Congress

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

Published

1 year ago

May 9, 2025

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.

Congress

Capitol agenda: Thune and Trump plot GOP money wave

Published

1 hour ago

October 6, 2026

Blue Light Newsroom

John Thune has money on his mind in the final stretch before the midterms.

The Senate majority leader, in an exclusive conversation Monday with Blue Light News on the campaign trail, said funding for Republicans has dominated his recent conversations with President Donald Trump and his staff as the party tries to divvy up its spending to hold onto seats in closer-than-expected races while picking up spots in other states.

“I think the president is sincerely interested in trying to do whatever he can to help the team,” Thune said. “You know, some of the states have gotten very expensive.”

Thune’s focus highlights the emerging story defining the 2026 midterms: Is there enough Republican money, and can it be spent fast enough to counter surging Democratic campaigns and a lackluster national environment for the GOP?

Thune was at a news conference Monday with Senate GOP candidate Michele Tafoya in Minnesota — a state where the party increasingly sees a pickup opportunity after Democrats nominated progressive Peggy Flanagan.

Minnesota is one possible state where Trump could deploy his $400 million war chest, Thune said. But he was vague when asked about Republicans’ potential commitment to the race. He named Michigan and New Hampshire as other GOP pickup opportunities.

Republicans are simultaneously having to play defense in a growing list of red states, like Iowa, Kansas and Alaska. And the Thune-aligned Senate Leadership Fund recently pulled back spending in North Carolina — essentially surrendering a GOP-held seat to Democrats — while increasing its spending in Kansas.

Thune referred to the super PAC’s North Carolina decision as a “pause” in financial support.

And then there’s Texas, where Republicans are deploying hundreds of millions of dollars as they struggle to drag GOP nominee Ken Paxton over the finish line. Thune said “dedicated donors” focused on Texas have prevented the need to siphon funding away from other states.

Thune declined Monday to put odds on the GOP’s chances of keeping Senate control, but repeated, “I think we can keep the majority.”

The results may carry personal stakes for him, as he is expected to run for leader again. And while no other senator has raised their hand against him, some conservatives have questioned whether Trump would publicly turn on Thune if Republicans lose.

“I can’t control that,” Thune said, adding that the Republican conference would ultimately make the decision. “What the president does or doesn’t do … you just move forward and let the chips fall where they may.”

What else we’re watching:

— THUNE CHECKS TRUMP’S DAYLIGHT SAVING ZEAL — Thune also said Monday there is no “consensus” yet on Congress establishing permanent daylight saving time — even as Trump ramps up pressure to pass it. “The president feels strongly on it like he does a lot of issues,” Thune said. “It’s something we’re having conversations about, but there’s no clear path forward or consensus on it yet.” Thune also made clear that while Trump singled out Sen. Tom Cotton for scrutiny, opposition to the bill — which would lead to late winter sunrises in some parts of the country — runs deeper than one senator.

— BUCKS FOR BABIES PLAN DRAWS MURRAY IRE — Top Democratic appropriator Patty Murray is blasting a Trump administration plan to reward communities with high birth and marriage rates with a bigger share of federal transit money. “Tying funding for transit projects to marriage rates and how many babies a woman has is the sort of bizarre and dystopian idea you’d expect in a TV show, not actual policy put forth by the U.S. government — yet here we are,” Murray said in a statement. The Federal Transit Administration wants to revamp a multibillion-dollar program that helps state and local authorities fund infrastructure projects such as rail improvements and new bus lanes. The agency opened public feedback on the plan this month.

Jordain Carney and Sam Ogozalek contributed to this report.

Congress

John Thune has money on his mind

Published

4 hours ago

October 6, 2026

Blue Light Newsroom

LE SUEUR, Minnesota — The word on John Thune’s mind these days is “resources.”

In the Senate majority leader’s recollection, it was a dominant topic in his recent conversations with President Donald Trump, including at a recent visit to the White House, not to mention in his frequent conversation with Trump’s political team — and in an exclusive conversation with Blue Light News Monday during a Midwest campaign swing.

“I think the president is sincerely interested in trying to do whatever he can to help the team,” Thune said about his midterm conversations with the president and his advisers. “I also share with him, too, the importance of just the resources in some of these states. You know, some of the states have gotten very expensive.”

As Trump focuses on turning out his own voters — a message the president is taking into his own hands in a series of preelection rallies — Thune is making sure he also has money on his mind: “I … just conveyed to him the importance of ensuring that our candidates are well-resourced.”

Thune’s focus underscores the emerging question defining the 2026 midterms: Is there enough Republican money, and can it be spent fast enough, to counter surging Democratic campaigns and a lackluster national environment for the GOP?

It’s a narrative both sides largely agree on — Thune’s Democratic counterpart, Minority Leader Chuck Schumer, said as much last week — even as each leader insists his side will prevail.

Thune declined Monday to put odds on the GOP’s chances of keeping control of the Senate but said repeatedly, “I think we can keep the majority.”

“I think all of these races are margin of error, at least the ones that we have to win,” he added. “And historically, at least if you look at polls, we tend to outperform them.”

Unlike Schumer, who is keeping a low profile in October and focusing on private fundraising, Thune is barnstorming the country — visiting a mix of deep-red and battleground states.

Minnesota was not expected to be in play for Republicans when Thune took over as leader nearly two years ago. Democratic incumbent Sen. Tina Smith had a clear path to reelection in a state that has not elected a GOP senator since 2002.

But Smith chose to retire, and Democrats nominated an unabashed progressive, Peggy Flanagan, who is now facing Michele Tafoya, the well-known former sportscaster, in November. Recent public polls have shown the race in single digits, and Thune was not shy about including it alongside Michigan and New Hampshire as a GOP pickup opportunity.

Mentioning Minnesota is one thing, but investing in it is another, and national groups affiliated with Thune have not made major investments in the state so far. Standing next to Thune at a news conference Monday, Tafoya made the case for that to change.

“We have had three or four straight weeks of really solid polls,” she said. “This is one worth investing in. We are right there.”

But they both kept things vague when asked about Washington Republicans’ potential commitment to the race — including how much cash would be necessary to overcome 24 years of futility and a bad political environment.

Both Thune and Tafoya used the same words to answer that question: “We haven’t had that conversation.”

Thune put the party’s spending decisions into a larger context: “If the president is looking for places where he can make a difference … we’re in touch on a daily basis with his team and hopefully they will — as they already have — continue to help us leverage the resources that we’ve got to bring to bear to get the best possible impact and outcome in these key states.”

Thune pointed to Minnesota as one possible state where Trump could choose to deploy his $400-million-plus war chest. But the tiny national footprint in the Gopher State pales next to the hundreds of millions of dollars being spent in Texas — an expensive state Thune and Trump continue to discuss as Republicans struggle to drag Senate nominee Ken Paxton over the finish line.

Asked about the super-sized investments there, Thune declined to connect the massive spending on Paxton to tough decisions elsewhere on the map. “Dedicated donors” focused on Texas, he said, have meant GOP groups haven’t yet had to siphon funding away from other key states.

But the tough decisions are nevertheless underway. As Republican candidates play defense in a growing list of red states, the Thune-aligned Senate Leadership Fund recently pulled back spending in North Carolina — essentially surrendering a GOP-held seat to Democrats — while increasing its spending in Kansas.

Thune referred to the decision as a “pause” in financial support for nominee Michael Whatley.

The reasons for the political headwinds were on display Monday at an agriculture-focused roundtable, where Thune and Tafoya heard about the impact of Trump’s trade war with Canada, the president’s decision to import foreign beef and the high diesel prices that followed his decision to attack Iran.

Thune, a South Dakotan fluent in farm-state politics, touted Tafoya as someone who could help address some of those concerns by being a “great voice on issues like agriculture” if she makes it to the Senate.

His broader message in the interview, however, was to cast the midterm election as “choice” between the two parties rather than a referendum on the Iran war and the ensuing spike in energy prices. Democrats want “more spending,” “higher costs,” and “open borders,” he said, while Republicans had put “more money in your pockets” with their 2025 tax bill.

“Iran is temporary,” he said. “It will be behind us. Gas prices are going to come down, so who do you want to invest in for the next two years, four years?”

The midterm results carry personal stakes for Thune, who is expected to run for leader again in internal Senate GOP elections that are expected to take place just days after the midterms, regardless of the outcome.

Thune remains well-liked within the Senate GOP conference, and no other senator has raised his or her hand to run against him. But some conservatives, in and out of the Senate, have privately questioned whether Trump would publicly turn on Thune if Republicans lose their majority.

Asked about that possibility, Thune said, “I can’t control that.” He added that “the Republican conference” would ultimately make the decision.

“What the president does or doesn’t do … you just move forward and let the chips fall where they may,” he said. “All I can say is, I’m with him and his team to do the things I think are good for the future of the country.”

When Blue Light News pointed out Trump defended Thune at last month’s GOP midterm convention after some in the crowd booed the mention of his name, he laughed.

“Yeah, I know,” he said. “It’s the little things, right?”

Congress

GOP committee chair rebuts Sam Altman: ‘I’m never willing to accept bad results’ from AI

Published

15 hours ago

October 5, 2026

Blue Light Newsroom

The chair of the House Agriculture Committee said he’s not willing to “accept bad results” as a tradeoff for the benefits of advancements in artificial intelligence — a direct rebuttal to OpenAI CEO Sam Altman.

“As someone who practiced health care for 28 years, I’m never willing to accept bad results. I think we just need to do our best,” Rep. G.T. Thompson, a Pennsylvania Republican, told reporters Monday.

He was responding to Altman’s comments to Decoded by Blue Light News that people “should accept some bad things happening for the benefits of this technology and people having the agency.”

Pressed further on whether he agreed with Altman’s premise, Thompson replied, “No, I think we have to work harder to prevent any bad things from happening.”

Altman’s comments come in the wake of increased panic over the risks of catastrophic destruction from AI, with many industry leaders and experts arguing that guardrails are needed on the technology to prevent it from spinning out of human control.

Pressure is building on Congress to regulate the rapidly-advancing technology, but lawmakers are divided over whether the AI industry needs federal regulation or if it’s capable of governing itself.

The executives of major AI labs and tech companies gathered at the White House last week to discuss solutions with President Donald Trump, who believes overregulating AI will have national security repercussions. The group ended up signing a “morally binding” AI accord that critics say won’t do enough to prevent a worst-case scenario.

Thompson noted Monday he believes that AI will bring “tremendous solutions,” specifically in regards to finding cures for health issues like cancer and Alzheimer’s disease. But he also said AI has to be led with “principle” — comparing it to how he addressed digital assets in a bill to regulate the cryptocurrency industry, which he worked on as chair of the Agriculture Committee.

“The first principle is ‘do no harm.’ So we need to protect consumers, and that means, I think, building some guardrails — some guidelines — to do that,” Thompson said. He added that the second principle is to “foster innovation.”

“I think AI has a lot to do with that,” he added. “I don’t think AI works without RI: Real Intelligence.”