The House Budget Committee approved the Republicans’ reconciliation bill late Sunday night, with a quartet of conservative hardliners voting “present” rather than derailing the legislation for a second time.
But Speaker Mike Johnson and top House Republicans still have serious problems and a bruising negotiation ahead of them over the next few days. Both conservatives and moderate swing-seat Republicans are eyeing Johnson warily, afraid he’ll cave to the other faction on key issues including Medicaid spending cuts, taxes and clean-energy credits.
The stakes are huge, both politically and fiscally. Democrats are railing against the GOP package asserting that more than 13 million Americans will lose health insurance if the Medicaid changes are enacted. Republicans peg it far lower – at more than 8 million.
President Donald Trump is also pushing for GOP lawmakers to act on extending his signature 2017 tax cuts, which expire at year end. And credit rating agency Moody downgraded the U.S. rating late last week, putting more pressure on Republican congressional leaders to act.
After the reconciliation bill failed Friday in the Budget panel, Johnson and House Budget Committee Chair Jodey Arrington (R-Texas) brought the panel back for a 10 p.m. session Sunday night. Following a roughly 25-minute delay as Johnson cut a deal in the panel’s back room, the committee voted 17-16 to allow the legislation to move forward.
In a warning sign for Johnson, Reps. Chip Roy (R-Texas), Josh Brecheen (R-Okla.), Ralph Norman (R-S.C.) and Andrew Clyde (R-Ga.) all voted present. They did so to allow the bill to move forward, while still signaling their reservations with the underlying legislation.
The House Freedom Caucus said in a statement late Sunday that the legislation still “does not yet meet the moment.”
“There’s a lot more work to do this week,” Roy told reporters. “We made progress this weekend … but they didn’t get nearly far enough.”
During negotiations over the weekend, Johnson – mostly joining by phone – discussed accelerating the implementation of expanded Medicaid work requirements to Dec. 31, 2026. These were originally set for 2029. Moderates don’t like this new timetable, and that will spark a massive intraparty battle.
Johnson also proposed a quicker phase-out of clean energy tax credits that were put into law as part of the 2022 Inflation Reduction Act. Republican leaders tentatively agreed to cut off all credits by 2028.
Conservatives are still insisting on changes to FMAP, the formula by which the federal government calculates Medicaid payments to states. This has been a hard red line that moderates oppose.
In fact, moderates believed they’d stopped this. But over the weekend, the idea cropped back up, sources involved in the negotiations say.
Roy posted on X about the issue Sunday evening, saying that FMAP “provides seven times more federal dollars for each dollar of state spending for the able-bodied relative to the vulnerable.”
Then there’s SALT. Johnson still has a crop of blue-state Republicans who expect the speaker to make a new offer on raising the state-and-local tax deduction. The House Ways and Means Committee’s bill set the cap at $30,000, a level the moderates rejected. As of very late Sunday night, the moderates hadn’t heard anything new from Johnson.
There’s a belief within the White House and House Republican leadership that moderates may be willing to swallow more drastic changes to Medicaid if Johnson makes a good SALT offer.
Yet there are plenty of moderates who don’t care much about SALT but are unwilling to stomach additional Medicaid changes. Put Reps. Rob Bresnahan (R-Pa.), Juan Ciscomani (R-Ariz.), Don Bacon (R-Neb.) and Brian Fitzpatrick (R-Pa.) in that category.
Johnson is expected to meet with the moderates and hardline conservatives as soon as today. Trump and top administration officials are likely to mount a vigorous whip effort this week too.
Let’s be clear here: A deal isn’t very close. The changes conservatives are seeking are drastic. Some of these tweaks are clearly unacceptable to moderates and the middle of the conference.
The House Rules Committee will hold its hearing on the package Wednesday morning at 1 a.m. Yes, that’s the correct time. Any changes that Johnson negotiates will come in the form of manager’s amendment that Rules will have to make in order. Roy and Norman are on Rules, also. So they have another chance to slow the bill.
The House Republican leadership is warning us that they won’t send members home for the Memorial Day recess until the House passes the reconciliation bill.
As Johnson drags the bill even further to the right, we’ll note that the Senate isn’t going to like much of this at all. Senate Majority Leader John Thune’s chamber is certain to try to temper the House’s actions on Medicaid, the IRA and perhaps even SALT.
Remember: Republican leaders have said they expect to put this bill on Trump’s desk by July 4. That’s 47 days away.
Crypto news: Sen. Mark Warner (D-Va.) will support the latest version of the GENIUS Act and is “encouraging his colleagues to do the same,” according to spokesperson Rachel Cohen. We broke the news on our text platform last night.
As a senior centrist and dealmaker, Warner’s support will be a critical bellwether for many pro-crypto Senate Democrats on stablecoin reform. The Senate will vote as early as tonight to advance the GENIUS Act.
