Tom Williams/CQ Roll Call via AP Images
Speaker of the House Mike Johnson (R-LA) conducts a news conference following a meeting of the House Republican Conference, April 29, 2025, in Washington.
Back on January 6, a day when important things tend to happen, I wrote about a quietly important moment in the as-yet-not-begun Trump presidency. Deciding whether to split up his agenda into multiple parts or to combine all of his tax cuts and all of his spending cuts into one overstuffed piece of legislation, Trump opted for the latter, calling it the “one big beautiful bill.” At the time, Speaker Mike Johnson surmised that everything could get wrapped up by “April or May.”
I said back then that one-bill agendas tended to fail, because they offer plentiful targets for opposition and maddening coalitional choices that typically leave everyone bruised and upset. “Each day without a legislative accomplishment will both grate on the president and amp up the discord,” I wrote. “The one-bill strategy heightens the possibility of getting nothing done, or at least the possibility of scaling back ambitions and only getting a fraction passed.”
Fortunately, Republicans didn’t listen to me. And now they are in their familiar stage of recriminations, anger, and desperation, which is already leading to scaling back ambitions and only getting a fraction passed.
Let’s lay out the major fault lines. First off, Republicans are saddled with a “SALT caucus” of front-liners (meaning candidates in swing seats) from high-tax states like New York, New Jersey, and California who are adamant about scrapping the cap on the state and local tax (SALT) deduction. They all know that if they do nothing and the Trump tax cuts expire completely, so does that cap, which limits deductions for state and local taxes to $10,000.
To be clear, this is a narrow problem for a narrow group of fairly wealthy people. Most Americans do not itemize deductions, and most Americans do not pay more than $10,000 in state and local taxes. But the well-off people in suburban blue-state districts who care about this are also the kind of people who fund and vote for Republicans specifically to get this kind of tax break.
Raising the cap, though, costs lots of money that Republicans don’t have, especially with the SALT caucus making maximalist demands. House Ways and Means Committee leadership offered to raise the cap to $30,000; four Republicans in New York called that “insulting.” This fight is years in the making, and both sides are dug in. These few members are enough to sink the bill, and they have expressed an eagerness to do absolutely that if they don’t get what they want. Rep. Nick LaLota (R-NY) has told reporters, “I am willing to stake my entire congressional career” on whether his upper-middle-class New York constituents can deduct more from their taxes.
Trump’s falling approval ratings and the likelihood of a recession are diminishing his ability to dictate terms to Congress.
The SALT demand comes from members who are also opposed to major cuts to social programs. Swing-district Republicans in significantly poorer districts that are chock-full of Medicaid recipients also oppose those cuts. I scooped last week about a number of debilitating Medicaid cuts that appear to be in the House Energy and Commerce Committee draft, which is due for a markup tomorrow. But importantly, those cuts, which include increased out-of-pocket charges on Medicaid recipients making above the federal poverty level, were winnowed down from the much larger ones House hard-liners sought.
Hard-liners wanted to reduce the federal share that goes to Medicaid (according to what I saw, that would only happen for the District of Columbia), particularly the share that the government pays for the Medicaid expansion. Moderate Republicans and some senators ruled that out, with vulnerable Rep. Don Bacon (R-NE) setting a $500 billion red line for cuts. Cutting Medicaid is deeply unpopular and harmful, and many Republicans represent districts with significant portions of their populations on Medicaid. That’s about where we’re at with the draft I saw last week, but what remains still crosses other moderate red lines about benefit cuts to poor people (increasing cost-sharing is a net benefit cut) and kicking people off the rolls (which a lot of the other ideas like work requirements are designed to do).
The demands from moderates have made hard-liners furious. Chip Roy insisted on the PBS NewsHour last week that “you have a hard wall you have got to get through” in the Freedom Caucus, and that the bill would have to reduce the deficit, which is impossible. Thirty-two House Republicans said they needed $2 trillion in “verifiable” savings to get their vote. The sections of the bill so far laid out get nowhere near that, but interestingly, the hard-liners said that could be achieved “either through spending reductions or scaling back the size of the tax package.”
There’s a mechanism in the reconciliation instructions that ties the amount available for tax cuts to the spending cuts; if Republicans fail to hit $2 trillion, they have to pull the tax cuts back. That could mean time-limiting them, pulling parts out, or raising taxes elsewhere in the package, like the tax increase for millionaires that Trump has gently proposed. “Gently” is precisely the word, as on Friday Trump spat out a word salad about such a tax increase that concluded, “Republicans should probably not do it, but I’m OK if they do!”
Slightly increasing the top marginal rate on taxpayers who make above $2.5 million in income, as a policy matter, does not offset the large loophole on pass-through income, the lack of a wealth tax to deal with capital income, all the tax avoidance strategies (like “buy, borrow, die”) rich people use to skip taxes, and the gutting of the IRS that would track that money down. But it would close off a Democratic talking point about how the Trump tax cuts are only for the rich, while humiliating the last part of the Republican establishment Trump hasn’t corralled: the “no new taxes” fiscal zealots.
But that ideology is embedded in Republican DNA; while a couple of Freedom Caucus right-populists like Rep. Andy Harris (R-MD) might go along with it, there are few others. As an example of the bind he and his party are in, Trump also floated closing the “carried interest” loophole that lowers the tax rates for hedge funders. Within days, four committee chairs and the head of the Republican campaign arm in the House joined a letter saying, basically, “No way.”
That incident shows that Trump’s falling approval ratings and the likelihood of a recession are diminishing his ability to dictate terms to Congress. The initial Energy and Commerce proposal I scooped last week included a White House proposal for “most favored nation” status for prescription drugs, a measure Trump tried by executive order in his first term that would attempt to limit drug purchases in Medicare to the price other countries pay.
But suddenly, Trump declared that he would announce the most favored nation initiative today, by executive order. As Bill Scher says correctly, this is a sign of weakness, that he couldn’t get the idea past Republicans in Congress and the phalanx of drug company lobbyists who surround the Capitol. Republican congressional opposition takes away one of the few budget-reducing measures that is actually popular, by dropping the cost of prescription drugs.
I’ve only outlined the major points of contention; there are a lot of minor ones, too. The House Agriculture Committee wants to save money by shifting the cost of the Supplemental Nutrition Assistance Program (aka food stamps) onto the states. But several members are against that, and more importantly, so is Trump. Ag Committee chair Rep. GT Thompson (R-PA) doesn’t want to do the alternative, which is cut benefits. Meanwhile, he does want to throw the entire five-year farm bill into his chapter of the omnibus bill, because Congress didn’t get around to it last year and because Republicans don’t want to negotiate with Democrats on it. But a lot of the farm bill problems in 2024 were the result of Republicans’ internal divisions, and bringing them into the big beautiful bill complicates it even more. (It also may not be allowed under Senate reconciliation rules.)
The list goes on. Republicans in states with clean-energy investments still don’t want to let go of Inflation Reduction Act tax credits for that manufacturing. Leadership may delete changes to federal employee pension benefits that the House Oversight Committee just voted for. Last-minute plans to sell off public land to pay for the package could run into resistance in the Western states. Trump added a huge corporate tax cut into the mix at the last minute that throws the math into disarray. Moderates are even balking at killing Planned Parenthood spending, a relatively small part of the budget.
Enough problems are piling up that the ambitions of January are already dead. Republicans may not extend the Trump tax cuts permanently, and will likely time-limit the other tax cuts he called for on the campaign trail, on tips, Social Security benefits, and overtime pay. All of these details begin to play out today, when bill text should be released in the big three committees that haven’t moved yet: Ways and Means, Energy and Commerce, and Agriculture. The plan was to have all of them mark up tomorrow, so the opposition couldn’t focus. But I wouldn’t be so sure they’re all ready to move by then.
The truly incredible thing now being whispered in the Capitol is that they give up on the big beautiful bill entirely, and try just to extend the Trump tax cuts in a deal with Democrats at the end of the year. To go back to something else I wrote, this one in February, that Republicans would fail to get together on tax cuts, something so simple and fundamental to their perspective, is both unthinkable yet totally predictable. This is a caucus with no legislative accomplishments or track record, with huge differences of opinion, and with an allergy to compromise. Which exactly explains where we are today.
