The discussion surrounding Senate Majority Leader John Thune (R-S.D.) and fellow Senate negotiators has intensified as they aim to pass legislation aligned with President Trump’s agenda by July 4th.
Some Republican senators have expressed concerns about potential spending cuts affecting Medicaid and the Supplemental Nutrition Assistance Program (SNAP), while budget hawks are insisting on more stringent deficit reductions and limits on state and local tax (SALT) deductions.
A recent challenge for Thune and his colleagues is a push by fiscal conservatives to eliminate over $200 billion deemed as waste, fraud, and abuse in Medicare. This proposal has sparked differing opinions between senators and the Trump administration regarding permanent corporate tax cuts, including the full bonus depreciation for short-term investments and immediate write-offs for research and development expenses.
With 53 seats in the Senate, Republicans can manage to lose three votes on what they refer to as Trump’s “big and beautiful bill.” However, Senator Rand Paul (R-Ky.) has stated he will vote “no” due to concerns that it would raise the debt ceiling by $4 trillion. Senator Ron Johnson (R-Wis.) has also announced a firm opposition to any bill he sees as insufficient for reversing spending levels to those before the pandemic.
Several issues could threaten the passage of the Senate bill:
Medicaid
Republican Senators Susan Collins (R-Maine), Lisa Murkowski (R-Alaska), Jerry Moran (R-Kan.), and Josh Hawley (R-Mo.) have reacted negatively to proposed cuts to Medicaid and have indicated they might oppose the bill if it doesn’t adequately tackle their concerns. GOP leaders in both the Senate and the House insist that Medicaid benefits won’t be reduced, yet a Congressional Budget Office report indicates that 10.9 million Americans could lose health insurance as a result of changes to Medicaid and the Affordable Care Act.
“I hope it doesn’t end up benefitting from cuts; that’s my main concern,” Hawley mentioned on Thursday.
He raised alarms regarding a proposal to limit states’ ability to raise additional Medicaid funds through healthcare provider taxes, suggesting higher co-payments for individuals earning between 100% and 138% of the federal poverty line.
SNAP
Concerns about proposed cuts to SNAP, amounting to $267 billion, have also been raised by several Senate Republicans, including Collins and Moran. The Senate Agriculture Committee is anticipated to release some text related to the budget agreement next week, but Agriculture Committee Chairman John Boozman (R-Ark.) remarked that the situation remains unresolved.
“We’re still working on that,” Boozman stated, expressing a desire for a quicker resolution.
Collins voiced worries about the bill’s language that could shift much of the program’s administration burden to the states and penalize those with outdated systems for monitoring benefits.
Deficit Reduction
Some Republicans are calling for further cuts in the budget, notably Senator Ron Johnson (R-Wis.) who advocates for reducing spending by approximately $1.6 trillion over the next decade. Other GOP Senators, including Lindsey Graham (R-S.C.), are seeking even deeper cuts.
“I think the bill needs to be more responsible financially,” he told reporters.
Various Republicans are considering proposals to eliminate perceived “waste, fraud, and abuse” in the Medicare Advantage program and are currently evaluating initiatives led by Senator Bill Cassidy (R-La.) to reform insurance diagnostics and recoup Medicare overpayments. However, this proposal is dividing opinions within the GOP.
Hawley called the idea of Medicare cuts “crazy,” even though its proponents argue it targets waste effectively, a sentiment echoed by Democrats like Senator Jeff Merkley (D-Ore.) and Alexandria Ocasio-Cortez (D-N.Y.) who also view Medicare cuts unfavorably.
Spectrum Auction
Members of the Senate Armed Services Committee, including Mike Rounds (R-S.D.) and Deb Fischer (R-Neb.), are scrutinizing the bill language concerning the auction of government-owned spectrum. Rounds noted that existing language could pose serious challenges, urging negotiators to ensure that the spectrum used by the Pentagon is preserved throughout the auction process.
“We need to fix it,” he emphasized. “If they’re serious about protecting that part of the spectrum, they’ll safeguard it until the auction rights expire in 2034,” he added after discussions with Senate leaders.
AI Regulation
Another contentious point in the negotiations is the proposed limitation on states’ ability to regulate artificial intelligence for a decade. Representative Marjorie Taylor Greene (R-Ga.) expressed her opposition to the House bill under these conditions, stating she could not support legislation that restricts state-level AI regulation for such a long period.
Other conservatives have also voiced strong objections to this clause.
Corporate Tax Deductions
Senate Republicans, along with Trump White House officials, are split on making corporate tax deductions permanent, including bonus depreciation and R&D expenses. The House bill is set to phase out some popular corporate tax breaks after 2029, with White House officials feeling this gives them leverage heading into Trump’s next term, as stated by well-informed GOP senators.
On Thursday, Republicans on the Senate Finance Committee aimed to propose making these tax provisions permanent to Trump and his economic team, yet unresolved issues remain.
Senator Roger Marshall (R-Kan.) remarked that while Finance Committee members expressed their wish for permanence in these tax policies, it’s unclear if they made progress with Trump on the matter.
State and Local Tax (SALT) Deduction
Republican senators are planning to revise the SALT provision agreed upon by House Speaker Mike Johnson (R-La.) and House Republicans from high-cost areas like New York and New Jersey. This SALT deduction is projected to cost $350 billion over ten years, leading Senate Republicans to dissatisfaction.
Some GOP members believe the SALT cap could be lowered from $40,000 to around $10,000, or discover alternative ways to cut costs while still advancing the bill.
“That’s too pricey,” remarked Senator James Lankford (R-Okla.) regarding the $40,000 SALT limit.
Senator Mike Lee (R-Utah), a proponent of deficit reduction, criticized the SALT compromise suggesting it unfairly benefits high-tax states. He pointed out that most Republican senators are not in favor of the $40,000 cap.
Speaker Mike Johnson (R-La.) cautioned that if Senate Republicans undermine the SALT provision, they risk jeopardizing the bill’s passage. Amendments in the Senate would necessitate the bill returning to the House before heading to the President.
