Senate Republicans plan to unveil key details of their version of President Donald Trump’s giant economic policy bill as soon as Monday, with the party pushing to enact the $3 trillion tax package by July 4.
Republican lawmakers are slated to return to the U.S. Capitol to receive a briefing on the legislation Monday afternoon. The bill text, which could be released later that day, will represent a major breakthrough for the GOP as it seeks to continue to advance the centerpiece of Trump’s economic agenda.
Finance Committee Chairman Mike Crapo has toiled for weeks to forge a compromise between four factions in his party: conservatives who want deeper spending cuts, moderates seeking to soften those reductions, business allies pushing for larger tax cuts and members who support preserving the clean energy tax breaks that were phased out in the House bill.
One major outstanding question may be left blank in the Senate’s first version of the bill. Lawmakers have said the draft on Monday won’t resolve how the legislation will ultimately treat the state and local tax deduction. The SALT section will either be left blank or set the cap at the current level — $10,000 — as a starting point for further negotiations.
Senate Majority Leader John Thune said on Fox News Sunday there is no real interest among Republicans who hail from low tax states to raise the SALT cap to the $40,000 level called for in the House-passed version.
“I think at the end of the day we’ll find a landing spot. Hopefully that will get the votes we need in the House, a compromise position on the SALT issue,” Thune said.
House Republicans representing high-tax areas in New York, New Jersey and California have said they would not accept anything less than the $40,000 cap. They’ve said they’re prepared to block the bill when it comes back to the House for a final vote if there is a less generous allowance for SALT.
House Speaker Mike Johnson has also been putting pressure on Senate leaders to preserve the $40,000 cap in order for the bill to maintain the support it needs in his chamber.
Business interests
Energy companies will be closely watching how the draft addresses the phase-out timelines for clean-energy tax credits, particularly for projects that are already under way. Wall Street will also be looking for changes to the Section 899 “revenge tax,” which has sparked concerns among foreign investors. Senators have said they are looking to soften the blow of that levy.
Senate Republicans have for months pushed for making permanent a trio of expired and expiring business-tax provisions from Trump’s first-term tax cuts. Those tax breaks — which will costs hundreds of billions of dollars — include:
The research and development tax deduction;Boosting write-offs for business interest expenses;Full expensing for the depreciation of property costs.
Trump, in meetings with Republicans, has argued in favor of keeping the business breaks temporary, putting him at odds with some members of his party, according to people familiar with the conversations. The president believes making them last just through 2029 boosts near-term economic growth, the people said.
The president is open to and would prefer the business tax provisions to be shorter in length to make sure they spark investment in the short-term, but the administration is also open to Republican lawmakers making them permanent because it knows that is a high priority for senators, said one White House official.
Senator Ron Johnson, a Wisconsin Republican, said earlier this month that Trump called for keeping the business credits temporary, and “made a pretty good case” that a shorter window could spur investment early on. It also means they would cost less.
The Medicaid portion of the bill will also likely undergo more negotiations before a final vote, with many lawmakers skeptical of the House’s calls to quickly ramp up requirements that could scale back the ability of low-income people to qualify for health coverage.
Some lawmakers have argued that states won’t be ready to implement proposed work requirements for Medicaid by the end of 2026 and have raised concerns about mandating parents of young children to work. Others have objected to moves to crack down on the ability of states to tax Medicaid providers.
The more that these House provisions are watered down, however, the more Senate Republicans will need to look to other programs like Medicare Advantage billing practices to keep the cost of the bill from expanding.
“Just because they put it out there doesn’t mean it’s final,” Senator Josh Hawley of Missouri said about the initial version of the bill.
Procedural hurdles
Even as Republicans aim to build a political consensus around tax and spending-cut details, they are also wrangling with Senate rules. The time-consuming process of ensuring the tax bill does not contain extraneous non-fiscal matters is also slowing down Republicans’ ability to act quickly on the measure.
Democrats are challenging dozens of provisions in front of the Senate rules-keeper in the hopes of having them stricken from the bill.
Among the provisions under dispute are the regulation of gun silencers, new restrictions on the ability of courts to hold Trump administration officials in contempt and penalties for states that regulate artificial intelligence.
Republicans can only lose three votes on the partisan bill.
