House Republicans passed early Thursday a major package to advance President Trump’s tax priorities, significant spending cuts to Medicaid and food stamps, and a host of other partisan add-ons.
The 1,000-plus page bill, which Republican leaders changed overnight to appease GOP moderates and hard-line conservatives, lays out trillions of dollars in proposed tax cuts and well north of $1 trillion in spending cuts over the next decade.
Its passage in the House caps off weeks of messy infighting among various GOP factions and leadership, while also setting the stage for a clash with the Senate. Some conservatives are already getting heartburn about a proposal to raise the debt limit by $4 trillion and have called for breaking up the House measure into smaller pieces.
Trump tightens grip on House GOP
As House Republicans ran up against their self-imposed Memorial Day deadline, Trump visited the Capitol on Tuesday to press his party to fall in line, unleashing some of his ire on GOP critics of the plan.
Some moderate Republicans softened their opposition to the package in the days since Trump’s visit, as leadership negotiated a deal with Republicans from high-tax blue states to raise the state and local tax (SALT) deduction cap to provide more relief to their constituents back home.
It remained unclear as recently as Wednesday morning if the House bill would pass, as several in the party’s right flank dug in as they pressed leadership for steeper cuts to federal spending.
However, that resistance began to ebb after Trump met with the holdouts at the White House to discuss changes to the measure to secure their support.
In the end, the holdouts were able to secure changes ahead of the Wednesday vote to speed up the timeline for new work requirements for Medicaid but not some of the more aggressive reforms some hard-liners had previously sought. Trump is also expected to address some of the hard-liners’ asks via executive order.
Republicans of all stripes said Trump played a crucial role in getting the bill over the finish line.
When Trump pressed his party to fall in line behind the package during his visit Tuesday, he also sent a warning that opponents could face a primary challenge. And afterward, even Rep. Thomas Massie (Ky.), one of just two Republicans who opposed the bill, said the president’s persuasive powers would erode the opposition.
“I predict that the president persuaded the Freedom Caucus and the blue-state Republicans to give up their fights and go along,” Massie said.
The erosion wasn’t immediate. The moderates still demanded their tax break, and conservatives pressed ahead for further Medicaid cuts. But the new involvement by the president greased the skids for both camps to ultimately get on board.
Speaker Mike Johnson (R-La.) huddled with the moderates Tuesday evening with a new offer on the SALT deduction — one they accepted. And Trump called the conservative holdouts to the White House on Wednesday, where he offered some last-minute concessions — including a promise of executive orders — that finally won over the hard-liners.
“It would have never happened without Donald Trump,” Rep. Ralph Norman (R-S.C.) said.
Deficits expected to climb
The cost of extending Trump’s expiring 2017 tax cuts — a cornerstone of the legislative package — along with measures to nix taxes on tips and overtime pay, are estimated to add trillions of dollars to the nation’s deficits over the next decade.
The bill includes a slew of cuts to social safety net programs, including new work requirements for Medicaid and a smaller budget for the Supplemental Nutrition Assistance Program (SNAP), estimated to generate more than $1 trillion in savings during the same timeframe.
Estimates from federal budget analysts have found the bill would add more than $2 trillion to the nation’s deficits, not factoring recent changes made this week. Other estimates from nonpartisan think tanks have projected even higher price tags.
The White House has claimed the bill will not add to the deficit and Republicans have sought to discredit estimates from the Congressional Budget Office about the bill’s costs.
But that doesn’t mean others aren’t worried about its potential deficit impact.
Although Rep. Warren Davidson (R-Ohio), who was one of two Republicans to vote against the bill on Thursday, criticized the CBO’s track record on projections, he also cited recent estimates of the bill’s potential cost when explaining his opposition to reporters on Wednesday night.
“Historically, their batting average is terrible, they’ve missed by wide marks on a lot of things,” Davidson said. “But when you look at the outside groups that do dynamic models, even the most aggressive dynamic models, grow the deficit in this Congress.”
Thune facing big challenges ahead
Senate Majority Leader John Thune (R-S.D.) is staring down similar challenges to what Johnson faced in recent weeks as his members expect to rewrite significant portions of the bill, giving him little margin for error to get the bill over the line by their self-imposed July 4 deadline goal.
Multiple Senate GOP members have already made their dissatisfaction clear with the House bill, giving the party a dearth of breathing room as they look to make numerous revisions in the coming weeks.
“I think there will be considerable changes in the Senate,” Sen. Ted Cruz (R-Texas) told reporters Thursday, pointing to a possible reprisal of what happened in the 2017 tax cut push. “The House passed a good bill. It came to the Senate, and we made it substantially better.”
Cruz added that he expects those changes to occur “across the board” in the bill.
For Thune, he has to balance concerns on the right — headlined by what they believe is a lack of spending cuts — with those held by moderates that could make or break their efforts.
The South Dakota Republican can only lose a maximum of three votes, with that number already down to two if Sen. Rand Paul (R-Ky.) remains opposed to the bill over the inclusion of a $4 trillion increase in the debt ceiling.
“[It’s] very difficult,” Sen. Mike Rounds (R-S.D.) conceded. “But he can do it.”
“It’s a matter of building consensus, and he’s going to have to basically be in touch with almost every single member,” Rounds added.
He will also be forced to walk a tightrope on Medicaid in order to keep his conference lined up behind the bill. A number of his members have already indicated they are uneasy about the House’s Medicaid reforms, with Sen. Josh Hawley (R-Mo.) serving as the loudest in pushing against cuts to beneficiaries.
“We ought to just do what the president said,” Hawley told reporters, adding that he spoke with Trump about the subject on Wednesday night. “He said, ‘We should do no Medicaid benefit cuts. Zero.’”
“His exact words were: ‘Don’t touch it, Josh,’” Hawley added.
Climate change takes a step back
The already-strict constraints on subsidies for climate-friendly energy projects became even more stringent in the last-minute updates to the bill.
The low-carbon tax credits were the climate crown jewel of the Democrats’ Inflation Reduction Act — providing massive emissions reductions as they were slated to spur a significant build out of wind, solar and other energy sources.
And while some low-carbon power is already in the works as a result of those incentives, many more could sputter amid the difficult conditions to qualify for the credit.
The legislation’s initial text, unveiled last week, included a phaseout of many of these credits, with incentives diminishing between the years 2029 and 2032.
Some described the initial text as “unworkable” however, since it also contained strict provisions barring projects that contained minerals, components or subcomponents from China from being eligible.
The final version passed by the house was even stricter. The credits now cease for any project that does not begin construction within 60 days and that is not producing electricity by the end of 2028.
The restrictions on Chinese components and minerals are stricter, too. Previously, it would have only applied to companies that began construction a year after the bill was enacted, now it applies to any project whose construction begins after this year.
Both energy industry players and climate activists reeled after the changes were announced.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, said in a written statement that the legislation would “upend an economic boom in this country that has delivered an historic American manufacturing renaissance.”
Meanwhile, Aru Shiney-Ajay, executive director of the Sunrise Movement, described the bill as “a declaration of war on our generation and our planet” in a written statement.
In addition, the legislation also cuts billions of dollars in grants that aim to lower emissions and other pollution and seeks to make it faster to build up fossil fuel projects and expands opportunities to produce fossil fuels.
Bill sets up Senate battle over Medicaid
House GOP leaders made changes to the Medicaid provisions in the legislation in order to win over conservative votes.
The bill moves up the start date for mandatory work requirements from Jan. 1, 2029, to Dec. 31, 2026. According to congressional scorekeepers, the original language would have saved almost $280 billion.
The bill passed Thursday morning before the CBO could analyze the changes, but the accelerated timeframe could yield even more savings, by pushing more people off their Medicaid coverage.
The earlier iteration of the bill was projected to result in 7.6 million people who had Medicaid going uninsured. Those losses are expected to be higher with this new version. Republicans have long sought to impose work requirements in Medicaid, and the provision in the House-passed bill is the strictest that have ever been proposed.
There are more stringent reporting requirements, and there are significant hurdles for people to re-enroll if they lose coverage for not meeting the requirement.