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

Trump says voters are mad at other Republicans, not him, as midterms approach

Published

4 hours ago

August 7, 2026

Blue Light Newsroom

President Donald Trump said voters may seek to punish Republicans — but not him — in the November midterm elections, as GOP lawmakers sweat that affordability concerns and the war in Iran could mean Democrats flip the House and perhaps even the Senate.

“They’re angry at Republicans,” Trump said in an interview with Punchbowl News that aired Friday. “But they’re not angry at me. They’re not angry at me, but they are angry at Republicans.”

The GOP faces the prospect of heavy losses this November, as gas and grocery prices remain stubbornly high due in part to the White House’s five-month-long war in Iran. The administration’s guidance on campaign trail messaging has been “tone deaf,” House Republicans fear.

Meanwhile, the president’s approval rating has tumbled since he returned to the Oval Office last year, and even his biggest supporters have grown frustrated over his Middle East war.

And with a messy, jam-packed slate of primaries now all but in the rearview mirror, Democrats are determined to go on offense. The Democratic Congressional Campaign Committee has 58 seats on its midterm target map that stretches into redder territory — while still facing an uphill climb to take the Senate.

Trump has a massive war chest at his disposal. His MAGA Inc. super PAC reached $400 million in June. The president told Punchbowl he plans to use it to “help Republicans,” but he stressed that he faces no pressure in this campaign cycle.

“I said to somebody, ‘Wait a minute, you don’t understand, I won,’” Trump said, referencing his 2024 presidential election victory. “I’m not campaigning.”

The biggest issue for Republicans this year? That Trump himself is not on the ballot, he said.

“If I don’t run, will those people go out and vote? And that’s the one thing I can’t tell, I’m going to ask them to,” he said.

Congress

Capitol agenda: Senators find their exit strategy

Published

6 hours ago

August 7, 2026

Blue Light Newsroom

The Senate’s plan to get out of town is coming together.

Majority Leader John Thune teed up a final vote on the Russia sanctions legislation for this morning, as well as a confirmation vote for dozens of nominees and a procedural step on a stopgap funding bill.

But there’s still a number of questions that need to be answered if Thune wants to adjourn for recess by the end of the day:

— BLANCHE’S FATE: President Donald Trump’s pick for attorney general needs to secure at least one more vote to be confirmed before the break.

It looks like it’s all up to Sen. Bill Cassidy after Sen. Lisa Murkowski announced Friday morning she is opposed. Thune indicated Thursday night Blanche’s fate was uncertain and that leaders were “still working to get the final vote.”

— SAVE AMERICA ACT: Thune said to expect a vote related to the SAVE America Act as well as an initial vote on a budget blueprint for a third party-line spending bill — which includes elements of Trump’s election security legislation.

The decision to hold the budget vote comes after two Republican senators, granted anonymity to speak candidly, told Blue Light News Thursday they believed Sen. Mike Lee or another member of the GOP’s right flank would have otherwise forced a vote on the framework.

But as we’ve previously reported, Republicans don’t believe the budget resolution has the votes within the conference to be adopted — meaning the expected initial vote today will fail to clear a simple majority threshold.

And it’s not clear Lee or like-minded senators will be satisfied and allow for lawmakers to adjourn for recess without more action on the elections measure. The senator has made similar threats over the past year but has never followed through.

— TIME AGREEMENT: GOP leaders need to strike an agreement to finish other business, including passing the stopgap government funding bill and advancing a college sports bill.

At this point, any single senator could still object to expediting the chamber’s agenda, which would derail Thune’s goal of getting members out of town by the end of the day.

“We’ve been having these conversations with Democrats trying to figure out what’s the path,” Thune said.

“We’ll see how it goes,” he added.

What else we’re watching:

— GOP EXPECTS CRYPTO BILL DELAY: The Senate will leave for the chamber’s August recess without holding a vote on a landmark cryptocurrency bill, according to three people with knowledge of the matter. Thune may still file cloture on the bill, but it likely won’t come to the floor until lawmakers return to Washington next month, two of the people said.

— COLLEGE SPORTS BILL STUMBLES: Sens. Ted Cruz and Maria Cantwell’s legislation to impose new guardrails on college sports is looking increasingly unlikely to hit the floor this week. Eleven senators objected to expedited consideration of the Protect College Sports Act after Thune filed cloture earlier this week, two people familiar with discussions told Blue Light News.

— OGLES OUSTED: GOP House leaders lost an incumbent — and a perennial headache — with Rep. Andy Ogles’ primary defeat in Tennessee Thursday night. His loss to former Tennessee Agriculture Commissioner Charlie Hatcher represents the second Trump-endorsed candidate to lose a primary this week.

Jordain Carney, Mia McCarthy, Andrew Howard and Jacob Wendler contributed to this report.

Congress

Lisa Murkowski says she will oppose Blanche, endangering his confirmation

Published

8 hours ago

August 7, 2026

Blue Light Newsroom

Todd Blanche’s attorney general nomination is on the brink after Sen. Lisa Murkowski announced Friday that she would oppose confirming him.

The Alaska Republican said in a statement that she did not believe Blanche, who has been serving as acting attorney general since April, would act to rein in President Donald Trump and reverse the “politicization—even weaponization” of the Justice Department that has “accelerated” under Trump.

“The country needs an Attorney General who will check the worst impulses of this administration,” she said. “I hope Mr. Blanche is able to achieve that, if confirmed, but I simply do not have confidence that will be the case.”

Blanche’s fate is now thought to come down to Sen. Bill Cassidy of Louisiana, who has been increasingly critical of the president since losing his renomination campaign to a Trump-backed Republican earlier this year.

Cassidy met with Blanche alongside Murkowski Wednesday afternoon but hasn’t yet said how he will vote. Blanche has to win his support in order to be confirmed, given unified opposition from Democrats and opposition from Murkowski and Sen. Susan Collins (R-Maine).

The extended absence of Sen. Mitch McConnell of Kentucky for health reasons has also left Republicans short of a vote.

Murkowski cited Blanche’s handling of the Jeffrey Epstein files and the settlement agreement reached between Trump and the IRS under his watch as well as DOJ’s “repeated targeting” of Trump’s political enemies.

Senate Republicans rejecting Blanche would be a significant blow to Trump, who has pressured GOP senators to support Blanche over the past week as his nomination has been in limbo. And it would come as he’s already fuming at the conference, and Senate Majority Leader John Thune, over their inability to end the legislative filibuster and pass the elections bill known as the SAVE America Act.