Congress
From spaceports to venture capitalists, tailored tax breaks add billions to megabill
Special tax breaks for venture capitalists, Alaskan fisheries, spaceports, private schools, rum makers and others — together costing tens of billions of dollars — quietly caught a ride on Republicans’ sprawling domestic policy megabill.
The legislation is primarily designed to prevent $4 trillion in looming tax increases set to hit at the end of this year. But, shortly before approving the plan, Senate Republicans added a new crop of unrelated, bespoke tax breaks. House GOP lawmakers got in their share, too.
Many are the sort of narrowly targeted breaks Republicans have long complained are unfair, reward influential special interests and unnecessarily complicate the tax code.
There’s a new supersized deduction for business meals — though only for employees at certain Alaskan fishing boats and processing plants, with the measure stipulating the facilities must be “located in the United States north of 50 degrees north latitude” though not in a “metropolitan statistical area.”
There’s a $17 billion expansion of a little-known provision that enables venture capitalists to make a fortune tax-free.
Sen. James Lankford (R-Okla.) won a carve-out for the oil and gas industry from a minimum tax on big corporations that was created during the Biden administration.
There’s a $2 billion break important to the rum industry and, tangentially, Louisiana, said Sen. Bill Cassidy (R-La.), a tax writer.
“We have the highest per capita intake of alcohol in the nation,” he said.
The targeted tax breaks have been overshadowed by the main purpose of the legislation: preventing a whole slate of tax cuts from expiring at the end of this year, and enacting a handful of breaks for things like tips and overtime pay that President Donald Trump had promised.
But they nevertheless got the same fast-track-into-law treatment, despite some seeming to come out of nowhere with little public vetting.
Some House Republicans grumbled about the provisions — “loaded with pork to buy key Senate votes,” the chamber’s hard-right Freedom Caucus said in a memo to colleagues. But House lawmakers backed down from threats to sink the plan over fiscal concerns and other complaints, and approved it Thursday on a 218-214 vote that sends it to Trump for his signature into law.
Even as Senate Republicans added their own provisions to the legislation, they deleted some earmarks that had been approved by the House.
Though some of the add-ons are small — like an increase in a special deduction for certain Alaskan whaling captains to buy weapons and maintain their boats — others have price tags that run in the billions.
The bill includes an expansion of a little-known break that Silicon Valley investors have used to nix tax bills on tens and even hundreds of millions of dollars in earnings from Internet startups. Another spends $26 billion to create a new $1,700 credit for people who give to groups providing scholarships for children to attend private school.
Sen. Mitch McConnell (R-Ky.) secured a $7 billion tax cut for farmers that allows them to postpone paying some of the capital gains taxes they owe when selling off farmland.
There’s also a $1 billion provision allowing “spaceports” — which the legislation defines as “any facility located at or in close proximity to a launch site or reentry site” — to sell tax-exempt bonds, like airports. Sen. Ron Wyden, the chamber’s top Democratic tax writer, said in an X post that “Trump’s wedding gift to [Jeff] Bezos and birthday gift to [Elon] Musk were tucked in the new budget bill.”
Finance Chair Mike Crapo (R-Idaho) chafed at suggestions the various tax breaks are earmarks.
“I wouldn’t describe them that way,” he said. “You can go through there and find 100 specific issues, and if you want to call them earmarks, that’s your choice, but I don’t think they are.”
“Would you say that if we build a highway, would you say we’re doing an earmark for roads?” he said. “It’s infrastructure policy.”
His colleagues are likewise defending their provisions.
Lankford says the special break for oil and gas companies is needed because the arcane calculations that go into determining when a company is subject to a 15 percent minimum tax are biased against the industry.
The provision reverses the “tax penalty Democrats placed on America’s energy producers and allows our producers to deduct essential capital costs just like any other manufacturer,” he said.
Cassidy said the rum item is a permanent version of a temporary break lawmakers have approved many times before. The Treasury has long transferred federal excise taxes imposed on rum made in Puerto Rico and the Virgin Islands and sold in the U.S. back to those governments.
“We’re attempting to provide certainty for businesses, and that includes distillers,” said Cassidy, whose sugarcane-producing state is part of their supply chain.
Democrats tried, unsuccessfully, to kill some of the proposals.
During Senate deliberations, Sen. Mazie Hirono (D-Hawaii) watched her amendment targeting the private-school tax break win bipartisan support but nevertheless go down on a 50-50 vote.
“Nearly 90 percent of K through 12 students attend public schools, yet Republicans are pushing a plan in this bill to undermine support for public schools,” she said. Sen. Ted Cruz (R-Texas) retorted that Democrats “are more beholden to teacher union bosses than they are dedicated to fighting for kids.”
Even as they added their own pet projects, Senate Republicans jettisoned earmarks that had been approved by their colleagues in the House. Out is an $800 million tax cut for corporations that have income in the Virgin Islands.
They also dumped plans to spend $10 billion on a provision pushed by the fitness industry, including the YMCA, that would have allowed people to count gym-membership fees as a medical expense in Health Savings Accounts. A provision boosting the Earned Income Tax Credit for some Purple Heart winners was similarly axed.
It wasn’t all bad news for House members, though.
Rep. Mike Kelly (R-Pa.) was pleased to see Senate Republicans reinserted his plan sending a $3 billion tax break to real estate investment trusts, after lawmakers had initially deleted it from their draft.
“It was a little questionable about what was going to go and what wasn’t,” he said.
And Senate Republicans not only kept a House-approved provision exempting gun silencers from a long-standing $200 tax on firearms — they dumped the tax on all guns it applied to, except machine guns and what the legislation terms “a destructive device.” That cost: $1.7 billion.
Rep. David Kustoff (R-Tenn.) hailed the plan, calling the charge “an illegal poll tax used as a piggy bank for the federal government.”
Congress
Capitol agenda: Dems plot redistricting revenge
Democrats are ready to play hardball after a stunning series of redistricting losses that could kneecap the party’s power in Congress for years to come.
“We’re going to win in November, and then we’re going to crush their souls as it relates to the extremism that they are trying to unleash on the American people,” House Minority Leader Hakeem Jeffries said Wednesday.
Jeffries will hold a caucus-wide meeting Thursday morning with House Administration’s top Democrat Joe Morelle to discuss next steps on the party’s election security strategy.
The mid-decade map redrawing war marks a reversal from years of high-minded Democratic rhetoric that included advocating for independent redistricting commissions, campaign finance curbs and more. Democratic leaders are now openly discussing overriding those safeguards as Republicans use the courts and their control of state governments to consolidate and enhance their own party’s power.
Democrats’ call to action comes after the Supreme Court’s April decision to slash the Voting Rights Act, kicking off a GOP mad dash to crack majority Black, safe Democratic seats in the South. The Virginia Supreme Court’s rejection of a map last week that would’ve given Dems four new seats this year dealt another blow.
Jeffries and fellow Democratic leaders laid out an ambitious plan this week to redistrict before the 2028 elections in states like New York, New Jersey, Colorado, Oregon and Washington where their party currently holds power but cannot immediately redraw House lines.
But opportunities to redistrict in 2026 are running dry for the party, except for a potential last-ditch pick-up in Maryland, where Democrats want to eliminate Rep. Andy Harris’ district even with the state’s primary two weeks away and mail-in ballots already issued.
Prominent Democrats are heavily pressuring state Senate President Bill Ferguson to move for a map redraw now after preventing the party from trying to draw an 8-0 map months ago, Gregory Svirnovskiy reports. Ferguson’s spokesperson Wednesday said the leader told Maryland’s governor he’s “open to a conversation about next steps.”
“At this point, the Republicans are literally doing everything in their power to create all Republican congressional delegations in the South and to squeeze out every possible seat,” Rep. Jamie Raskin told Blue Light News in an interview. “So if [Ferguson’s] initial position was that he didn’t want to be part of continuing a downward spiral, that consideration should be gone.”
The party’s anger also translates to a growing appetite to remake the Supreme Court, which many House Democrats say is ushering in an era of “Jim Crow 2.0.”
Rep. Johnny Olszewski, who has introduced legislation to term-limit the justices, said in an interview that the VRA ruling was “a straw that broke the camel’s back.” And Rep. Sean Casten said there are tools to “kneecap” the Supreme Court that Congress has never used, such as stripping their power to review lower court rulings.
“I think everybody from the top of our caucus to the bottom are saying we have got to push back on them,” Casten said.
— SURVEY SAYS: Separately, new results from a Blue Light News Poll show many Democratic voters want their party leaders to fight back hard — even if it means breaking up districts designed to protect the power of Black voters and other minority communities. Read the results here.
What else we’re watching:
— SENATE GOP COOL ON SUMMER RECONCILIATION 3.0 PLAN: Senate Republicans aren’t sold yet on their House counterparts’ plan to finish a third party-line spending package before summer recess. “We’re still working on reconciliation 2.0,” Senate Majority Leader John Thune said Wednesday when asked if his chamber was also planning a pre-recess timeline for a third bill.
— HOUSING BILL COMES TO HOUSE FLOOR: House GOP leadership is planning to put an amended housing bill up for a fast-track floor vote next week, despite President Donald Trump’s calls for the chamber to pass the Senate’s version as-is. Senior House lawmakers late Wednesday reached a bipartisan deal and released bill text. The final House text would maintain restrictions on Wall Street’s purchase of single-family homes — a priority for Trump — but would significantly scale back the Senate bill’s limitations on so-called institutional investors in the housing market.
Riley Rogerson, Andrew Howard, Erin Doherty, Jordain Carney, Kelsey Brugger, Katherine Hapgood and Meredith Lee Hill contributed to this report.
Congress
House Democrats prep for years of redistricting hardball after court losses
House Democrats say they tried playing nice. Now the gloves are off.
After spending more than a decade pushing for anti-gerrymandering measures and other good-government initiatives, Democratic lawmakers said this week they are gearing up to play political hardball in the wake of stunning court losses on redistricting — potentially for years to come.
“We will beat the far-right extremists,” House Minority Leader Hakeem Jeffries said Wednesday. “We’re going to win in November, and then we’re going to crush their souls as it relates to the extremism that they are trying to unleash on the American people.”
It’s a marked reversal from years of high-minded Democratic rhetoric that included advocating for independent redistricting commissions, campaign finance curbs and more — even as Republicans used the courts and their control of state governments to consolidate and enhance their own party’s power.
The U-turn was already underway, but it was cemented in recent weeks after the U.S. Supreme Court reinterpreted the Voting Rights Act of 1965 to allow states to eliminate majority-minority districts. Then the Virginia Supreme Court moved last week to invalidate a recent voter referendum paving the way for a Democrat-friendly map.
Several Democratic states, including New York, have been hindered by their adoption of independent redistricting commissions and other processes meant to take partisan considerations out of the drawing of congressional lines. Now Democratic leaders are openly discussing overriding those safeguards.
“All options should be on the table,” Rep. Ted Lieu (R-Calif.) told reporters Wednesday. “And other states that have redistricting commissions should be prepared to have conversations with their legislature and their voters in response to what we’re seeing in the South. And I think all of that is completely fair.”
The party’s anger also translates to a growing appetite to remake the Supreme Court, which many House Democrats say is ushering in an era of “Jim Crow 2.0.”
Rep. Johnny Olszewski (D-Md.), who has introduced legislation to term-limit the justices, said in an interview that the ruling was “a straw that broke the camel’s back.” And Rep. Sean Casten (D-Ill.) said there are tools to “kneecap” the Supreme Court that Congress has never used, such as stripping their power to review lower court rulings.
“I think everybody from the top of our caucus to the bottom are saying we have got to push back on them,” Casten said.
What was especially gutting to Democrats about the two court decisions was that they believed they had battled Republicans to a draw after President Donald Trump kicked off the unusual mid-decade line drawing spree by pressuring Texas legislators to eliminate as many as five Democratic House seats there.
The Virginia referendum last month was seen as a capstone, with voters essentially endorsing a map that would add four Democratic seats. Jeffries won plaudits for spending heavily to get that result and took a public victory lap only to see it all reversed.
Despite the setback, Jeffries has mostly gotten a pass from fellow House Democrats, who say that the GOP efforts in other states had to be countered despite the risks.
“My feeling is, given what was happening around the country, there was no choice but to launch the effort in Virginia,” said Rep. Lloyd Doggett (D-Texas), who is retiring after seeing his district radically redrawn.
Jeffries and fellow Democratic leaders laid out an ambitious plan this week to redistrict before the 2028 elections in states like New York, New Jersey, Colorado, Oregon and Washington where their party currently holds power but cannot immediately redraw House lines.
“This is not a war we started,” Rep. Ilhan Omar (D-Minn.) said. “But as Democrats it’s important that we also get aggressive in that fight.”
The focus on 2028 comes as opportunities to redistrict in 2026 run dry — except for a potential last-ditch pick-up in Maryland, where Democrats want the legislature to eliminate Republican Rep. Andy Harris’ district, even with the state’s primary two weeks away and mail-in ballots already issued.
In light of the court rulings, Rep. Glenn Ivey (D-Md.) said, there’s “enormous pressure to do something, and I think we should.”
Other House Democrats are calling for new investments in state-level races to support legislators who will commit to redistricting efforts ahead of 2028 and the post-2030 Census redraw.
“Democrats are going to be moving to do what Republicans did 15 years ago and that is to focus on state legislatures,” Rep. Kwesi Mfume (D-Md.) said in an interview. The “smartest thing to do,” he added, “would be to control the process.”
The appetite for even more aggressive redistricting could even mean a new push to redraw maps again in California, where voters last year approved a Democratic-drawn map that handed the party five new favorable districts. The hope is that Democrats can squeeze more blue seats out of the state ahead of 2028.
“We were meeting fire with fire. Texas did five seats, California did five seats,” Rep. Yvette Clarke (D-N.Y.), the Congressional Black Caucus chair, said in an interview. “Now … we’ve got to look at all options. We’re not taking anything off the table.”
Congress
House releases amended housing bill text, schedules vote for next week
Senior House lawmakers late Wednesday reached a bipartisan deal on housing affordability legislation and scheduled a floor vote for next week.
The final House text would maintain restrictions on Wall Street’s purchase of single-family homes — a priority for President Donald Trump — but would significantly scale back the Senate bill’s limitations on so-called institutional investors in the housing market.
If the House passes its legislation, the bill would have to go back to the Senate for final approval before it reaches Trump’s desk — even as the White House has pushed the lower chamber to pass the Senate’s 21st Century ROAD to Housing Act as-is.
House leadership is aiming to pass the bill under suspension of rules, a fast-track procedure that limits debate, prohibits further amendments on the floor and requires a two-thirds majority. House Financial Services Chair French Hill said earlier on Wednesday that bill text would be posted once an agreement was reached and fully expected the support of ranking member Maxine Waters.
The bill text contains changes to language aimed at limiting the ability of large institutional investors to purchase housing by narrowing the definition of “single-family home,” which could make it possible for private equity firms and other large companies to purchase more homes than the previous version allowed, which is in line with draft text previously reported by POLITICO on Saturday.
The definition of a single-family home would now exclude manufactured housing and homes that have been renovated for sale, among others, according to the text.
The House bill would also strip a controversial Senate provision that would require single-family homes built by large institutional investors as long-term rentals to be sold after seven years to individual homebuyers. The housing industry and affordable housing advocates have opposed the language, arguing that it could disincentivize investment in a large segment of housing stock. There is no requirement for private equity firms to sell single-family homes they currently own or obtain in the future, whether newly built long-term single-family rental homes or otherwise, according to the bill text.
Notably, the House’s amended version of the bill will preserve a five-year ban on the Federal Reserve issuing a digital dollar, which GOP hardliners strongly opposed, arguing that a temporary ban is worse than no ban at all. Members of the House Freedom Caucus previously said they would not vote for the Senate’s housing bill due to the sunsetting ban on a central bank digital currency.
The legislation also contains 12 community banking provisions, which has been a priority of Hill this Congress. The deregulation provisions were excluded from the Senate’s bill and aim to be less burdensome for community banks.
Portions of the Senate’s 21st ROAD to Housing Act that were fully removed include language that would eliminate the cap on the number of properties eligible for HUD’s Rental Assistance Demonstration program; a permanent authorization of the Community Development Block Grant-Disaster Recovery program; and the requirement that Federal Housing Administration mortgage disclosures include cost comparison information for veteran homebuyers so they are aware of their Veteran Affairs benefits.
Additionally the House preserved the Build Now Act, which would increase funding through HUD’s CDBG program for communities that build more housing than previously and decrease funding if the housing growth rate is below its previous median rate for that locality. This has been a legislative priority for Sen. John Kennedy (R-La.) and was included in Senate crypto bill text released Monday.
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