Congress
Trump’s tax cuts are set to shrink after GOP flinches at deep spending cuts
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.
NEW YORK — With just five days to go until the primary election in New York, Mayor Zohran Mamdani issued a stark warning to members of Congress who believe “incumbency is a substitute for action”: Watch out.
“People often ask me what I think of the state of the Democratic Party,” Mamdani said to the crowd at the Kings Theatre in Brooklyn as he boosted his endorsed congressional candidates. “This slate here today is our answer. The Democratic Party must change.”
The democratic socialist framed Tuesday’s election as much more than what that means for New York, though. In recounting how people also ask him about the 2028 presidential election, he put it bluntly: “It starts now. It starts on Tuesday.”
“For far too long, our party has seen its job as managing decline instead of delivering material change for working people,” Mamdani said. “That old way of thinking will lose on Tuesday. And frankly, it will lose in South Carolina and New Hampshire. It will fall short of 270 electoral votes, because the party of the past will not be what leads us into the future.”
Mamdani, joined by Vermont Sen. Bernie Sanders, urged his supporters to show up for his endorsed candidates “the way you showed up for me.” They include former New York City Comptroller Brad Lander, who’s challenging two-term Rep. Dan Goldman; state Assemblymember Claire Valdez, who’s vying for retiring Rep. Nydia Velázquez’s seat; and community organizer Darializa Avila Chevalier, who’s trying to unseat five-term Rep. Adriano Espaillat, the chair of the Congressional Hispanic Caucus.
Mamdani’s endorsed slate of legislative candidates were at the rally, too.
The rally featured standard stump speeches from the candidates, highlighting the need to support working class New Yorkers and immigrants. Speakers called out the American Israel Public Affairs Committee, the pro-Israel group that has loomed over many of these primaries — despite no evident spending from its independent expenditure arm. Sanders also emphasized his call to ban super PACs, which have reshaped primaries across the city.
Taking place just hours after the massive ticker-tape parade celebrating the Knicks’ historic championship, there were also Knicks references galore.
“I hate to break it to you, but OG Anunoby is not here to save the day,” said Mamdani, who was wearing a Knicks jersey under his suit. “The only hands we can count on are ours.”
Sanders, who is wildly popular in New York, previously endorsed Valdez and Lander. Both Valdez and Avila Chevalier are members of the Democratic Socialists of America and are backed by the city chapter in their bids. Sanders had not officially endorsed Avila Chevalier prior to the rally.
“Why are progressives and socialist candidates winning elections all across this country?” Sanders asked. “The answer in my view is not complicated. The working class of America understands that our current economic system is rigged, that it is designed to benefit the wealthy and the powerful.”
Polling has shown Lander with a lead over Goldman, and a tight race for Velázquez’s seat. Public polling is scarce in the Espaillat race, but recent internal surveys suggest Avila Chevalier is posing a real challenge to the incumbent. Mamdani endorsed her just weeks ago, much later than Lander and Valdez, but his engagement in the race has significantly elevated its profile.
“Six months ago, they told us this race was over before it started,” Avila Chevalier said at the rally. “They told us Adriano was untouchable, that he was an institution, that you don’t run against someone like him and win. That this district was his, and that we should wait our turn. And they said it with such confidence, like the outcome had already been written. Look around. Look at what we’ve built.”
Mamdani’s decision to get involved in congressional races is stress-testing how the new mayor navigates relations with powerful, well-respected party figures — many of whom he’s on the opposite side of.
Mamdani’s endorsement is expected to be a significant asset for his picks; he had dominant performances across these districts in last year’s mayoral primary. And that shine doesn’t seem to have dulled. Recent polling has shown that Mamdani has high approval ratings.
Goldman did not support Mamdani during last year’s mayoral primary or the general election, as Lander has often pointed out. Espaillat backed former Gov. Andrew Cuomo in the primary, but supported Mamdani in the general election. Valdez’s opponents, Brooklyn Borough President Antonio Reynoso and city Council Member Julie Won, both supported Mamdani in the primary.
The mayor has been active on the trail for his congressional candidates of choice in the closing stretch of the campaign. And he touted them all in an advertisement that ran during the first game of the Knicks’ finals run.
Still, Lander has tried to keep some distance. When asked at a recent press conference why he would appear in that ad with Avila Chevalier, who attended a pro-Palestinian rally the day after Hamas’ Oct. 7 attack in 2023 — the same rally Lander said he left the DSA over — he said it was an “opportunity to show New Yorkers that politics can be a team sport.” He also clarified that he has not endorsed candidates in any other congressional primaries.
Avila Chevalier told reporters that she went to that rally to “stand against” Israel engaging in “a response that is often disproportionate and creates a greater loss of life.” She added that she has “condemned Hamas” and does “not believe that celebrating the loss of anybody’s life is OK.”
Kings Theatre isn’t located in any of the districts these congressional hopefuls are trying to represent — though it neighbors the seats that Lander and Valdez have their eyes on.
It’s especially far from Espaillat’s district, which includes parts of upper Manhattan and the Bronx.
While handing out campaign literature to people walking out of the subway in Hamilton Heights, Blue Light News asked Espaillat if he had thoughts about Avila Chevalier appearing at the rally.
“I’m rallying right here in my district with my constituents — not in Brooklyn,” he replied.
Jason Beeferman contributed to this report.
Retirement groups are calling on Congress to investigate Meta over a wave of social media scams targeting older Americans.
In a letter sent Thursday to House Homeland Security Committee Chair Andrew Garbarino (R-N.Y.) and ranking member Bennie Thompson (D-Miss.), the groups alleged Meta has been slow to take down fraudulent ads, leaving seniors vulnerable to financial loss. The letter, shared exclusively with POLITICO, was signed by the Alliance for Retired Americans, the American Postal Workers Union Retirees and the American Federation of Teachers, among others.
“Fraudulent Medicare ads have proliferated on Meta platforms and too many seniors are getting scammed while Meta profits,” said Richard Fiesta, executive director of the Alliance for Retired Americans. “We are calling on Congress to investigate how these scams are allowed to spread, what Meta knew about them, and why stronger protections are not in place. Seniors should not be left vulnerable while scammers and tech companies cash in.”
The letter’s demands follow a report published last month by the Center for Countering Digital Hate, a nonprofit advocacy group, which alleged that Meta has profited by leaving up fraudulent ads, many of which target Medicare recipients.
“Scammers are determined criminals who use increasingly sophisticated tactics to defraud people and evade detection,” Meta spokesperson Andy Stone said in a statement. “We aggressively fight scams on and off our platforms because they’re not good for us or the people and businesses that rely on our services and for years we’ve been one of law enforcement’s strongest partners in the fight against this type of online crime — identifying criminals, disrupting their crimes and helping bring them to justice.”
Stone pointed to several examples of Meta’s efforts to combat scams on its platform, including a recent collaboration with U.S. and Thai law enforcement to disrupt online scams.
It’s not the first time Meta has faced scrutiny over the scams: Sens. Richard Blumenthal (D-Conn.) and Josh Hawley (R-Mo.) urged the Federal Trade Commission and the Securities Exchange Commission to open an investigation into the company in November after Reuters reported that Meta in internal documents projected 10 percent of its 2024 revenue would come from fraudulent ads. And in February, a group of bipartisan lawmakers pressed Meta CEO Mark Zuckerberg over its plans to prevent and combat fraud on its platforms.
Reps. Dan Meuser (R-Pa.) and Lou Correa (D-Calif.) also introduced bipartisan legislation earlier this year to combat predatory scam ads.
Congress is expected to send a landmark, bipartisan housing affordability bill to President Donald Trump’s desk by the end of next week as the Senate and House schedule action on the legislation in the coming days.
The Senate has teed up the 21st Century ROAD to Housing Act for final passage on Monday, after completing all its necessary procedural votes this week.
The legislation will then move on to the House where GOP leadership plans to open debate on Wednesday, with a vote expected as early as the same day, according to six people familiar with the vote granted anonymity to discuss plans.
House leadership plans to suspend the rules, requiring a two-thirds majority vote, to speed up the bill’s path to Trump’s desk. Final passage could be pushed to Thursday depending on timing, the people said.
The housing bill aims to tackle housing affordability and boost homeownership and supply ahead of a midterm election dominated by cost-of-living concerns.
The four lawmakers leading the negotiations over the legislation — Senate Banking Chair Tim Scott (R-S.C.), ranking member Elizabeth Warren (D-Mass.), House Financial Services Chair French Hill (R-Ark.) and ranking member Maxine Waters (D-Calif.) — came to an agreement Tuesday afternoon after months of back and forth on the bill’s contents.
The housing affordability legislation, which the White House supports, contains a provision limiting the role of large institutional investors in the single-family housing market, which was a key condition for Trump to sign the bill.
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