News: Sen. Markwayne Mullin (R-Okla.) and blue-state House Republicans discussed a potential SALT cap compromise on a call Wednesday as Senate GOP leaders try to settle key reconciliation hangups.
The conversation centered on the possibility of keeping the House bill’s $40,000 cap on deducting state-and-local taxes but restricting how many higher-income households can benefit, according to multiple sources familiar with the matter.
This idea — lowering the income threshold for claiming the full deduction — would give SALT backers some political cover by maintaining the deduction cap. And it would cost significantly less, which would be a win for GOP senators.
But SALT backers didn’t negotiate with Mullin and no deal has been made, according to sources familiar with the call. Blue-staters remain dug in behind the House bill’s full SALT provision, which only limits deductions for households making more than $500,000 per year. Reps. Mike Lawler (R-N.Y.), Young Kim (R-Calif.) and Andrew Garbarino (R-N.Y.) were on the call with Mullin.
The episode underscores the challenges Senate Republicans are facing as they try to get a bill on the floor by the middle of next week.
House SALT holdouts insist they’re not backing down. There’s a real political incentive for them to fight on the issue.
Some GOP senators want to jam the House with a watered-down provision and dare the SALT Caucus to tank the entire bill. Sen. Kevin Cramer (R-N.D.) said that while a negotiation with the House is necessary, in the end “they’ll be given a binary choice… or they amend it.”
Mullin has been a key intermediary for leadership to try to help settle SALT, but his fellow Senate Republicans would still have to back any deal.
Medicaid changes: Senate GOP leaders are likely to add a stabilization fund for rural hospitals to the bill to win over the Medicaid holdouts. The fund would soften the blow for rural hospitals that would lose out on Medicaid funding because of the Senate bill’s provider tax crackdown.
Sens. Susan Collins (R-Maine) and Josh Hawley (R-Mo.) are discussing a plan that would mirror a Collins proposal from 2003. The Senate Finance Committee is also working on a proposal.
It’s unclear, however, if this would satisfy House opponents. Speaker Mike Johnson wasn’t consulted on the Senate’s harsher provider tax crackdown. His leadership team believes it can’t pass the House.
What comes next: Senate Republicans’ efforts to settle Medicaid and SALT hangups are meant to clear the way for a vote next week.
In addition to nailing down the votes, Senate Republicans have to clear procedural hurdles.
That means that despite the federal holiday, the “Byrd Bath” process is rolling on. The Commerce Committee provisions, including the hotly contested AI moratorium, are expected to be litigated today.
On Friday, aides from both parties will present their Byrd arguments to the parliamentarian for the Judiciary Committee’s legislative text.
GOP senators were told Wednesday that the Byrd process is about halfway done for the entire bill — though the Finance portion will be the most important and happen last.
Democrats are waging a relentless campaign to “Byrd out” as many of the bill’s provisions as they can. While most of their challenges won’t be successful, any small victory can help muck up the process for Republicans.
