The Senate is inching toward floor consideration of Donald Trump's "Big, Beautiful Bill" (BBB) to pass the legislation by its July 4 deadline. Several controversial parts of the bill have been mostly smoothed over, but there are still a dozen or so senators claiming they can't vote for the bill in its current form.
One of those senators is Wisconsin's Ron Johnson. When asked if he would vote for the bill, Johnson said the bill doesn’t go far enough to cut the federal deficit, which is projected to exceed $2.2 trillion annually over the next decade.
“We’ve got a ways to go on this one,” he said.
The sticking points are familiar if you've been following the debate. The state and local tax (SALT) deduction is $40,000 a year in the House version of the BBB. The Senate temporarily reinstated it to its original value of $10,000. It's expected to rise when the House and Senate meet in conference after the Senate (presumably) passes the current bill.
Most of the rest of the 2017 tax cuts renewed by the House remain in the Senate's bill, with a few significant changes. The Senate slightly reduces the Child Tax Credit from $2,500 to $2,200. Tax deductions on tips, car loan interest, and overtime pay are slightly different from the House version.
"Tips are deductible up to $25,000 through 2028. Overtime pay is deductible up to $12,500, or $25,000 for joint filers, through 2028. Auto loan interest is deductible up to $10,000, also through 2028," The Hill reports.
The 800-pound gorilla still in the room is Medicaid cuts. Already controversial, the Senate slashed the program even further.
The legislation would effectively cap provider taxes at 3.5 percent by 2031, down from the current 6 percent, but only for the states that expanded Medicaid under the Affordable Care Act. The cap would be phased in by lowering it 0.5 percent annually, starting in 2027.
Nonexpansion states would be prohibited from imposing new taxes, but as was true in the House-passed version, their rates would be frozen at current levels. The lower cap would not apply to nursing homes or intermediate care facilities.
Limiting provider taxes is a long-held goal among conservatives, who argue states are gaming the current system and driving up federal Medicaid spending. The policies are designed to inflate Medicaid spending on paper to allow states to receive more federal reimbursement dollars.
The Senate bill also cuts certain existing state-directed payments to hospitals, which would be a significant hit to the hospitals’ bottom line. The House version, in contrast, limited future payments but grandfathered existing arrangements.
The Senate also altered the green tax credits that the House eviscerated. The Senate wants to phase in the termination of some green credits, allowing some projects that begin this year to be eligible for the credits.
Some northeastern Republicans are adamant that SALT deductions remain at $40,000 per year as they appear in the House bill.
Senate Majority Leader John Thune (R-S.D.) told reporters Monday afternoon that the $10,000 deduction cap is a “marker” for talks with House Republicans, and that they will find a number in the middle that satisfies both camps.
But the House’s SALT Caucus Republicans are insisting $40,000 be the final answer.
Rep. Mike Lawler (R-N.Y.), a key member of the group, wrote on the social platform X that the proposal was “DEAD ON ARRIVAL” and warned in a statement that a $40,000 deduction cap “is the deal and I will not accept a penny less.”
As you can imagine, the Senate bill is far from being a done deal. But many were saying the same thing before the House passed its version of the BBB. The one thing that will ensure passage is the realization that they only get one shot at this.
Failure is not an option.
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