It’s time to talk about SALT and why we think that New York, New Jersey and California Republicans have exponentially more leverage than some in the House Republican Conference are giving them credit for.
Let’s put this plainly: A handful of SALT members are willing to tank the reconciliation package and President Donald Trump’s domestic agenda if they don’t get a SALT deal they like.
“It is a hill I am willing to stake my entire congressional career on,” Rep. Nick LaLota (R-N.Y.) said. LaLota said he’d be “pressing the red no button” if the SALT cap isn’t high enough.
Here’s Rep. Mike Lawler (R-N.Y.), who represents a swing district and is eyeing a gubernatorial run:
“I’ve been very clear with leadership and the administration from the very beginning — if there is not a fix for SALT, there is no bill. If nothing passes, SALT comes back unlimited, so it is on leadership to offer a number and negotiate from there. We are not negotiating against ourselves.”
Remember: This entire reconciliation package is a snake pit for moderate House Republicans. Some have privately argued to us that they’d be better off voting against it because of the cuts to Medicaid, SNAP and social programs. But SALT is also an acute and immediate problem that Republicans are nowhere close to solving.
What Lawler said is important – and is getting lost a bit in the debate over the state-and-local tax deduction limit.The SALT cap will disappear completely at the beginning of 2026 if Congress does nothing – and that’s precisely what the SALT Republicans want. So these members don’t have any incentive to cut a deal.
The House Republican leadership – namely Speaker Mike Johnson and Ways and Means Committee Chair Jason Smith (R-Mo.) – have been meeting with the blue-state Republicans to try to work out a new cap that would provide SALT relief but not lose conservative votes.
But here’s the problem for Johnson and Smith: Lawler, LaLota, plus Reps. Andrew Garbarino (R-N.Y.), Young Kim (R-Calif.) and Tom Kean (R-N.J.) are incentivized to drag this process out as long as possible to get the best deal they can. And most of them seem absolutely willing to do that.
In fact, some GOP lawmakers and aides have privately argued they’re better off letting the entire reconciliation process collapse and holding out for a late December tax deal with Democrats. A bill like that would almost certainly keep all tax cuts in place, be silent on politically risky spending cuts and restore the full deduction of state and local taxes. That would be a nightmare for the majority of the House Republican Conference but would be a dream for blue-state Republicans.
Where negotiations stand. Right now, the talks between Smith, the SALT crew and the Republican leadership are nowhere. To make things worse, it seems glaringly obvious that the SALT lawmakers understand their power.
A meeting between Ways and Means Committee Republicans, Kim and Garbarino went absolutely sideways.
Garbarino and Kim made the case that their districts need relief. Kim asked Smith to give them an offer. Smith countered that it wasn’t his job to do that.
The SALT Caucus also feels as if it’s not their job to negotiate against themselves. They view their willingness to even consider a cap as enough of a give on their end.
In other words, they can’t even decide whose responsibility it is to make the first offer.
The GOP leadership view. Top House Republicans are quite aware of this massive problem. They think the longer the SALT group holds out, the easier it will be to split them.
The problem for the SALT crew is that they lose completely if they can’t stick together. They may have to do it in the face of massive pressure from fellow House Republicans and Trump. So this will be an exercise in trust, particularly for the five Republicans who’ve vowed to stay united on this issue.
The ideal SALT cap varies in each district. No two areas of the country are identical. It’ll get tempting to break if the House GOP leadership hits a number that one or two of the members are OK with but others oppose.
The politics. “If I vote for a cap that I can’t sell at home, I might as well just pack up my office now,” Garbarino said.
Here’s more from Kim: “I campaigned on the promise that I’m going to get a SALT fix,” Kim said. “Don’t make me a liar on this. That’s what I’m asking the leadership.”
Meanwhile in crypto: The Senate is moving ahead on a cloture vote on the GENIUS Act at 1:45 p.m. It’s far from clear how crypto-friendly Democrats will vote on the legislation to regulate stablecoins, but they hold significant leverage.
Negotiators were tight-lipped leaving their second meeting of the day Wednesday night. GENIUS co-sponsor Sen. Kirsten Gillibrand (D-N.Y.) said she was “very hopeful about the agreements we’ve made.” She declined to speculate on the fate of the cloture vote.
“That’s all on the leadership level now,” Gillibrand said.
