Senate Republicans are working on a significant piece of legislation that could reshape parts of President Trump’s agenda. The Senate Finance Committee recently released a draft of a bill that addresses key issues like Medicaid and clean energy tax credits. This proposal comes at a crucial time as it aims to prevent a potential tax increase exceeding $4 trillion and aims to make the tax cuts from 2017 permanent.
Chairman Mike Crapo, a Republican from Idaho, emphasized that this bill would help families and businesses plan for the future. However, Senate Democrats have criticized the proposal, claiming it primarily benefits wealthy corporations. Despite this opposition, Republicans are using a budget process called reconciliation, which allows them to pass the bill with only their votes.
The Senate Finance Committee’s release came just before the Congressional Budget Office (CBO) announced an updated estimate for a similar bill that passed in the House earlier this year. This new estimate suggests that the House bill could add approximately $2.8 trillion to the national deficit over the next decade, a figure higher than previous projections.
Both the House and Senate are currently dealing with narrow majorities, making it crucial for Republican leaders to maintain unity. Senate Majority Leader John Thune can only afford to lose three GOP senators in the upcoming vote. The Senate aims to pass the bill by July 4, after which it will return to the House for another vote.
One of the contentious issues in the bill is the state and local tax deductions, known as SALT. The House version proposed raising the cap on these deductions, which currently stands at $10,000, to $40,000 for married couples earning up to $500,000. However, Senate Republicans, who do not represent high-tax states, are likely to keep the cap at $10,000 for now, although they have indicated this figure could change during negotiations.
Another significant difference between the House and Senate versions is the proposed increase in the debt limit. The Senate bill suggests a $5 trillion increase, whereas the House version proposed $4 trillion. This could create further complications, especially since Congress needs to act on the debt limit soon to avoid defaulting on national debt.
On the tax front, the Senate proposal extends the 2017 tax cuts permanently and includes specific deductions for tips and overtime pay, which the House version did not specify. It also introduces new tax credits for school choice and savings accounts for newborns, while reducing the child tax credit slightly.
The Senate bill also seeks to roll back clean energy credits established under President Biden but does so with more flexibility than the House version. This includes a slower phase-out of incentives for wind and solar projects.
In terms of Medicaid, the Senate plan introduces work requirements for certain adults to qualify for the program. This aligns with some elements of the House bill but has drawn criticism from Democrats who argue these cuts are more severe.
As the Senate continues to refine this legislation, the stakes are high. Both chambers must reconcile their differing proposals to achieve a final version that can pass through Congress. The coming days will be critical as lawmakers work to address these differences and push the bill forward.