The text of the bill, released on June 16, sets the possibility of an explosive conflict with House Republicans.
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WASHINGTON – Senate Republicans are proposing deeper Medicaid cuts than the House’s recent budget bill to help President Donald Trump pay major tax cuts under the budget plan announced June 16th.
The measures announced by the GOP leader working at the Key Panel, responsible for writing the country’s tax laws, seeking more limited tax cuts for tips and overtime than homes, changing one of Trump’s most famous 2024 campaign promises.
The Senate Treasury Committee, which set up a showdown with a Republican-led house that adopted a unique version of Trump’s so-called “Big Beautiful Bill,” in late May, will not increase federal and local tax deductions for people under $500,000 a year from $10,000 to $40,000. Senate Republicans will continue to negotiate changes to the so-called salt tax credit.
The proposal is the culmination of weeks of negotiations among Senate Republicans over the GOP bill, which will be Trump’s biggest legislative achievement in his second term so far. The senators were pushing to complete the package work by July 4th. They then settled the changes with the house and passed the bill by August.
They have been walking the fine line ever since the House passed its version three weeks ago. Several senators are calling for deeper spending cuts on the bill as the House version is expected to add $2.4 trillion to the deficit over the next decade, while others are concerned that Medicaid and Green’s energy tax taxes have gone too far.
Meanwhile, the changes they make could disrupt the delicate balance of the home where Republicans only have three vote margins.
The House Pass version of the bill will extend the 2017 income tax cuts and implement new temporary tax cuts for tips and overtime. It will create a new federally seeded savings account for children and give seniors additional tax credits. It would put billions of dollars into the administration’s deportation plan and defense.
It also adds new restrictions to benefit programs like Medicaid and food stamps to balance the costs of cleaning bills, including new Medicaid work requirements for healthy adults without children. Initial estimates by the Nonpartisan Congressional Budget Office show that changes to Medicaid in the House will save at least $625 billion, with 7.6 million Americans expected to lose their health insurance over the next decade.
CBO estimates released on June 12 showed that the bill would reduce resources for low-income households and increase resources for middle-income and high-income households.
Deeper Medicaid cut
Like the House, there are fiscal conservatives in the Senate, and they are concerned that the bill will be added to others who are concerned about the federal deficit and the potential impact on Medicaid health insurance.
Mitigate one camp is difficult to do without inflaming the frustration of the other camps, and Republican leaders are forced to balance out the votes they need, as Democrats are not expected to support the proposal.
Sen. R-Missouri and Sen. R-West Virginia Sen. Jim Justice are critical of the provisions of the bill that restrict the state from raising funds to pay a portion of Medicaid spending through a health-related tax known as the “provider tax.”
But instead of rolling back the House proposal, the senators cut Medicaid deeper through provider tax changes.
Now, the state charges taxes from health care providers and collects providers through higher Medicaid payments. The system extracts federal spending on state Medicaid programs as federal payments match state payments. The Senate bill will gradually cut these taxes and thus reduce federal contributions.
Tip: There are no taxes on overtime
A handful of Trump’s key campaign promises will be expanded under the Senate bill, in contrast to the House bill, to keep the costs of the package down.
The Senate proposal creates a new tax credit for overtime up to $12,500 for individuals making less than $150,000 a year.
They also create tax deductions on slope wages of up to $25,000 for those earning under $150,000.
In the House version, there is no limit to overtime and tax credits for tips, and applies to people under $160,000.
Child Tax Credit
A version of the House of Representatives law would increase the child tax credit to $2,500 per child until 2028, followed by $2,000.
Instead, the Senate version will increase the child tax credit to $2,200.
The child tax credit is currently $2,000, but if not extended it will return to $1,000 at the end of the year.
Green Energy Credit
A handful of moderate senators were sought a more gentle approach to rolling back the Green Energy Tax Credit passed under former President Joe Biden.
The Senate proposal listens to their calls and delays phase-out of multiple clean energy provisions the House has sought to eliminate more quickly.
Salt Mathematics
The Senate has made it clear that they plan to make some changes to the hotly graded provisions that benefit people living in high-tax states, state and local tax credits known as salt.
A small number of Republican lawmakers in the House, representing districts in democratically controlled states such as New York, New Jersey and California, have pushed to raise the $10,000 limit on salt deductions for people under $500,000 a year to $40,000.
But unlike the House, there is no Republican senator representing a high-tax state who can benefit from the deduction. Adding a cap to the deductions Republicans approved during President Trump’s first presidency was “one of the best reforms we had in the bill,” said John Tune, Senate majority leader.
The package, released on June 16th, eliminates that deal and maintains the existing $10,000 cap. However, the Senate is considering a placeholder that will eventually replace it with another agreement.
Some of the GOP lawmakers in the house have already said they will not vote for the House bill if the salt deal is abandoned.
R-New York Rep. Nick Lalota told reporters on June 4th.