WASHINGTON — Senate Republicans have unveiled their version of President Donald Trump’s major tax overhaul, but passing it remains an uphill battle amid persistent internal divisions.
Despite weeks of negotiations, Republican senators are still at odds over major provisions of the bill, which include deep cuts to Medicaid, changes to state and local tax (SALT) deductions, and the potential for a dramatic increase in the federal deficit.
With just six working days left before the July 4 recess, Republican leaders are scrambling to secure the necessary votes. The bill can pass without Democratic support under budget reconciliation rules, but the GOP can afford to lose no more than three votes in the Senate.
Here’s where the bill stands and the major sticking points senators are grappling with:
Medicaid Cuts Spark Republican Resistance
The House-passed version of the bill includes sweeping changes to Medicaid, the federal health insurance program for low-income Americans. These changes aim to reduce federal spending by at least $625 billion over the next decade. However, the Congressional Budget Office estimates that such cuts would result in 7.6 million Americans losing coverage.
Several GOP senators have voiced strong concerns. Sens. Josh Hawley (R-Mo.) and Jim Justice (R-W.Va.) are particularly troubled by new limits on “provider taxes,” which allow states to leverage additional federal funding for Medicaid. These taxes are viewed by supporters as vital to maintaining rural hospitals and state-level healthcare funding, while critics liken them to financial “money laundering.”
Rather than scaling back the proposed restrictions, the Senate version tightens them further. “I'm totally surprised by what they proposed to do on the provider tax,” Hawley said. “I don't know why we would defund rural hospitals to pay for Chinese solar panels,” referencing provisions in the bill that maintain certain green energy tax credits.
Sen. Justice added, “We’ll reserve judgment. I'm not going to be a rubber stamp on anything.”
Deficit Fears Intensify Fiscal Scrutiny
The House bill would increase the federal deficit by at least $2.4 trillion over the next decade, prompting a number of senators to demand steeper cuts in spending.
Sen. Rick Scott (R-Fla.) has called for deeper reductions to Medicaid, while Sen. Ron Johnson (R-Wis.) said the bill is not yet ready for support. “We're a long ways from home on this one,” Johnson said. “Let’s be serious about making this a much better bill.”
Meanwhile, some senators are alarmed by a provision that would raise the federal debt ceiling by $5 trillion. Without such action, the U.S. could reach its borrowing limit by August. Sen. Rand Paul (R-Ky.) opposes a large increase, saying, “It’s a mistake to give generous extensions of credit to a Congress acting irresponsibly with spending.”
SALT Deduction Dispute Between House and Senate
A significant source of tension lies in how the bill handles state and local tax (SALT) deductions. In 2017, Republicans capped SALT deductions at $10,000, which disproportionately affected taxpayers in high-tax states such as New York, New Jersey, and California.
To secure votes from House Republicans in those states, the new bill raises the cap to $40,000 for individuals earning under $500,000. However, the Senate version excludes this provision entirely, as there are no GOP senators from high-tax blue states pushing for it.
This has already caused friction between the chambers, and Senate Republicans acknowledge the need for compromise. “We’re looking for a good landing spot, and I think we’re getting close,” said Sen. Markwayne Mullin (R-Okla.), who has been working closely with House Republicans on the issue.
As negotiations continue, the success of the tax package hinges on Republican leaders’ ability to reconcile ideological differences and navigate complex policy trade-offs in a tight timeframe.
Read more about what’s in the Senate tax bill here.
Source: usatoday.com
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