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
House GOP leaders race to release health care package Friday
House Republican leaders are rushing to release a new health care package Friday, but a morning meeting with members of key GOP faction led unsettled whether to allow a floor vote on extending expiring Obamacare tax credits.
Speaker Mike Johnson and other members of his leadership team want to file text of the health care legislation as soon as possible in order to comply with House notice requirements and prepare it to be take up by the House Rules Committee early next week. But the matter has been held up as they negotiate with conservative hard-liners who are wary of teeing up a vote to extend the expiring insurance subsidies.
“This is going to be a great piece of legislation that everyone will be united around,” Johnson told reporters after the meeting.
The core package is expected to include an expansion of health savings accounts and association health plans, as well as funding for cost-sharing reductions that help low-income Obamacare enrollees afford their plans. But moderate House Republicans want an amendment vote to add what is likely to be a two-year extension of the enhanced tax credits that were enacted by Democrats during the Covid pandemic and are set to expire on Dec. 31.
GOP leaders had been planning to let the subsidies expire, but they are now inclined to allow a floor amendment on an extension, according to four people granted anonymity to describe the closed-door Friday morning meeting with Johnson and a swath of senior Republicans.
Conservatives, including Budget Chair Jodey Arrington (R-Texas), have strongly objected to any attempt to continue the tax credits.
“I pity the Republican that has to explain why they would propagate or perpetuate, I should say, a fraud-ridden subsidy from the Covid era to prop up a failed health care program,” Arrington said Friday, saying it would make Republicans “complicit in propping up the very driver” of rising health care costs.
But he suggested a vote on an extension would happen regardless: “I expect people are going to have an opportunity to vote their conscience and then go defend their votes back home like we always do.”
House Majority Leader Steve Scalise said the topic was “heavily discussed” in the meeting, which another senior House Republican described as “lively.” Leaving the session, Scalise said leaders would be “making final decisions shortly, because we have to file text later today.”
Benjamin Guggenheim and Nicholas Wu contributed to this report.
Congress
Trump, Clinton, Gates included in Epstein photo trove
Photos from the estate of Jeffrey Epstein tie the late, convicted sex offender to President Donald Trump, former President Bill Clinton, tech billionaire Bill Gates and former Treasury Secretary Larry Summers.
These men and others are featured in the roughly 95,000 photos the House Oversight and Government Reform Committee has received from the Epstein estate as part of its ongoing investigation. House Democrats publicly released select 19 photos Friday morning.
“It is time to end this White House cover-up and bring justice to the survivors of Jeffrey Epstein and his powerful friends,” said the Oversight Committee’s top Democrat, Rep. Robert Garcia of California, in a statement. “These disturbing photos raise even more questions about Epstein and his relationships with some of the most powerful men in the world. We will not rest until the American people get the truth. The Department of Justice must release all the files, NOW.”
The White House and other individuals in the photographs beyond Trump did not immediately respond to requests for comment.
The Justice Department is required to release the full tranche of Epstein-related documents by Dec. 19, per the terms of legislation Congress passed last month.
Of the photos shared Friday, one features Trump alongside someone who appears to be a young woman (her face has been redacted). Another shows Trump standing beside Epstein, chatting with a woman, while a third has Trump grinning among a half dozen women whose faces have also been redacted. In that shot, he appears to have his arm around one women’s waist.
There is another photo in the tranche showing pictures of “Trump condoms” being sold for $4.50 each, branded with the words, “I’M HUUUUGE!”
There is a signed photo from Clinton depicting him smiling alongside Epstein and Epstein’s associate Ghislaine Maxwell, who is serving 20 years for her part in the sex trafficking scheme.
The images underscore Epstein’s long and storied network of connections to powerful men across industries, from filmmaker Woody Allen to conservative strategist Steve Bannon. They were sent to Capitol Hill after a subpoena from the Oversight panel for materials from the late financier’s estate, separate from the documents demanded from the Justice Department by legislation.
While Epstein’s connections with these public figures are far from new revelations, they highlight the extent to which Epstein reveled in his relationships with powerful people.
Gates, the Microsoft founder, is seen smiling at Andrew Mountbatten-Windsor, formerly known as Prince Andrew, in one photo and grinning beside a pilot in front of a plane in another. That photo has been published previously.
Summers, the former Treasury Secretary and president of Harvard University, is the latest public figure to face fallout from his relationship with Epstein. In wake of new materials produced in response to the congressional investigation, Summers was banned from the American Economic Association and stepped back from his roles at Harvard.
Summers is seen in one photo on what appears to be a small plane.
Bannon, who served as Trump’s chief strategist during his first term, is seen in the photos talking with Epstein at a desk and standing beside Epstein in front of a mirror, posing for a selfie. In another, Bannon appears to be speaking with Allen.
Trump has maintained that he ended his relationship with Epstein years ago and called the efforts clamoring for the release of the files a “hoax.” In a pivot last month, he gave congressional Republicans his nod of approval to vote to release the Epstein files and swiftly signed the legislation into law.
Those files are due in the coming days, after courts cleared the way for the Justice Department to release grand jury materials and the 30-day clock for Attorney General Pam Bondi to make the contents public is winding down. A Justice Department spokesperson did not immediately respond to a request for comment.
Clinton, meanwhile, has been subpoenaed by the Oversight panel, but a date has not yet been scheduled for his testimony to Congressional investigators. Trump has ordered Bondi to investigate Democrats with ties to Epstein, including Clinton and Summers. Bondi asked Jay Clayton, U.S. attorney in the Southern District of New York, to lead the charge.
Congress
Capitol agenda: Johnson stares down another revolt — this time on energy permitting
Speaker Mike Johnson is facing another intraparty revolt — one that has nothing to do with health care, defense policy or pay for college athletes.
Johnson wants the House to vote on a bill next week from Natural Resources Chair Bruce Westerman (R-Ark.) that would accelerate the production and delivery of domestic energy. For Republicans, it would fulfill a yearslong legislative priority — and for President Donald Trump, his dreams of achieving U.S. energy dominance.
But some conservatives want to speed up the federal permitting process only for fossil fuels. And they’re furious that Westerman’s measure, which advanced out of committee with bipartisan support last month, would ease the path for green energy projects, too.
The GOP will likely need to supply all the votes on a procedural rule — as per usual in the majoritarian House — to tee up the measure for floor debate. Right now, the votes may not be there.
“We’re taking in … whether [the legislation] goes far enough to free up all the constraints put on oil, gas and nuclear and whether it’s still promoting too much wind and solar,” said Rep. Chip Roy (R-Texas), who sits on House Rules.
The meltdown prompted Johnson to delay consideration of the bill from this week to next. But hard-liners have yet to budge, and Westerman told Blue Light News Thursday there are no plans to remove some of the most controversial language to appease them.
Freedom Caucus Chair Andy Harris (R-Md.) and Reps. Jeff Van Drew (R-N.J.) and Chris Smith (R-N.J.) escalated their campaign against the measure this week in a new letter to Trump and Interior Secretary Doug Burgum.
“Your administration would have fewer tools to rightfully halt offshore wind development, and projects currently being blocked by successful court actions brought by your administration would see a second life,” they warned of the consequences of Westerman’s bill becoming law.
Van Drew told Blue Light News he plans to share his concerns directly with the White House in the coming days.
For now, Johnson plans to plow ahead as GOP leadership aides work to resolve outstanding issues, three people close to negotiations told Blue Light News.
“We are working through it,” Westerman said in an interview. “We’re just taking everybody’s input under consideration right now and focusing on the big picture of getting permitting reform done.”
What else we’re watching:
— House moves on health care: Moderate House Republicans are talking with leadership about possibly setting up an amendment vote that could add an extension of expiring Obamacare subsidies to a health care package expected on the floor next week, according to four people granted anonymity to describe internal conversations.
GOP leaders will likely meet with a few more Republican groups Friday morning before finalizing the package. House Majority Leader Steve Scalise said Thursday he is hoping to file the bills Friday.
— Speaking of health care: The Republican Study Committee is hosting a briefing Friday morning on health care polling with the Foundation for Government Accountability, according to a copy of the event invitation obtained by Blue Light News. The invite says the briefing will feature “critical polling showing what the American people really care about when it comes to health care.”
Kelsey Brugger, Josh Siegel, Meredith Lee Hill, Jordain Carney and Benjamin Guggenheim contributed to this report.
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