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: Summer exit eludes Senate

Published

2 hours ago

August 6, 2026

Blue Light Newsroom

Don’t expect the typically strong smell of Thursday jet fumes in the halls of the Senate just yet.

Ideally, senators would be leaving town for a five-week recess after business Thursday, but a legislative pile-up and pressure from President Donald Trump has made that impossible.

All 100 senators still need to agree to a deal to speed up consideration of a measure to extend government funding through Dec. 11, a Russia sanctions bill, dozens of nominees including Todd Blanche and a bipartisan college athletics bill — an agenda that would otherwise take weeks to accomplish.

Republicans also need to make a decision about whether they’re going to attempt to take an initial step on a third party-line spending bill, which includes election security measures Trump is demanding.

Senate Majority Leader John Thune said Wednesday evening the vibes were “starting to pick up” in terms of a deal taking shape. But he cautioned on jet fumes:

“You’re not going to be smelling those anytime real soon. …We’ve obviously got, like I said, a stack of stuff to do,” he said.

While Thune hasn’t ruled out taking up a budget blueprint for the GOP bill, he said it was “hard to say at this point” if the votes were there.

However senators are eyeing an exit strategy to allow Republicans to leave town while giving Trump a small win by taking up his elections measure. With that option, Republicans would bring up legislation related to the SAVE America Act instead of advancing a budget resolution, three people granted anonymity to discuss internal discussions said.

Thune said it “remains to be seen” whether that’s enough for hard-liners who have threatened to oppose leaving town without a vote on it.

Also still in limbo is Trump’s attorney general pick Blanche, who met Wednesday with GOP holdouts Sens. Bill Cassidy and Lisa Murkowski. Neither said afterward how they would vote on the nomination — and Blanche needs to secure at least one of their votes.

Government funding legislation is also stuck in the pile-up, with Republicans grappling with intraparty wrangling over hemp language. And an agreement to speed up consideration of the Russia sanctions measure is also in limbo as Democrats work through concerns in their ranks about it.

And Democrats are waiting for smoke signals from Republicans on whether they’ll force them to vote on cryptocurrency legislation that many of them currently oppose (more on that below). Dems are eager to avoid taking that vote ahead of the recess, potentially fueling tens of millions of dollars of campaign spending by industry allies.

What else we’re watching:

— JOHNSON BULLISH ON SPEAKERSHIP: Mike Johnson said he is planning to remain speaker if House Republicans hold onto the House — but didn’t weigh in on his future plans if Democrats flip the majority. “I don’t have to answer that question because we’re gonna win,” Johnson told Dasha Burns on Tuesday in an interview for Blue Light News’s The Conversation. “I’m gonna remain speaker of the House,” he added. Johnson would face difficult political headwinds to stay on as minority leader if Democrats take back the chamber, but he dodged on the topic, reiterating his optimism.

— FARM BILL OUTLOOK DIMS: Agriculture ranking member Amy Klobuchar is signaling she’ll oppose the GOP-led farm bill up for a markup Thursday, likely scuttling chances it’ll advance. At issue is a provision to delay requirements that states pay for part of Supplemental Nutrition Assistance Program benefits. Agriculture Chair John Boozman has offered a one-year delay while Democrats are asking for two years. The nutrition aid requirements were passed as part of the GOP’s megabill last summer. Boozman needs to win support from at least one Democrat to advance the bill out of committee given Sen. Mitch McConnell’s prolonged absence.

Jordain Carney, Mia McCarthy and Grace Yarrow contributed to this report.

Congress

Senate’s summer pileup is threatening a quick recess escape

Published

13 hours ago

August 6, 2026

Blue Light Newsroom

Ideally, the Senate would be adjourning for a five-week break in less than 24 hours.

Instead, Republican senators are still navigating what Majority Leader John Thune described as a “train wreck” as they face a pileup of legislation, key nominations and public pressure from President Donald Trump and angry conservatives to show progress on a GOP election bill Trump views as his “No. 1 priority.”

They’re heading into Thursday — when the scent of jet fumes typically starts wafting through the halls of Congress — without a deal that would let them speed up votes on a government funding bill or long-stalled Russia sanctions bill.

Meanwhile, Todd Blanche’s attorney general nomination is still stuck in limbo after he came to the Capitol Wednesday for a roughly hourlong meeting with two key Republican holdouts.

That said, the general outlines of a deal that would allow senators to quickly get out of Washington and onto the campaign trail has started taking shape, even as senators and aides acknowledged they might have to stick around at least a little bit longer than they’d hoped.

“Don’t kill the vibe — it’s starting to pick up,” Thune said in an interview, while cautioning that “you’re not going to be smelling those [jet fumes] anytime real soon. … We’ve obviously got, like I said, a stack of stuff to do.”

One key issue Republicans haven’t yet settled is a new party-line spending bill that would pump billions of dollars into the Pentagon, to ailing farmers and into some elections-related spending that could take some of the Trump-fueled pressure off — even as several people with knowledge of the discussions said the votes aren’t there.

Thune hasn’t formally ruled out taking up a budget blueprint for the GOP bill, saying Wednesday it was “hard to say at this point” if he had the votes. But he indicated there was progress behind the scenes toward an exit strategy that would allow Republicans to start their recess with minimal internal friction.

“There’s not clarity, but it’s getting less cloudy if you put it that way,” Thune said.

Three people granted anonymity to discuss internal discussions said that endgame would not involve the time-consuming process of advancing a budget, but instead calling up a vote related to the SAVE America Act, the Trump-backed elections bill.

Republican leaders are hoping that holding a vote on the elections proposal, at the Senate’s usual 60-vote threshold for legislation, will let them hammer Democrats as the holdup while satisfying Republicans who have been frustrated over the lack of progress and have threatened to oppose leaving town.

“We’re looking at options there,” Thune said about possible SAVE America-related votes.

He added that it “remains to be seen” if that would be enough to placate Trump-allied rabble-rousers, “but we’ve had a number of conversations now about how we get the votes people feel are necessary.”

A key MAGA ally, Sen. Mike Lee of Utah, posted a social media video Wednesday thanking Thune, saying that the conversation has moved in a “favorable direction” and that Republicans were discussing “what procedural vehicle to use in order to get this thing done.”

Thune has several other obstacles to clear besides the SAVE America fight.

Senators want an agreement that would let them extend government funding into mid-December, pass a sanctions bill targeting Russia in honor of the late Sen. Lindsey Graham, confirm dozens of Trump nominees, including Blanche, and start work on a bipartisan college sports bill.

The highest drama surrounds Blanche, who met Wednesday with GOP Sens. Bill Cassidy of Louisiana and Lisa Murkowski of Alaska. Neither said afterward how they would vote on his nomination. With Sen. Susan Collins (R-Maine) and every Democrat expected to oppose Blanche, and Sen. Mitch McConnell (R-Ky.) out for health reasons, he will need to win support from at least one of the two.

The legislative targets have issues, too: Republicans are grappling with intraparty wrangling over hemp language included in the stopgap bill, and Democrats are working through concerns in their ranks about the sanctions bill.

They also want to know if Republicans are going to force them to take a vote on cryptocurrency legislation that many Democrats currently oppose. They are eager to avoid taking that vote ahead of the recess as bipartisan talks happen behind the scenes — especially because a failed vote could potentially fuel tens of millions of dollars of campaign spending against Democratic opponents by industry allies.

Democrats are also looking for signals from Republicans about whether they will move forward with the party-line budget plan. But it was clear by Wednesday afternoon that major obstacles remained.

One GOP senator said Wednesday evening that “there won’t be the votes to do reconciliation and that will simplify things” for the rest of the schedule.

At a Senate GOP lunch meeting, Budget Chair Ron Johnson of Wisconsin presented his ideas for the budget blueprint. It would closely mirror a version that the House advanced last month, but it would also instruct a host of new committees to help draft the bill — expanding the range of issues Democrats could force vulnerable GOP incumbents to take tough votes on just months before the midterms.

Besides ongoing intra-GOP disputes about the amount of Pentagon funding to include and whether to offset the spending with cuts elsewhere, Thune is dealing with senators who aren’t convinced that they should force the issue just months before voters cast ballots.

Retiring Sen. Thom Tillis (R-N.C.), who described himself as a “lean no” on the budget, said his views were being influenced by wanting to protect vulnerable colleagues.

“There’s only like five members of my conference that I care about. and they’re the ones who are running in at-risk states,” he said.

Asked if he would vote “no” to protect them, Tillis added, “I’m going to support my members who are up for election. They’re the most important priority right now.”

Congress

Trump urges GOP senators to back off hemp ban

Published

16 hours ago

August 5, 2026

Blue Light Newsroom

President Donald Trump and top White House officials are privately lobbying Republican senators to delay a ban on intoxicating hemp that’s set to kick in this fall.

At the Trump administration’s urging, the government funding patch the Senate is working to pass this week would push off the forthcoming ban of some cannabis products derived from hemp. But several Republican senators are demanding a vote to strip the delay out and let that prohibition kick in come November.

They’re hearing from the White House about it.

Trump called Sen. Ted Budd on Tuesday night, after the North Carolina Republican filed an amendment to ensure the ban kicks in as mandated on Nov. 12, according to a Senate aide granted anonymity to describe the private discussion. On the call, the president discussed creating a federal regulatory framework for hemp but did not ask Budd to withdraw his amendment, the individual added.

“I’ve been asked by lots of people to stand down on this amendment,” Budd told reporters Wednesday.

Budd noted that the Trump administration has had almost nine months to come up with a plan for implementing the ban.

“So why all of a sudden pop up for some seemingly innocent delay?” he asked, accusing the White House of instead preparing to “jam this on some must-pass” funding package at year’s end to further delay the prohibition.

A White House official granted anonymity to discuss the private debate said the Trump administration is seeking “a modest four-week delay” through the Dec. 11 expiration of the funding patch “to allow for productive conversations to continue.” Some synthetic cannabis products would be permanently banned in the meantime, the official added.

The administration lobbying has successfully swayed some Senate Republicans, such as Sen. Rick Scott (R-Fla.), who said in an interview that “the White House has committed to me that they’re committed to regulate the industry.”

Republican Sen. Rand Paul of hemp-rich Kentucky said the issue came up “in a big way” during Senate Republicans’ private lunch meeting Wednesday. Paul said he spoke in support of delaying the ban and said those arguing for a delay “aren’t very rational.”

“They’re wanting to hold up the funding for the government over one month,” he said. “It’s kind of insane.”

Grace Yarrow contributed to this report.