Senate Republicans revealed details on the most controversial aspects of the comprehensive legislation designed to implement President Trump's second-term agenda. The Senate Finance Committee presented its portion of the bill, which includes modifications to the tax and Medicaid provisions compared to the version that narrowly passed the House last month.
Senate Republicans are striving to make significant progress this week in their effort to approve the legislation. However, some key disagreements remain unresolved, making it less certain they will meet their self-imposed deadline of July 4th to send the bill to the President.
GOP senators have proposed deeper cuts to Medicaid funding by reducing provider taxes. These taxes, which states use to help fund their share of Medicaid costs, would be lowered from 6% to 3.5% by 2031. The House bill aims to reduce federal costs by freezing states' provider taxes at current rates and preventing them from establishing new ones.
Several Republicans have indicated they might withdraw their support if the provider tax is frozen or decreased, citing potential negative impacts on rural hospitals. Senator Josh Hawley of Missouri expressed concern over the changes, stating it was a "major departure" from the House bill. He questioned the rationale behind the changes, suggesting they could effectively defund rural hospitals.
The Senate version proposes permanently extending the $10,000 state and local tax deduction, known as SALT. This differs significantly from the House measure, which increases the deduction to $40,000 per household for incomes up to $500,000. House Republicans from blue states threatened to withhold their support if the cap wasn't raised and have already stated they will vote against the package when it returns to the House.
Senate Republicans are also advocating for a $5 trillion increase in the debt ceiling, which is $1 trillion higher than the limit set by the House. Senator Ron Johnson of Wisconsin expressed his disapproval of this change and doubted sufficient fixes could be made by July.
The Senate version also includes provisions to eliminate taxes on tips, overtime, and auto loan interest, while making tax cuts enacted during Mr. Trump's first term permanent. Additionally, the Child Tax Credit would increase to $2,200 under the Senate bill, which is $300 less than the House-passed increase.
Republican leaders are pushing to get the legislation to the president by early July. With a short week, Senate Republicans need to act quickly to put the legislation on a path for passage in the upper chamber before it returns to the House for approval of the changes. Senator Thune plans to bring up the budget agenda for a vote next week and has threatened to keep senators in Washington, D.C., over the Fourth of July recess to pass it.
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