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Capitol agenda: Senate says SALT isn’t settled

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Pity Speaker Mike Johnson this morning.

Not only does he have to deal with Elon Musk trying to sabotage the “big, beautiful bill,” Johnson is now staring down Senate tax writers who are doubling down on threats to scale back his carefully negotiated deal to raise the state-and-local-tax deduction cap.

Senate Finance Republicans left the White House on Wednesday without decisions on key tax provisions in the bill. But two things are clear: Senators want to make President Donald Trump’s business tax incentives permanent, not just extend them for five years as the House did. And to help pay the roughly half-trillion-dollar price, they’re ready to carve up the House’s deal to quadruple the SALT deduction limit.

SALT Republicans don’t have the same leverage in the Senate that they do in the House — because they simply don’t exist in the other chamber.

“There’s not a single [Republican] senator from New York or New Jersey or California,” said Finance Chair Mike Crapo (R-Idaho). That means there’s not much appetite “to do $353 billion for states that, basically, the other states subsidize.”

But Senate Republicans are keenly aware of the House’s precarious math problem. If they send a package back to the House with significant SALT changes, it could derail the timeline for Trump’s biggest legislative priority.

“We are sensitive to the fact that, you know, the speaker has pretty narrow margins, and there’s only so much that he can do to keep his coalition together,” Sen. Todd Young (R-Ind.) told reporters. “At the same time it wouldn’t surprise people that the Senate would like to improve on their handiwork.”

Where’s Trump? The president on Wednesday didn’t directly tell lawmakers not to meddle with the House’s SALT deal. But he, too, is playing the numbers game. “He said, ‘You do this, do we lose three votes here? If you do that, do you lose three votes here?’” Sen. Ron Johnson (R-Wis.) told reporters after the meeting.

Senate Majority Leader John Thune also conceded the difficult calculus on SALT, telling reporters “we understand that it’s about 51 and 218” and “we will work with our House counterparts and the White House” to move the megabill.

There’s been a breakthrough elsewhere, though: With Commerce preparing to release its draft bill Thursday, Sen. Mike Rounds (R-S.D.) told Blue Light News Wednesday that he’s satisfied a planned spectrum auction will protect national security, with specific frequencies used by the military shielded through 2034.

One potential wrinkle: Rounds later suggested to Blue Light News that the deal that was still being finalized Wednesday could look to free up other frequencies “that the business community is going to be concerned with.”

What else we’re watching:

— Appropriations moving: Speaker Johnson plans to meet Thursday with top GOP appropriators about what funding totals to use in drafting the dozen government funding bills they’ll write this summer. House Appropriations is forging ahead with markups Thursday on two of the 12 bills, even before GOP leaders and his dozen subcommittee chairs — “the cardinals” — have settled on numbers for the full slate.

— Senate Banking meeting: Senate Banking Republicans will propose provisions that would change the pay scale for Federal Reserve employees and zero out funding the Consumer Financial Protection Bureau as part of the Senate version of the GOP megabill, according to a committee staff memo obtained by Blue Light News. Banking Republicans are scheduled to meet Thursday morning to discuss the proposal.

— Lutnick on Blue Light News (again): Commerce Secretary Howard Lutnick is back on Capitol Hill Thursday to testify in front of House Appropriations. Expect him to be back in the hot seat after Sen. John Kennedy (R-La.) grilled him on Wednesday over the Trump administration’s tariffs.

Jasper Goodman, John Hendel and Jennifer Scholtes contributed to this report.

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Congress

The Senate megabill is on a collision course with House fiscal hawks

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House fiscal hawks are looking at the math underlying Senate Republicans’ sprawling domestic policy legislation, and they don’t like what they see.

As Senate Republicans try to muscle President Donald Trump’s “big, beautiful bill” for final passage, they’re on track to violate a budget framework brokered between House fiscal hawks and Speaker Mike Johnson. Under that framework, if the GOP piles on tax cuts over $4 trillion, they’d need to match them dollar-for-dollar with additional spending cuts beyond the $1.5 trillion in the House-passed bill.

“The Senate version adds $651 billion to the deficit — and that’s before interest costs, which nearly double the total,” said the House Freedom Caucus in a Monday afternoon post on X. “The Senate must make major changes and should at least be in the ballpark of compliance with the agreed upon House budget framework.”

It’s a wonky hill to die on, but dozens of House conservatives insisted on the deal before smoothing the megabill’s path through their chamber. Johnson at one point told the conservatives they could go after his gavel if he didn’t hold up the deal — what some of the holdouts considered a “blood oath.”

If the House hawks stand by the deal and the Senate bill doesn’t change appreciably during the final amendment vote marathon that got underway Monday, it could force GOP leaders to “conference” the legislation between the two chambers — likely delaying the bill’s passage beyond Trump’s deadline of July 4.

Now compounding concerns for House GOP leaders, who have ordered members back to Washington to start voting on the bill Wednesday morning, billionaire Elon Musk sent new volleys of criticism at Trump’s marquee legislation Monday over the bill’s deficit impact.

“Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame!” said Musk on X on Monday. “And they will lose their primary next year if it is the last thing I do on this Earth.”

The House fiscal hawks have been crystal-clear about their fiscal red lines, though many now privately worry that they could end up getting jammed by Senate Republicans — and by Trump — with a far spendier bill. Johnson on Monday would not address whether the pending Senate bill could pass the House but told reporters he’s long advised Senate GOP leaders to hew as close to the House version as possible.

There’s “a lot of game left to play,” he added.

Notably, a group of 38 House Republicans led by Rep. Lloyd Smucker (R-Pa.) wrote Senate Majority Leader John Thune in early June warning that any changes to the GOP megabill needed to adhere to the fiscal framework laid out by the House. Under that plan, if the GOP includes $4.5 trillion in tax cuts in their bill, then they would need to scrounge up at least $2 trillion in spending cuts.

It’s already looking to be a far cry from what Senate Republicans hope to pass in the coming hours.

According to the Joint Committee on Taxation, the Senate’s plan includes around $4.45 trillion of tax cuts versus the $3.8 trillion in tax cuts passed by the House. But the spending cuts contemplated by the Senate GOP wouldn’t come close to making up the difference, according to the Congressional Budget Office, the other official budget scorer on Capitol Hill.

CBO estimates the Senate plan includes around $1.5 trillion in mandatory spending cuts, but that amount is reduced by around $300 billion in one-time investments in border funding and national security policy.

“The Senate bill is currently out of compliance with the budget framework by $651 billion, which is adjusted for dynamic revenue from higher economic growth,” said Paul Winfree, CEO of the Economic Policy Innovation Center and a top economic official during Trump’s first administration, in a text. “I think it will be very important to get that number closer to $0 to avoid conference.”

Senate Republicans in many ways made steeper cuts to Medicaid than the House, which would have otherwise helped rectify the difference.

But between $200 and $300 billion in spending cuts included in the House-passed bill were knocked out because they didn’t comply with Senate budget rules. The chamber’s parliamentarian, Elizabeth MacDonough, has been in constant talks with Senate Republican and Democratic staff about whether provisions in the legislation are fit for the filibuster-skirting reconciliation process.

“What we’ve been told is somewhere around $250 billion, because I’ve heard $300 and I’ve heard [$200], so I’m gonna split the difference,” said Sen. Markwayne Mullin (R-Okla.) of the sidelined spending cuts.

Mullin added that House Republicans should look at the score of tax cuts under the so-called current policy baseline, which assumes that trillions of dollars of expiring tax cuts would be extended.

“I think it’s up to the House how they want to look at this, because they can go in two different directions,” said Mullin. “If you go underneath current law, then you have a deficit. If you go into current policy, you actually have a surplus of $507 billion.”

Still, prominent Republicans such as Budget Chair Jodey Arrington (R-Texas) and conservative firebrand Rep. Chip Roy (R-Texas) have argued that Senate Republicans still need to do the math as laid out in the House budget, regardless of which baseline they use.

Rep. Keith Self, another Texas Republican, wrote Monday on X that senators are “completely ignoring” the House budget framework. “This isn’t just reckless,” he wrote, “it’s fiscally criminal.”

Meredith Lee Hill contributed to this report.

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Musk goes back on the offensive as megabill moves through Congress

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Elon Musk is escalating his assault on President Donald Trump’s “Big Beautiful Bill” as the Senate readies a final vote on it.

The world’s richest man, who until recently played an active role in the Trump administration, attacked the GOP’s sweeping domestic megabill over the weekend. On Monday, he threatened to wield his financial resources against Republicans who support it.

“Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame!” Musk wrote on X. “And they will lose their primary next year if it is the last thing I do on this Earth.”

Musk’s opposition to the megabill, which could cripple the renewable energy industry while adding trillions to the national debt, led to a public break with the president shortly after his time as a federal government employee came to an end in late May.

The two appeared to patch things up several days later.

But Musk is again on the offensive. Also on Monday, he tagged Freedom Caucus members Texas Rep. Chip Roy and Maryland Rep. Andy Harris in another post assailing the megabill.

“How can you call yourself the Freedom Caucus if you vote for a DEBT SLAVERY bill with the biggest debt ceiling increase in history?” Musk wrote.

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Planned Parenthood funding at grave risk after Senate ruling

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Republicans are on the cusp of a breakthrough in their long effort to strip federal funding from Planned Parenthood after a Senate ruling Monday.

Senate Parliamentarian Elizabeth MacDonough advised lawmakers that a provision that would cut off Medicaid funding for one year to the women’s health organization and abortion provider can remain in the GOP’s domestic policy megabill without threatening its ability to be passed along party lines, according to Senate Democrats.

The megabill is expected to clear the Senate Monday or Tuesday using a budgetary tool to bypass a 60-vote filibuster. Bills advanced with that tool must adhere to strict budget rules, and the parliamentarian is the de facto arbiter of those rules. Senate Democrats had challenged whether the provision was allowed.

“Republicans will stop at nothing in their crusade to take control of women’s bodies,” said Democratic Sens. Ron Wyden and Jeff Merkley of Oregon in a statement.

Conservative lawmakers have sought to strip Planned Parenthood’s eligibility for federal funds for decades. It has long been subject to the Hyde amendment, which bans federal funding directly on abortions, but the organization bills Medicaid for nonabortion services and receives other federal funding through other programs and grants.

Republicans sought to target the group in their party-line 2017 push to repeal the Affordable Care Act, but the overall effort collapsed.

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