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:
“There’s not a single [Republican] senator from New York or New Jersey or California and so there’s not a strong mood in the Senate Republican caucus right now to do $353 billion for states that basically the other states subsidize.”
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.
