Senate GOP seeks to cut SALT cap, triggering fight with House

The Hill

a day ago

Senate Republicans indicated on Wednesday they are prepared to reduce the size of a key tax deduction in President Trump's 'big, beautiful bill' that was backed by moderates in the House, setting up a battle within the GOP over the divisive issue.
The fight had long been expected, with senators saying they thought the state and local tax (SALT) deduction cap in the House-passed bill was too large and too expensive, but the hardening of the plan in the upper chamber threatens to delay progress on the bill and raises further questions about meeting the GOP's self-imposed July 4 deadline.
'There's a gap between where we are and where the House is. … [It's] likely going to be a lower number,' said Sen. Steve Daines (R-Mont.), a top adviser to Senate Majority Leader John Thune (R-S.D.), adding that the Senate GOP has not yet zeroed in on what that number will be.
Senate Republicans emerged from a conference meeting Wednesday where key committees laid out their portions of the bill and lawmakers discussed numerous changes on the table. Several contentious issues remained unresolved, with only two legislative weeks to go until the July 4 recess.
But multiple senators told The Hill that the chamber appears ready to chop down the $40,000 SALT cap, which was painstakingly negotiated between Speaker Mike Johnson (R-La.) and House GOP moderates from New York, New Jersey and California who have warned not to touch it.
Senate Finance Committee Chairman Mike Crapo (R-Idaho), one of the members who led the meeting, was insistent that the cap would fall below $40,000, one Senate Republican said.
It's unclear exactly what number Republicans in the upper chamber are eyeing, but Bloomberg News reported it was $30,000.
'There was never a number specifically discussed other than the House's [$40,000] — and it's a lot,' Sen. Kevin Cramer (R-N.D.) told reporters. 'No surprise that there's an interest in reducing it.'
The current cap sits at $10,000, which was set in place in the 2017 Tax Cuts and Jobs Act. Senate Republicans have been fine with an increase in the cap, but many believed the $40,000 total for individuals making $500,000 or less was overzealous.
A number of Senate Republicans have balked at some of the cost-cutting proposals in the bill the House sent and are looking for other ways to save money.
Not a single Senate Republican hails from a high-tax blue state that would benefit from a higher SALT deduction cap. But the $40,000 figure was painstakingly negotiated by Johnson and House moderates, several of whom threatened to tank the whole bill over it. And any Senate changes would been to be approved by the House.
For weeks, Republicans in the SALT Caucus have warned that they will not accept a lower cap.
'The compromise has already been made in the House. $40,000 is the figure that unlocks the rest of the bill,' Rep. Nick LaLota (R-N.Y.), a SALT member, told The Hill. 'It's not a number to be bargained down from.'
The Wednesday conference meeting, led by Crapo and Agriculture Committee Chairman John Boozman (R-Ark.), also focused on other changes the Senate is looking to make to the House-passed legislation.
Among those is a proposal to scale back provisions that would place more of the cost burden of the Supplemental Nutrition Assistance Program (SNAP) onto states. A number of Republican senators were turned off by the House's language.
GOP lawmakers are attempting to have all portions of text by the end of next week, which is truncated by the Juneteenth holiday. But several of the issues that GOP holdouts in the Senate have named as sticking points — including Medicaid and green energy tax credits — remain unresolved.
Republicans admit there is still much work to do in that time.
'Imagine a jigsaw puzzle with 3,000 pieces — and no picture,' Sen. John Kennedy (R-La.) said after the meeting. 'That's what we're trying to put together.'
Sen. Markwayne Mullin (R-Okla.), a top ally of Thune, labeled that deadline for committees as an 'aspirational goal,' with the entire bill potentially hitting the floor by Monday, June 23 to kick off consideration. If that happens, a vote-a-rama could take place by that week's end.
He admitted all those are lofty plans.
'We work really good on deadlines,' Mullin said. 'Without deadlines, we don't ever work.'
Sen. Ted Cruz (R-Texas) said on Wednesday morning that he does not believe July 4 is a realistic deadline for the bill to hit Trump's desk given that roughly one-third of the bill is set to be revised by the upper chamber.
'And so I think the Senate will vote it out right before the July 4 recess, and then, I think it is likely that we will spend the month of July in conference and trying to reconcile the two,' Cruz said at an event hosted by Punchbowl News.
'The Senate bill is going to be markedly different from the House,' he continued. 'My guess is the Senate bill will track the House bill, maybe 60 to 70 percent. There are a lot of good provisions. A lot of the broad outlines are going to be similar, but it's the Senate. So the Senate is going to do what it damn well wants to do and that's a good process.'
When asked if the deadline is realistic, Sen. Mike Rounds (R-S.D.) was unsure.
'Maybe,' he said, noting that a number of members are awaiting scoring from the Congressional Budget Office.
And a number of members still need to be won over. Sen. Susan Collins (R-Maine), a key lawmaker who remains up for grabs, told reporters that she has questions about Medicaid changes and is still 'deliberating.'
The possibility of work stretching close to the nation's birthday led Thune on Wednesday to warn that he is prepared to keep members in Washington until they complete work on the mammoth bill.
Senators are slated to be back in their home states from June 28 through July 6 for the break, giving them just north of two weeks to get everything done.
The afternoon meeting was not the only conference discussion about the sprawling bill for the Senate GOP. Border czar Tom Homan appeared hours earlier at a weekly luncheon hosted by the Senate Steering Committee, which is composed of the GOP's most conservative members.
Homan pressed lawmakers to approve the tax package in order to unlock funding included for the border as Immigration and Customs Enforcement officials are running out of beds for detained migrants.
According to Sen. John Hoevan (R-N.D.), Homan told members that ICE currently has 55,000 individuals detained, but only 41,000 beds.
'That's a problem,' Hoevan told reporters. 'The biggest pitch he had was: There are still about 600,000 people out there who are here illegally who have criminal records, so he needs this funding for the bed space.'
More meetings are set for the coming days, including at the White House on Thursday when Thune and Crapo are expected to huddle with Trump.
'It's going to be an interesting week or two,' said Sen. Josh Hawley (R-Mo.), one of the remaining holdouts.
Emily Brooks contributed.