trump’s first impeachment. Trump’s allies have noted that Biden canceled Trump’s clearance in 2021 after the Jan. 6 Capitol attack.

“Americans should be able to have confidence that the security clearance process is focused solely on protecting our nation’s most sensitive information,” Warner said.

Here’s Collins:

The bill also prohibits the revocation of security clearances based on the individual’s constitutional rights, such as freedom of speech and expression. And it allows those individuals to appeal a denial or revocation.

— Andrew Desiderio

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