Republicans hope to finalize Trump’s tax and policy bill by the end of July in order to avoid a debt default.
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Reuters
WASHINGTON – President Donald Trump’s sweeping tax and policy bill that would change Americans’ everyday lives has cleared one big hurdle after several marathon days of negotiations in the U.S. House and an assist from the president himself.
But the 1,000-plus page legislation is still a long way from becoming a law.
The House bill that passed by the most narrow of margins early on May 22 brings good news for the nation’s wealthiest, car buyers, parents, waiters and waitresses. It’s also got bad news for people making less than $50,000, recipients of Medicaid and food stamps and anyone still saddled with student loan debt.
It’s also still just one puzzle piece in what Trump and his GOP allies hope will become the signature piece of legislation for the president’s second term. Hours after House Republican leadership celebrated the “generational” and “nation-shaping” legislation, their Senate colleagues who still must write and then pass their own version of the bill struck a different tone.
“I expect there will be considerable changes in the Senate,” said Sen. Ted Cruz, R-Texas.
Ahead: A fight over deficits and spending
The House-passed legislation would add an estimated $3.8 trillion to the national debt over the next ten years, fueled by a permanent extension of the 2017 income tax cuts that Trump signed into law during his first term. The bill also includes a temporary tax breaks for tips, overtime, seniors, American-made car loans, and a boosted child tax credit, among other benefits.
Combined, it amounts to a price tag concerning to some fiscal conservatives who have considerable power in the negotiations ahead.
“Somebody’s got to be the dad that says, ‘I know everybody wants to go to Disney World, but we just can’t afford it,'” said Sen. Ron Johnson, R-Wisconsin. “That’s what’s going to have to happen here in the Senate.”
The $1.5 trillion that the House is cutting from the federal budget “isn’t squat,” Johnson added, noting the federal deficit is already more than $36 trillion and annual spending is on track to break $7 trillion.
“Those are the numbers that I’m going to force people in the Senate and the White House to look at and acknowledge,” Johnson said.
Unlike his fellow fiscal conservatives in the House who failed to extract even bigger spending cuts, Johnson said those GOP members who ultimately voted for the package did so because they could face primary challengers and want to keep their seats.
“Can’t pressure me that way,” said Johnson, a 70-year old who won his latest six-year term in the 2022 elections. “I ran in 2010 because we were mortgaging our children’s future. It’s wrong, it’s immoral, it has to stop.”
Medicaid cuts top of mind for GOP senators
The House-passed legislation would also make major changes to Medicaid, saving $625 billion from the low-income healthcare program while pushing an estimated 7.6 million Americans off of coverage.
Multiple senators have raised concerns about the House’s cuts to the program. Sen. Susan Collins, the Maine Republican who is up for reelection for a sixth term in 2026, previously said the bill’s language goes beyond “waste, fraud and abuse,” as GOP leadership has suggested.
Sen. Jim Justice, R-West Virginia, who has also been wary of the lower chamber’s changes to Medicaid, said they “don’t cut into the bone,” but said he wants to eliminate a portion of the bill that limits states from raising money to pay for their portion of Medicaid spending through health care-related taxes known as “provider taxes.”
“That’s going to put a big burden on the states,” said Justice, a freshman senator elected last November.
And the bill would cut off many of the clean energy tax credits passed under former President Joe Biden’s Inflation Reduction Act beginning just 60 days after the bill passes.
“I do support a portion of the IRA tax credits,” said three-term Sen. Jerry Moran, R-Kansas, including “the energy components that are important to my state and the Midwest.”
What’s the Senate schedule?
Senators are likely to begin reviewing the House’s version of the bill in committees soon, as Treasury Secretary Scott Bessent has said the final bill must pass before lawmakers leave for their summer break at the end of July.
The bill includes a $4 trillion increase in the debt ceiling, which must be approved to prevent a catastrophic default on the national debt sometime in August.
Presuming all Democrats vote against him, Trump can’t afford to lose more than three Republicans in the Senate to keep the process moving forward in a chamber where the GOP has a 53 to 47 majority. On most legislation, Republicans typically need 10 Democratic votes to bypass the 60-vote filibuster threshold.
But Trump’s tax and spending policy bill is being written through a complicated process known as “reconciliation,” which requires only a simple majority to get through the upper chamber – but which limits policy to provisions related to spending or raising revenue.
Trump can’t celebrate a victory just by securing a Senate majority. Any tweaks that senators make to the House-passed legislation would then need to be reconciled in negotiations between the two chambers. After that, the measure must go before both the House and Senate one more time for final approval before Trump can sign it into law.