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.
Congress
GOP senators urge Trump to find Iran exit plan as energy prices rise: ‘The clock is ticking’
President Donald Trump promised a quick end to the war in Iran, but the ongoing conflict has kept energy costs high — and some Senate Republicans are starting to go public with their concerns.
GOP lawmakers who already feared November would be an increasingly tough battle are trying to nudge the president toward clearly defining his endgame after a surge in oil, gas and fertilizer prices. Trump warned the sticker shock might not completely recede by the time the November elections roll around, though news Friday that the Strait of Hormuz would reopen could begin to bring some relief if the agreement sticks.
Several GOP senators are warning the president could face growing pushback, including them not supporting military action against Iran after the conflict hits the 60-day mark at the end of the month, if he doesn’t articulate his plan. The White House could try to invoke a 30-day extension for national security reasons.
“I hope that we are arriving at an exit strategy here to bring this to a close to preserve our security interests and bring down the cost of gasoline,” Sen. Josh Hawley (R-Mo.) told reporters this week, adding that the “clock is ticking” on the war.
Sen. Lisa Murkowski (R-Alaska) said in an interview that she and a group of other senators are in the process of drafting an authorization for the use of military force against Iran, which would lay out when and how Trump could use force. She pointed to the 60-day threshold as a possible deadline for hammering out text, saying it would be “helpful” for it to be done by then.
Even senior Republicans are warning that if the administration wants Congress to greenlight tens of billions in additional war funding, Republicans are going to need to know more about the president’s ultimate Iran strategy beforehand.
“I think our members are going to be very interested in what next steps are,” said Senate Majority Leader John Thune, predicting that the administration’s forthcoming Iran war spending ask “will be an important inflection point if and when the administration submits their request.”
Thune, like most congressional Republicans, has been supportive of the administration’s Iran campaign but said the impact on gas and fertilizer prices is “a big deal” back in his home state of South Dakota.
“We’re in planting season so if you didn’t buy fertilizer ahead of time, you’re really feeling it, and obviously fuel is a critically important part of production, agriculture,” Thune said this week, prior to the Strait’s reopening.
Retiring Sen. Thom Tillis (R-N.C.) predicted his party would ultimately keep the Senate majority, but said the Iran war and the related spike in pricing could be a drag when they are already facing “headwinds.”
“The president has to help us get the vote out,” Tillis said. “But the base alone is not going to be able to do it. The way we’re going to get the other ones is addressing the energy challenges, particularly the price at the pump and some of the other affordability issues.”
Sen. Kevin Cramer (R-N.D.), in an interview before Friday’s announcement, predicted that prices would come down after the strait’s reopening and that it would matter the most in September, when swing voters start tuning in for the midterms.
“If we’re going into September and, even more, October … with super high — you know gas prices over $4 — I mean it’s going to be a problem,” Cramer said.
There were early signs of celebration from Senate Republicans Friday over the announcement that the strait had reopened, even if it’s potentially only temporarily.
“Very glad to hear the Strait of Hormuz is open, at least for the remainder of the ceasefire,” Sen. Lindsey Graham (R-S.C.) wrote on X.
Sen. Bernie Moreno (R-Ohio), also took a victory lap: “Will Dems be making comments about the massive drop in oil prices?” he asked.
Trump has suggested that he is eager to negotiate a deal to end the conflict. And GOP lawmakers have largely deferred to Trump so far — including defeating attempts in both chambers this week to limit the president’s ability to carry out additional military action without Congress.
But even with oil shipments through the strait set to resume now, some Republicans say generally, they want to see the president focusing more on affordability issues.
“I would like to see the president spend 70 percent of his time talking about all the things that we and he have done to reduce the cost of living and 30 percent of his time on other important stuff,” Sen. John Kennedy (R-La.) said in an interview.
Congress
GOP hard-liners threaten to tank FISA vote
House GOP hardliners are threatening to tank the FISA rule shortly on the House floor as Speaker Mike Johnson tries to force through a five year extension, according to four people granted anonymity to speak about plans not yet public.
They’re livid over the “inexplicable 5 year extension, the fake warrant requirement, and the walk back of the promise from this afternoon to include CBDC,” according to one of the people, referring negotiations to prohibit a central bank digital currency.
Congress
‘The original sin:’ Hill Republicans blame White House for slow-walking FISA sales pitch
A messy GOP battle over a key government spy authority boiled over in the House this week — but the crisis was months in the making.
White House officials and Republican Hill leaders have tried to pressure GOP hard-liners into approving a clean, 18-month extension of Section 702 of the Foreign Intelligence Surveillance Act that President Donald Trump demanded. But amid a GOP rebellion on Capitol Hill, Speaker Mike Johnson Thursday afternoon punted a vote on the measure for the second day in a row.
The program expires Monday night. Senators went home for the weekend as Johnson continued to pursue a compromise with the holdouts for an extension as long as three years with reforms, and raced to hold a vote.
Now, the finger-pointing among Republicans is rampant and temperatures are running high.
A band of House ultraconservatives — who have long been concerned that warrantless government surveillance of foreign individuals could sweep up data on Americans — shot down Trump and GOP leaders’ long-held plans for the 18-month extension with no reforms earlier this week.
“A clean extension ain’t going to move on the floor,” Rep. Chip Roy of Texas, one of the head House GOP holdouts, warned earlier this week.
In interviews with more than two dozen Republican lawmakers and aides on Capitol Hill involved in the talks, many of whom were granted anonymity to speak freely about the contentious policy debate, the consensus is that the White House is largely responsible for the current breakdown as GOP factions snipe and assign blame.
“This is why we shouldn’t wait until the last minute on these things,” one House Republican fumed Thursday. A congressional GOP aide added, “The White House was too late to come to a decision. That was the original sin.”
A senior White House official disputed the characterization from some Hill Republicans that the administration had taken too long to plead their case. They pointed to a briefing in the Situation Room months ago with Republican lawmakers, during which “the president heard arguments on both sides of the issue.”
The official added, “We’ve had multiple briefings from senior officials, both on the House and Senate side, about the desirability of this program. Again, going back months ago.”
Trump told House Intelligence Chair Rick Crawford (R-Ark.) and House Judiciary Chair Jim Jordan (R-Ohio) that he wanted a clean extension, without reforms, in February. The president arrived at this position, a second White House official said, after “the administration completed a policy process through the interagency and advised POTUS that a clean extension was the best course and solicited views on length from Blue Light News.”
There was also coordination between the White House and Capitol Hill, according to three people familiar and the senior White House official: Johnson requested the reauthorization run for 18 months, and Trump agreed.
The administration succeeded in convincing Jordan, who had previously pushed for changes to Section 702, to publicly support a clean extension following a White House meeting on the subject.
But ultraconservatives on Capitol Hill were harder to convince, with some House Republicans correctly predicting two months ago they were going to have issues as the vote drew nearer. Trump has forced those hard-liners to cave in recent months on other fights, but the spy powers legislation was one area where members have not been as willing to relent.
While Trump officials made outreach to members at least two months ago, Hill engagement ramped up in the days leading up to the scheduled vote. That has included appeals to lawmakers from CIA Director John Ratcliffe, Deputy CIA Director Michael Ellis and Joint Chiefs Chair Gen. Dan Caine, according to five people. Ellis has made personal phone calls to members, according to two people familiar with the pressure campaign.
White House deputy chief of staff James Blair, White House Legislative Affairs chief James Braid and other legislative affairs officials have also been calling individual House Republicans and working through negotiation details, according to six other people with direct knowledge of the conversations.
Noticeably absent from this outreach is Director of National Intelligence Tulsi Gabbard. Her office plays a statutory role in overseeing Section 702 and has historically been a key proponent of the powerful spy powers.
Gabbard in early February expressed concerns to Trump about reauthorizing the statute without additional privacy guardrails, as Blue Light News reported earlier Thursday, though her appeal appears to have been unsuccessful.
And while the administration’s position on Section 702 came into focus in February, there were signs earlier in the month that its position had not fully crystallized. Officials meeting with the Senate Intelligence Committee at that time refused to divulge the White House’s stance on extending the surveillance power and adding reforms, according to five people with knowledge of the meeting. The exchange frustrated Republicans and Democrats on the panel, who are generally supportive of the surveillance program.
Due to a quirk in the law, the administration will still be able to operate the program for nearly a year even if it is not renewed, and privacy advocates have argued that Monday is a false deadline. But without the law on the books, communications providers like Google and AT&T, which the government tasks to surveil foreign messages, could stop complying with those orders.
But White House officials want an extension codified now, all the same. They have been arguing in conversations with lawmakers that the country is at war and national security is paramount amid threats from Iran. Therefore, they say, hardliners should fall in line to back the clean extension without delay, according to five people involved in the conversations.
“The program is critical for the United States military to listen to the conversations of foreign terrorists abroad while we are engaged in a military operation in Iran. That’s what we’ve been telling individuals, as well as the elevated threat levels around the world, as well as the threat from Mexican drug cartels,” the senior White House official said.
Two groups of House GOP hard-liners, after being summoned by Trump Tuesday night, met with officials at the White House. But some of the Republicans declined the invitation.“I’ve heard everything that the executive has to say on FISA,” Freedom Caucus Chair Andy Harris (R-Md.) said in an interview that evening. That meeting, however, marked a shift: Those House Republicans who went to the White House alongside GOP leaders — among them Roy and Reps. Keith Self of Texas, Byron Donalds of Florida, Clay Higgins of Louisiana, Morgan Griffith of Virginia and Warren Davidson of Ohio — took the opportunity to begin negotiations about a framework for a possible agreement around the use of warrants to access certain information.
The discussions included how the White House and GOP leadership needed to make good on a months-old promise to advance legislation that would ban a central bank digital currency. Enough House GOP holdouts late Thursday evening were threatening to still tank the procedural vote to advance the extension if the White House didn’t address the digital currency matter, according to four people with direct knowledge of the matter. “Unless it’s included, there’s enough votes to kill the rule,” Rep. Ralph Norman (R-S.C.) said in an interview Thursday afternoon. But other Republicans, White House officials and Senate GOP leadership are warning that attaching the measure directly would tank the FISA bill.
In exchange for making these concessions, GOP leaders and the White House have been pushing for a Section 702 extension that’s longer than 18 months and closer to three years.
The senior White House official also said Thursday the administration has “focused in on potentially having conversations about reforms to the program that we think would strengthen protections for American civil liberties … those conversations are ongoing.”
Jordan, meanwhile, has been helping build support for a clean extension by privately telling some Republicans that, if they can pass this 18-month clean extension now, they could potentially work on warrant reforms later, according to three people with direct knowledge of the discussions. That’s raised some eyebrows internally among House Republicans.
The House delays are leaving barely any time for the Senate to act. Majority Leader John Thune said in an interview Thursday that he’s already started having conversations with his own members about what they would need to clear a FISA extension Monday.
Ultimately, even if GOP leaders strike a deal on changes to the current proposed extension, it could risk support for reauthorization among key Democrats, who Republicans will need to pass the final legislation in a narrowly-divided House. While some House Democrats are expected to help Republicans get the final bill across the finish line — including top Democrat on the House Intelligence Committee, Rep. Jim Himes of Connecticut — Democratic leaders have so far declined to shore up the votes for any fast-tracked process.
“I am deeply skeptical of a straightforward extension,” House Minority Leader Hakeem Jeffries said Thursday, adding he told Johnson a few days ago there was “great Democratic skepticism” on a clean extension.
One Democratic Hill aide said Johnson and Trump did far too little to coordinate their pitch with Democrats, who carried a razor-thin vote to re-up the law in 2024.
“They never came to us,” the aide said.
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