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Senate Democratic moderates say they want to work with GOP on tax cuts

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A group of eleven moderate Senate Democrats say they want to work with Republicans on addressing the GOP’s expiring tax cuts and raising the debt ceiling.

In a new letter to Republicanleaders, they say they are willing to cut spending, protect family-oriented tax policies, have “competitive” rates on businesses — and that they can provide enough votes to allow Republicans to overcome a filibuster in the Senate without having to resort to so-called reconciliation.

The lawmakers say they’re otherwise worried Republicans will tack the $4 trillion cost of extending their tax cuts onto the deficit, which will increase interest rates for everyone, something nonpartisan budget forecasters have recently warned about.

“We understand that the Senate Republican conference is likely to use the budget reconciliation process to address these expirations,” said the letter, put together by Sens. Catherine Cortez Masto (Nev.) and Mark Warner (Va.), both of whom sit on the tax committee. “While we respect the majority’s right to do so under Senate rules, we believe a better outcome can be achieved by working in a bipartisan manner to reform the tax code and address our growing national debt through responsible spending reforms.”

“We believe a fully deficit-financed, partisan effort could risk raising costs for families, driving up interest rates for Americans looking to purchase a home, and increasing borrowing costs for American businesses and consumers.”

Republicans appear unlikely to take them up on the offer, though it presents a potential answer to many of the jams they now face.

The GOP is deeply divided over the cost of renewing their tax cuts, not to mention scads of individual provisions like the $10,000 limit on state and local tax deductions, and are sure to have a difficult time raising the debt limit. Some have never voted to increase the legal cap on government borrowing.

Republicans have struggled to even agree on scheduling, with weeks of debate over whether they should take up immigration first or combine it with their tax plans.

Tax debates are typically highly contentious, but there was a surprising outbreak of bipartisanship last year when House Ways and Means Committee Chair Jason Smith (R-Mo.) and then-Senate Finance Committee Chair Ron Wyden (D-Ore.) agreed on a plan to expand breaks for parents and businesses. It was overwhelmingly approved by the House before later dying in the Senate.

No Democrats voted for Republicans’ original 2017 tax cuts, much of which are now due to expire at the end of this year. Rolling them over is projected to cost some $400 billion per year, and the price tag has become a major issue given the government is already running $2 trillion deficits.

The prospect of a bipartisan tax plan would raise a whole different set of challenges though, with the two sides likely to clash over issues like how much to charge businesses and high earners. The moderates signing the letter would also likely take heat from fellow Democrats who are opposed to the tax cuts and would be happy to see them expire.

The lawmakers said they can work with Republicans on business-related provisions.

“Good faith negotiations can ensure the permanence of a competitive tax code for American businesses with reasonable effective tax rates and competitive treatment of capital and R&D expenses, as well as a rational international tax regime,” they wrote.

“While there will certainly be challenges to finding bipartisan agreement on certain issues, we believe addressing the growing deficit and reducing unnecessary spending can serve as a basis for good faith bipartisan negotiation.”

The letter was also signed by Sens. Raphael Warnock (Ga.), Tim Kaine (Va.), John Hickenlooper (Colo.), Mark Kelly (Ariz.), Gary Peters (Mich.), Jacky Rosen (Nev.), Ruben Gallego (Ariz.), Elissa Slotkin (Mich.) and Jon Ossoff (Ga.).

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Congress

Trump’s tax cuts are set to shrink after GOP flinches at deep spending cuts

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President Donald Trump wanted a “big, beautiful bill.” Now Republicans are having to take some of the shine off of it.

GOP leaders on Capitol Hill signaled Thursday they are scaling back their tax-cutting ambitions after running into difficulty making deep spending cuts and facing stern warnings from Republican deficit hawks who are threatening to vote against Trump’s sprawling megabill.

On the chopping block could be a litany of Trump demands, including a permanent extension of the tax cuts passed during his first term, as well as second-term campaign promises to provide tax relief to seniors while also exempting taxes on tips and overtime earnings. Those provisions could end up getting enacted only temporarily, according to four Republican lawmakers, some of whom spoke on the condition of anonymity.

With key committees struggling to meet a $2 trillion spending cut target, Speaker Mike Johnson told a group of House Republicans Thursday he is now targeting $4 trillion of tax cuts. That’s a half-trillion dollars less than many in the GOP had hoped, and it’s likely below the threshold needed to make the 2017 tax cuts permanent — one of Trump’s earliest demands for the party-line megabill.

“Republicans talk a big game … about reining in reckless spending,” House Budget Chair Jodey Arrington (R-Texas) told reporters. “You won’t get the full permanency in the tax policy on all the provisions if we don’t get to the $2 trillion in savings, and that’s unfortunate.”

That cake is not yet totally baked: Republican leaders are still exploring a request from Trump to increase income taxes on the highest-earning Americans — from 37 percent to 39.6 percent, the level that prevailed before the 2017 law — in order to make room for more tax cuts elsewhere.

The House’s top tax writer, Ways and Means Chair Jason Smith (R-Mo.), is set to visit the White House Friday as GOP leaders grapple with the idea of a more modest package. Trump posted Wednesday on Truth Social that the bill would deliver “the biggest Tax Cut for Middle and Working Class Americans by far.”

“We are going to do NO TAX ON TIPS, NO TAX ON SENIORS’ SOCIAL SECURITY, NO TAX ON OVERTIME, and much more,” he wrote.

Under Johnson’s new $4 trillion tax plan, however, Smith may not be able to deliver on all of Trump’s requests. Many of the desired tax cuts might be in place for only a few years — forcing future Congresses to decide whether to keep them in place.

Time is running out for Republicans to put the puzzle pieces together. Johnson is pushing to have three key committees vote on their portions of the bill next week. And with the committees on Ways and Means, Energy and Commerce and Agriculture all currently slated to convene on Tuesday, the window to make changes to the overall package is closing quickly.

Committee rules give the Energy and Commerce Committee, which is weighing major Medicaid changes, until 24 hours before the meeting Tuesday at 2 p.m. to release final legislative language. Ways and Means is aiming to meet at the same time.

Even if House GOP leaders manage to pull the megabill together, the Senate is poised to revise many of the policies. Many GOP senators have balked at making deep cuts to Medicaid and pushing food aid costs onto the states, which could trim back the cuts further, and Senate tax writers are pushing back on the higher top-earner rate.

“I’m not excited about the proposal, but I have to say, there are a number of people in both the House and the Senate who are, and if the president weighs in favor of it, then that’s going to be a big factor that we have to take into consideration as well,” Senate Finance Committee Chair Mike Crapo (R-Idaho) said Thursday in an interview with talk show host Hugh Hewitt.

Crapo has been an outspoken advocate for essentially writing off the cost of permanently extending the 2017 tax cuts and accounting only for the cost of new tax provisions. But the politics in the House are different, where a cadre of fiscal hawks are demanding that GOP leaders hold spending cuts and tax cuts in rough balance.

Smith had already indicated it would be difficult to make the 2017 bill permanent under the House’s fiscal framework, which envisioned $4.5 trillion in tax cuts and $2 trillion in spending cuts. (Fiscal hawks are counting on economic growth and other “dynamic” effects to make up the difference.)

Now that Johnson is planning on $500 billion less in tax cuts, tax writers on the committee will have to make some very difficult choices on what to prioritize. One tax writer, Rep. Ron Estes (R-Kan.), said Wednesday that he expects a number of tax provisions to be temporary, with some extended for four, six or eight years.

Those include various pieces of Trump’s 2017 tax law, such as tax deductions for businesses, individual tax rates and estate taxes. House Republicans have also wanted to restore three critical business provisions, which would cost more than $600 billion to make permanent. Then, Smith has to find room for enacting Trump’s campaign priorities, such as his ideas on tips, overtime and Social Security.

Even with revenue-generating proposals — such as increasing the tax on university endowments and repealing Biden-era clean energy credits — the math is not adding up for Republicans who want to fit it all in.

That’s to say nothing of the push from blue-state Republicans to increase the income tax deduction for state and local taxes. The so-called SALT Republicans presented proposals to Ways and Means members Wednesday, but they left far from a resolution that would satisfy both sides.

On Thursday evening, New York Republicans Andrew Garbarino, Nick LaLota, Mike Lawler and Elise Stefanik rejected one House GOP idea under discussion: increasing the SALT deduction from $10,000 to $30,000. They called the number “insulting.”

“We were on the 25-yard line with about 75 yards to go,” LaLota told reporters Thursday. “We got sacked at that meeting. We probably lost five to ten yards.”

Meanwhile, House GOP efforts to amp up spending cuts have largely faltered. On Medicaid — which had been targeted for as much as $600 billion in savings — Republicans have found consensus on only the more modest proposals, such as adding work requirements in the program, strengthening eligibility checks and booting noncitizens from the rolls.

Johnson ruled out one of the most controversial Medicaid cuts GOP leaders had been pursuing, slashing the federal cost share for the joint federal-state program, after meeting with moderates Tuesday evening. And House Energy and Commerce Chair Brett Guthrie (R-Ky.) said a policy intended to lower drug prices in the program that the White House has pitched is likely off the table, too.

Another ambitious cost-cutting proposal — capping the federal payments for at least some Medicaid enrollees — remains an option, though it’s politically explosive.

Ultraconservatives are demanding those kinds of “structural” changes, but moderates are wary. In a report requested by Democrats, the Congressional Budget Office estimated Wednesday that a similar policy to what is being discussed could lead to 3.3 million people losing Medicaid coverage and 1.5 million people going uninsured. It would, however, generate $225 billion in savings.

“It’s a sensitive thing,” Johnson conceded Thursday.

House Republicans also still need to convince centrist holdouts to back a controversial proposal to shift some costs of food aid under the Supplemental Nutrition Assistance Program to states for the first time ahead of the scheduled House Agriculture Committee meeting.

While the pared-down tax cuts might represent a setback for the Trump agenda, some in the White House have been relieved that Congress has stepped back from the most far-reaching proposals for safety-net cuts, according to two people granted anonymity to describe the private reactions, and are privately rooting for the swing-district moderates to win out over hard-liners.

Trump has promised the “largest tax cuts in history,” but he’s also repeatedly pledged not to cut Americans’ government benefits — and he’s recently grown uncomfortable with proposals for far-reaching Medicaid cuts.

Brian Faler and Robert King contributed to this report.

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Congress

Librarian of Congress Carla Hayden is fired by Trump

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President Donald Trump fired Librarian of Congress Carla Hayden Thursday, according to a library spokesperson and an email obtained by Blue Light News.

“Carla, On behalf of President Donald J. Trump, I am writing to inform you that your position as the Librarian of Congress is terminated effective immediately. Thank you for your service,” wrote Deputy Director of Presidential Personnel Trent Morse in an email to Hayden sent at 6:56 p.m.

Hayden’s firing generated an immediate backlash from congressional Democrats. Rep. Joe Morelle (D-N.Y.), the top Democrat on the House committee that oversees the library, slammed Trump for “firing a patriotic public servant.” House Minority Leader Hakeem Jeffries piled on, calling the decision “unjust” and a “disgrace.” Sen. Martin Heinrich (D-N.M.) praised Hayden in a statement and said Trump was “taking his assault on America’s libraries to a new level.”

The White House did not immediately respond to a request for comment.

Hayden became the first Black Librarian of Congress and the first woman to lead the world’s largest library after the Senate confirmed her in a 74-18 vote in 2016. Her 10-year term began that year, though she may have been eligible for renewal under rules set by Congress.

Hayden was nominated by President Barack Obama, who knew Hayden from her time at the Chicago Public Library. Immediately before being tapped as Librarian of Congress, she led the Enoch Pratt Free Library in Baltimore.

She has been a prominent public face of the Library of Congress, active on social media and expanding offerings of events at the library. She launched a strategic plan for the library and was shepherding a complete overhaul of the visitor experience, including significant structural changes to create a new way for visitors to view the iconic reading room.

Hayden faced criticism from House Republicans at a House Administration hearing Tuesday about cost increases and delays to that project.

Gregory Svirnovskiy contributed to this report

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Ways and Means chair to huddle with Trump on taxes

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House Ways and Means Chair Jason Smith is set to meet Friday with President Donald Trump at the White House with the tax portion of the GOP megabill at risk of unraveling, according to three people granted anonymity to describe the private plans.

Smith will have to inform Trump that the tax portion of the megabill has been limited by the GOP’s inability to build support for deep spending cuts and that Republicans will have to leave out some of his priorities, according to three other people with direct knowledge of the matter.

The White House meeting will come a day after Speaker Mike Johnson privately told Republicans Thursday that they would only be able to pay for $4 trillion in tax cuts, versus the $4.5 trillion they had previously been targeting to enact the president’s sprawling tax demands.

Smith explained Trump’s latest asks for the tax bill to Ways and Means Republicans in a Thursday morning meeting. They include closing the so-called carried interest loophole and hiking taxes on the wealthiest Americans, according to two other people.

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