(The Center Square) – After a 27-hour voting session, Senate Republicans narrowly approved their amended version of the House-passed “big, beautiful bill” Tuesday, sending it back to the lower chamber for final approval.
But the Senate’s swath of controversial changes has alienated multiple House Republicans and upset delicate political compromises House Speaker Mike Johnson, R-La., made with his constituents earlier, curtailing the bill’s chances of reaching the president’s desk by July 4.
The 940-page budget reconciliation bill – formerly titled the One Big Beautiful Bill Act before Senate Democrats pulled the name on procedural grounds – implements the bulk of President Donald Trump’s political agenda and campaign promises.
While the Senate mostly retained the House’s national security infrastructure funding, policies boosting fossil fuel energy production, and student loan repayment plan overhaul, it meddled in almost every other area of the bill.
One of the major sticking points now is the Senate’s adoption of the current policy baseline, an accounting method never before used in the budget reconciliation process to score tax cut costs.
Using that baseline rather than the House’s current law baseline theoretically zeros out about 90% of the bill’s projected ten-year $3.3 trillion cost, allowing tax cut permanence and negating the need for Senate committees to find hundreds of billions of dollars in offsets.
The Senate bill makes permanent the 2017 Tax Cuts and Jobs Act’s boosted maximum standard deduction and cross-bracket tax cuts; the 20% Qualified Business Income deduction; and the $2,000 child tax credit, though the Senate reduced the House’s four-year $500 boost to $200.
The Senate also beefed up the House’s temporary tax cut for eligible seniors, boosting the senior $4,000 deduction to $6,000. Although the Senate kept the House’s temporary nixing of taxes on tips and overtime, it capped deductions for tips at $25,000 and deductions for overtime at $12,500 for single filers.
Three key business tax credits would become permanent as well – full reimbursement for new capital investments like machinery and equipment, an expanded deduction for corporation’s interest on debt, and immediate deductions for companies’ research costs.
Though violating the House’s fiscal framework allowed for these ambitious tax policies to pass muster, the lower chamber will almost certainly revise the Senate’s revisions and send the bill back to the Senate, rather than approving of the Senate’s changes and sending it to Trump’s desk as Senate Majority Leader John Thune, R-S.D., hoped.
Johnson was only able to garner enough votes for the original bill by extending the tax cuts for the next 10 years only, fully offsetting the extension by including $1.7 trillion in savings and projecting robust economic growth.
Additionally, Johnson had reached delicate agreements with holdouts concerned about the bill’s cost-saving Medicaid reforms, the new state and local tax (SALT) deduction cap, funding reorganization of SNAP, and the phaseout timeline of Inflation Reduction Act subsidies.
Senate committees modified all of those portions, further jeopardizing the bill’s passage.
The Senate’s plan to gradually lower the 6% Medicaid provider tax cap to 3.5% by 2030 upset lawmakers from Medicaid-heavy districts, but GOP leaders are hoping the last-minute addition of a $50 billion rural hospital stabilization fund could placate them.
Instead of accepting the House’s plan to quadruple the SALT deduction cap permanently, the Senate-passed bill raises the cap to $40,000 only until 2030, at which point it will revert to the current $10,000 cap. Most Blue-state GOP House lawmakers seem mollified by this new compromise except Rep. Nick LaLota, R-N.Y.
Reactions are still pending from House Republicans concerned about SNAP. The Senate plan makes states cover 75% of the program’s administrative costs beginning in 2027, a higher rate than proposed by the House.
Like the House, it makes states pay a percentage of program costs the higher the state’s payment error rate. But the Senate’s cost-sharing requirements only kick in if a state has an error rate over 5% and the cost-sharing percentage caps at 15%, lower than the House’s 25%. The new plan also expands noncitizen eligibility for SNAP benefits and the populations who are exempted from work requirements.
This means that Johnson’s toughest holdouts will be lawmakers in the House Freedom Caucus, which includes Reps. Chip Roy, R-Texas; Andy Ogles, R-Tenn.; Andy Harris, R-Md.; Ralph Norman, R-S.C.; Keith Self, R-Texas; and others.
The HFC blasted not only the current policy baseline but also the Senate’s toothless phaseouts of the IRA’s costly solar and wind subsidies. Although the Senate initially had included a tax on wind and solar projects using materials from “foreign entities of concern,” like China, it ultimately scrapped that provision.
In a social media post Tuesday, Self called the bill “a swamp creation.” Ogles acknowledged that if the House doesn’t swallow the Senate’s bill, lawmakers will likely engage in “legislative ping pong,” but added that “that’s okay.”
“Like I’ve been saying for weeks: let’s STAY IN DC and get it RIGHT for the American People,” Ogles posted on X. “No recess for unfinished work.”
