Next steps

This draft will continue to undergo changes, as Senate Republicans hash out details among themselves, as well as with the House, to land on legislation that can pass both chambers.

“This is a proposal; nothing is finalized,” Sen. Markwayne Mullin, R-Okla., said of the Finance Committee’s release. “Everything is on the table. We’re working through every aspect. There isn’t any finalized text yet. … we’re going through everything to make sure we can get 51 votes.”

Fiscal hawks in the Senate continue to balk over the size of the deficit increase the legislation would cause ꟷ approximately $3 trillion over 10 years, when accounting for both increased deficits and debt financing, according to the Congressional Budget Office and Joint Committee on Taxation. And those lawmakers have been vocal about additional changes to the package, which could affect negotiations with the House and White House and push passage past the self-imposed July 4 deadline Republican leaders set.

“We don’t have time to get this right, by July 4,” said Sen. Ron Johnson, R-Wis., a critic of the bill’s effects on the national debt, during a June 17 interview with CNBC. “We have all of July, and we actually have beyond that, in terms of when the debt ceiling comes due.”

The federal debt ceiling to which Johnson referred is the one true driver of timing for this legislation. In June 2023, lawmakers suspended the debt limit through Jan. 1, 2025, and since January, the Treasury Department has been using so-called extraordinary measures to finance ongoing government operations. The ability for Treasury to continue using these measures is forecast to run out in late summer ꟷ as early as mid-August, when Congress is scheduled to be in recess ꟷ necessitating legislative action before then. Without such an increase, the government would be unable to meet its existing legal obligations, including funding and distributing Social Security, Medicare, military salaries and covering interest on the debt. This could lead to a unprecedented default, potentially causing a financial crisis. Both chamber’s legislative proposals include an increase in the debt ceiling ꟷ by $4 trillion in the House bill and $5 trillion in the Senate draft.

Sen. Rand Paul, R-Ky., has said he will vote against any bill that includes a debt ceiling hike; and Johnson said he and at least two other Republican senators are committed to slowing down the legislation over debt concerns and continuing the debate until at least August.

“What my role has been, and will continue to be, is I’m going to force everyone to look at the actual numbers, the massive deficits that we’re projecting over the next 10 years, and then we’ll let the chips fall as they may,” Johnson said.

Johnson’s words will be music to the ears of House fiscal hawks, most of whom voted in favor of the House bill but aim to use Senate negotiations to demand more spending cuts or, less likely, more revenue raisers.

On the other end of the spectrum, House Republicans from high-tax states ꟷ New York, California, and New Jersey in particular ꟷ are pushing back on any changes to the SALT deduction cap. A cap higher than the current $10,000 would result in less revenue coming in, which makes it a prime target of those looking for savings, but the so-called SALT Caucus threatened to scuttle the House bill until it included a significant increase in the cap, and at least two members have said they will vote against a bill that returns from the Senate with anything less than the $40,000 they fought for.

The various energy tax credits also are a subject of continued negotiation, though the Senate version had fewer changes to the energy portion than in other areas. Several Senate and House Republicans have spoken in favor of taking a lighter touch approach to phasing them out – with extension in future legislation possible for some ꟷ but it’s one of the major areas of savings within the bill, as accelerated repeal saves the federal government revenue, on paper.

President Trump and the administration will also continue to exert their own views within the negotiating process. While the Senate draft maintains several Trump campaign promises aimed at working-class taxpayers, it does add income limits and deduction caps not in the House bill.

Republicans will now engage in sprint negotiations to meet their self-imposed deadline of July 4 ꟷ or perhaps more realistically, the beginning of August recess, in order to smooth out these friction points and refine the bill further.

Senate Republicans unveiled a new version of their $4.2 trillion tax and spending package, moving closer to a vote as they near a July 4 deadline set by President Donald Trump .

The new draft reflects compromises among warring factions of the Senate GOP which has been divided over how much to cut safety-net programs such as Medicaid and how rapidly to phase out of renewable energy tax credits enacted under the Biden administration.

A tentative deal with House Republicans to increase the state and local tax deduction is included. The bill would raise the SALT deduction cap from …

WASHINGTON (AP) — Senate Republicans on Monday proposed deeper Medicaid cuts, including new work requirements for parents of teens, as a way to offset the costs of making President Donald Trump’s tax breaks more permanent in draft legislation unveiled for his “big, beautiful bill.”

The proposals from Republicans keep in place the current $10,000 deduction of state and local taxes, called SALT, drawing quick blowback from GOP lawmakers from New York and other high-tax states, who fought for a $40,000 cap in the House-passed bill. Senators insisted negotiations continue.

WATCH: Amy Walter and Jasmine Wright on how Senate Republicans feel about Trump’s big bill

The Senate draft also enhances Trump’s proposed new tax break for seniors, with a bigger $6,000 deduction for low- to moderate-income senior households earning no more than $75,000 a year for singles, $150,000 for couples.

All told, the text unveiled by the Senate Finance Committee Republicans provides the most comprehensive look yet at changes the GOP senators want to make to the 1,000-page package approved by House Republicans last month. GOP leaders are pushing to fast-track the bill for a vote by Trump’s Fourth of July deadline.

Sen. Mike Crapo, R-Idaho, the chairman, said the proposal would prevent a tax hike and achieve “significant savings” by slashing green energy funds “and targeting waste, fraud and abuse.”

It comes as Americans broadly support levels of funding for popular safety net programs, according to the poll from The Associated Press-NORC Center for Public Affairs Research. Many Americans see Medicaid and food assistance programs as underfunded.

What’s in the big bill, so far

Trump’s big bill is the centerpiece of his domestic policy agenda, a hodgepodge of GOP priorities all rolled into what he calls the “beautiful bill” that Republicans are trying to swiftly pass over unified opposition from Democrats — a tall order for the slow-moving Senate.

Fundamental to the package is the extension of some $4.5 trillion in tax breaks approved during his first term, in 2017, that are expiring this year if Congress fails to act. There are also new ones, including no taxes on tips, as well as more than $1 trillion in program cuts.

After the House passed its version, the nonpartisan Congressional Budget Office estimated the bill would add $2.4 trillion to the nation’s deficits over the decade, and leave 10.9 fewer people without health insurance, due largely to the proposed new work requirements and other changes.

The biggest tax breaks, some $12,000 a year, would go to the wealthiest households, CBO said, while the poorest would see a tax hike of roughly $1,600. Middle-income households would see tax breaks of $500 to $1,000 a year, CBO said.

Both the House and Senate packages are eyeing a massive $350 billion buildup of Homeland Security and Pentagon funds, including some $175 billion for Trump’s mass deportation efforts, such as the hiring of 10,000 more officers for Immigration and Customs Enforcement, or ICE.

This comes as protests over deporting migrants have erupted nationwide — including the stunning handcuffing of Sen. Alex Padilla last week in Los Angeles — and as deficit hawks such as Kentucky Sen. Rand Paul are questioning the vast spending on Homeland Security.

Senate Democratic Leader Chuck Schumer warned that the Senate GOP’s draft “cuts to Medicaid are deeper and more devastating than even the Republican House’s disaster of a bill.”

Tradeoffs in bill risk GOP support

As the package now moves to the Senate, the changes to Medicaid, SALT and green energy programs are part of a series of tradeoffs GOP leaders are making as they try to push the package to passage with their slim majorities, with almost no votes to spare.

But criticism of the Senate’s version came quickly after House Speaker Mike Johnson warned senators off making substantial changes.

WATCH: Breaking down Trump’s ‘Big Beautiful Bill’ and its impact on the deficit and national debt

“We have been crystal clear that the SALT deal we negotiated in good faith with the Speaker and the White House must remain in the final bill,” the co-chairs of the House SALT caucus, Reps. Young Kim, R-Calif., and Andrew Garbarino, R-N.Y., said in a joint statement Monday.

Republican Rep. Nicole Malliotakis of New York posted on X that the $10,000 cap in the Senate bill was not only insulting, but a “slap in the face to the Republican districts that delivered our majority and trifecta” with the White House.

Medicaid and green energy cuts

Some of the largest cost savings in the package come from the GOP plan to impose new work requirements on able-bodied single adults, ages 18 to 64 and without dependents, who receive Medicaid, the health care program used by 80 million Americans.

While the House first proposed the new Medicaid work requirement, it exempted parents with dependents. The Senate’s version broadens the requirement to include parents of children older than 14, as part of their effort to combat waste in the program and push personal responsibility.

Already, the Republicans had proposed expanding work requirements in the Supplemental Nutritional Assistance Program, known as SNAP, to include older Americans up to age 64 and parents of school-age children older than 10. The House had imposed the requirement on parents of children older than 7.

People would need to work 80 hours a month or be engaged in a community service program to qualify.

One Republican, Missouri Sen. Josh Hawley, has joined a few others pushing to save Medicaid from steep cuts — including to the so-called provider tax that almost all states levy on hospitals as a way to help fund their programs.

READ MORE: How cutting Medicaid could upend long-term care for many older Americans

The Senate plan proposes phasing down that provider tax, which is now up to 6%. Starting in 2027, the Senate looks to gradually lower that threshold until it reaches 3.5% in 2031, with exceptions for nursing homes and intermediate care facilities.

Hawley slammed the Senate bill’s changes on the provider tax. “This needs a lot of work. It’s really concerning and I’m really surprised by it,” he said. “Rural hospitals are going to be in bad shape.”

The Senate also keeps in place the House’s proposed new $35-per-service co-pay imposed on some Medicaid patients who earn more than the poverty line, which is about $32,000 a year for a family of four, with exceptions for some primary, prenatal, pediatric and emergency room care.

And Senate Republicans are seeking a slower phase-out of some Biden-era green energy tax breaks to allow continued develop of wind, solar and other projects that the most conservative Republicans in Congress want to end more quickly. Tax breaks for electric vehicles would be immediately eliminated.

Conservative Republicans say the cuts overall don’t go far enough, and they oppose the bill’s provision to raise the national debt limit by $5 trillion to allow more borrowing to pay the bills.

“We’ve got a ways to go on this one,” said Sen. Ron Johnson, R-Wis.

Associated Press writers Mary Clare Jalonick and Matthew Daly contributed to this report.

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