President Donald Trump has set a tight deadline for completing a significant tax bill, aiming for a final version on his desk by July 4. However, the path to achieving this goal is riddled with challenges as House and Senate leaders navigate disagreements over the bill’s structure and cost. The House has already extended certain tax deductions, such as those for research and development, debt interest, and capital expensing, through 2029. However, making these deductions permanent would add $450 billion to the national deficit. Senate Republicans are seeking ways to offset these costs, which includes considering adjustments to Trump’s campaign promises and the SALT deduction cap, areas where the administration is resistant to any changes. As the White House works to convince Senate leaders to avoid further revisions, the Senate aims to issue the final bill text by June 23, followed by a series of votes in the following days.
Senate leaders are eyeing another potential savings avenue: Lowering the state and local tax deduction cap that the House had quadrupled to $40,000 as part of a crucial compromise with blue-state Republicans. Those SALT Republicans are now threatening to torpedo the bill if that’s changed—and House GOP leaders appear to be taking them seriously. House Majority Leader Steve Scalise told POLITICO on Wednesday, ‘Obviously, it was very heavily negotiated in the House and we don’t want to see it lower.’ This resistance from the House, combined with Trump’s firm stance against scaling back the tax cut promises, is creating tension within the GOP leadership as they attempt to align their fiscal policies.
The challenge isn’t just about funding the tax cuts; it’s also about the broader implications of these decisions on the economy. House fiscal hawks are demanding that any additional tax cuts be offset with dollar-for-dollar spending cuts, which could mean reevaluating some of the more expansive proposals within the tax bill. However, Trump’s administration is making it clear that they are not willing to entertain any scaling back of their signature promises, as emphasized by a Trump administration official who told POLITICO that the House’s provisions are crucial to meeting the July 4 deadline. This firm stance is pushing Senate leaders to find alternative ways to offset the costs, potentially leading to further delays or compromises in the legislative process.
Meanwhile, other legislative priorities are also taking shape. The Senate is moving closer to passing landmark cryptocurrency legislation that aligns with Trump’s agenda, which includes establishing a stablecoin regulatory framework. This represents a significant step toward fulfilling one of Trump’s major priorities outside the megabill. Additionally, the Senate has unveiled a new plan to slash the Supplemental Nutrition Assistance Program (SNAP), making it less aggressive than the House-approved version. This could help attract a broader range of Republican support, particularly from those who are more moderate or at-risk in terms of their party’s standing.
The situation reflects the broader internal dynamics within the GOP as they grapple with balancing Trump’s campaign promises with the realities of fiscal responsibility. As the legislative calendar moves forward, the ability to navigate these challenges will determine the success of the tax bill and its potential impact on the economy and public policy in the United States.