
Senate tax bill stumbling blocks: Medicaid cuts, SALT and deficit explosion
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Senate tax bill stumbling blocks: Medicaid cuts, SALT and deficit explosion
Senate Republicans have unveiled their version of President Donald Trump’s big tax bill. Passing it will be easier said than done. The fractures that divided Senate Republicans before the bill text were released remain – or have deepened. Several Republicans are concerned with the package’s cuts to Medicaid, the program that provides health insurance to around 71 million Americans. Others are worried that it would add to the already-ballooning federal deficit. And a mystery remains about how senators will handle a tax deduction that was crucial to the House, but which has no support in the Senate. The House-passed legislation would add at least $2.4 trillion over the next 10 years, leading senators concerned about that price tag to push for larger cuts to the Medicaid and clean energy tax credits. The Senate proposal would go further in restricting “provider taxes,” which states use to boost the amount of federal funds they get for Medicaid. The proposed changes would save the federal government $625 billion and cause 7.6 million Americans to lose their health insurance.
The fractures that divided Senate Republicans before the bill text was released on June 16 remain – or have deepened – now that the details are clear.
Several Republicans are concerned with the package’s cuts to Medicaid, the program that provides health insurance to around 71 million Americans. Others are worried that it would add to the already-ballooning federal deficit. And a mystery remains about how senators will handle a tax deduction that was crucial to the package passing in the House, but which has no support in the Senate.
Senators are rushing to pass the bill before the July 4 holiday, leaving them only six working days to resolve their issues and get enough Republicans on board to pass the bill. They can afford to lose only three GOP senators and still pass the package, which is not subject to a filibuster.
Here’s what you need to know about where the bill stands.
Medicaid concerns
The House version of the bill would implement a raft of new rules and requirements for people who want health coverage under Medicaid, which covers low-income people. Republicans included the cuts in an effort to offset the lost revenue from Trump’s promised tax cuts.
The proposed changes would save the federal government at least $625 billion and cause 7.6 million Americans to lose their health insurance over the next 10 years, according to initial estimates by the nonpartisan Congressional Budget Office.
Several senators, including Sens. Josh Hawley, R-Missouri, and Jim Justice, R-West Virginia, have signaled for weeks that they may not be able to support the package due to concerns about a restriction on “provider taxes,” which states use to boost the amount of federal funds they get for Medicaid.
Proponents of provider taxes argue they are a crucial tool to help states fund Medicaid and for healthcare providers stay open, while opponents refer to it as a form of “money laundering.”
But instead of heeding those senators’ calls, the Senate proposal would go further in restricting provider taxes.
“I’m totally surprised by what they proposed to do on the provider tax. I don’t know why we would defund rural hospitals to pay for Chinese solar panels,” Hawley said, referencing other provisions in the Senate’s bill that would roll back green energy tax credits more slowly than the House.
Asked whether he would support the bill as written, Justice said: “We’ll reserve that for a little bit down the road. I’m not going to be a rubber stamp on anything.”
Deficit woes
The House-passed legislation would add at least $2.4 trillion over the next 10 years, leading senators concerned about that price tag to push for larger cuts to Medicaid and clean energy tax credits.
Sen. Rick Scott, R-Florida, said he still wants deeper cuts to Medicaid, while Sen. Ron Johnson, R-Wisconsin, said he couldn’t vote for the package as-is.
“We’re a long ways from home on this one,” Johnson said. “Let’s be serious about making this a much better bill.”
Others are worried about a provision in the bill that would raise the debt ceiling by $5 trillion. The United States is otherwise expected to run out of room to borrow sometime in August.
“I think that when people are acting poorly and irresponsibly with spending – that would be Congress – and they run up a tab of $36 trillion, it’s a mistake to give them generous extensions of credit,” said Sen. Rand Paul, R-Kentucky. “We should give them very small, incremental increases in the debt ceiling” to force changes in spending behavior.
SALT problems
In 2017, when Republicans passed income tax cuts during Trump’s first term, they set a $10,000 cap on state and local tax deductions (SALT) that impact people from high-tax states like New York, California and New Jersey.
A small but vocal cohort of House Republicans from those states forced leadership in the House to bump that cap up to $40,000 for people earning less than $500,000 per year.
But in the Senate, there are no blue-state Republicans whose constituents are clamoring for change. The Senate’s version of the legislation released on June 16 does not include the carefully negotiated House SALT deal, which has already prompted major blowback from the House.
However, Republican leaders acknowledge that they’ll need to get the changed bill through the House again. The GOP can afford to lose only three votes in the House. Senate leaders say they’ll replace that language with a deal they hope House Republicans will accept.
“We’re looking for a good landing spot, and I think we’re getting close,” said Sen. Markwayne Mullin, R-Oklahoma, who has served as an informal liaison with the House Republican conference.
Source: https://www.usatoday.com/story/news/politics/2025/06/17/trump-tax-senate/84247328007/