House Speaker Mike Johnson (R-LA) is determined to pass a megabill to codify President Donald Trump’s agenda by Memorial Day, but four factions of GOP lawmakers are forcing leadership to find a compromise that can pass the razor-thin GOP majority.
The White House held a meeting Thursday with Johnson, Majority Leader Steve Scalise (R-LA), House Ways and Means Chairman Jason Smith (R-MO), and House Energy and Commerce Chairman Brett Guthrie (R-KY) on reconciliation, all given the tough task of appeasing differing special interests within the conference with little to no room for error.
“We had a very productive and encouraging meeting at the White House this morning, and the remaining pieces of ‘The One, Big Beautiful Bill!’ are coming together very well,” Johnson said after the meeting.
“We are awaiting some final calculations on a few of the tax components, and we expect to be able to complete that work on a very aggressive schedule and quickly send the bill to the President’s desk.”
After the White House meeting, it was announced that both the Ways and Means and Energy and Commerce committees wouldn’t hold their markup hearings until the week of May 12, a week behind leadership’s desired schedule. An Energy and Commerce Democrat member anticipated that the markup is expected to take up to 30 hours.
Republicans have begun charging forward with a budget process that unlocks Trump’s agenda called reconciliation. Through one megabill, the GOP hopes to pass a renewal of his 2017 tax law alongside priorities on energy, defense, and the border.
Committee leaders tasked with leading sections of the reconciliation bill met with lawmakers throughout this week, as several Republicans have expressed concerns over how the GOP can find $1.5 trillion in spending cuts without slashing Medicaid, leaving the House Energy and Commerce markup expected to draw a heated debate.
Some centrist Republicans in states like California and New York are also aggressively advocating to increase the $10,000 cap on state and local tax deductions, with lawmakers gathering with Johnson this week to pitch numbers and find common ground with no concrete results yet.
Standing in the way of Medicaid and SALT Republicans are the fiscal hawks, who have warned Republicans that their support for the bill hinges on finding enough cuts to offset the tax cuts many Republicans want to make permanent, along with Trump’s promises of no tax on tips or overtime.
These four policy areas put leadership at a massive crossroads between the two ends of the party as they advocate an ambitious passage schedule, aiming for before Memorial Day weekend.
The Inflation Reduction Act protectors and repealers
Republicans have long complained about former President Joe Biden’s 2022 Inflation Reduction Act, a bill passed by the same reconciliation process that some Republicans want to use to fully repeal one of Biden’s biggest legislative wins.
The fight between those who want a full repeal and those who consider it a redline when it comes to their vote on reconciliation heated up Thursday when 38 Republicans sent a letter to House Ways and Means Committee Chairman Jason Smith (R-MO) arguing that leaving any of the bill in place would “undermine America’s return to energy dominance and national security.”
Many House Republicans calling for a full repeal of the Inflation Reduction Act also fall under the category of fiscal hawks, whose opposition often leads to many late-night or last-minute negotiations with House leadership to pass spending bills on the floor.
Rep. Chip Roy (R-TX), a notorious budget hawk and policy chairman for the Freedom Caucus, has said his vote will most likely teeter on whether the massive bill includes a full Inflation Reduction Act repeal. Budget hawks argue the repeal will be used to pay for the tax cuts expected to be in the reconciliation bill.
“We should fully repeal the Inflation Reduction Act,” Roy wrote on X. “The billions in green tax credits are a scam and can be traded (boondoggle). Americans get less reliable and more expensive energy. Protecting Biden policy is a bad look. We can’t afford this garbage.”
Rep. Thomas Massie, who signed onto the letter calling for a full repeal, is an expected holdout as he consistently votes no on bills on spending. When asked earlier this year if he supports a full repeal, the Kentucky Republican told the Washington Examiner, “Uh, sure, yeah.”
A full repeal would serve as a red line for many centrist GOP House members, however, whose districts have benefited from some of the clean energy tax credits included in the Inflation Reduction Act. It was deemed the biggest climate bill in history.
More than 20 of these centrist members sent a letter to Smith earlier this month stating they want to keep the clean energy tax credits that came from the IRA, arguing a full repeal could quickly increase utility bills. These members said they would withhold their support for the reconciliation bill if these tax credits were pulled.
“We request that any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments which will continue to increase domestic manufacturing, promote energy innovation, and keep utility costs down,” the 21 members wrote in the letter.
These members in favor of the credits told the Washington Examiner they want to “take a scalpel, not a sledge.”
Medicaid backers
Medicaid has been a point of contention for House GOP leadership in the reconciliation process well before the first budget framework was passed in late February.
Several swing district and state lawmakers have remained concerned that the $880 billion in proposed Energy and Commerce Committee cuts will likely run right through Medicaid. It’s opened the door for Democratic campaign attacks, slamming Republicans for wanting to slash working-class families’ benefits.
Leadership has spent weeks trying to assure centrist Republicans that there will not be cuts to Medicaid or other beneficiary programs on which their constituents rely.
But getting everyone in one room is proving to be difficult. Many members were tied up this week with other reconciliation markup hearings, and several centrist Republicans, like Rep. Jeff Van Drew (R-NJ), did not make it to meetings on Medicaid and SALT with Guthrie. Van Drew told reporters he heard the turnout “wasn’t huge.”
Van Drew’s redline comes if the bill cuts “current benefits to individuals or entities that are currently eligible or legal.”
Earlier this month, a group of 12 centrist Republicans wrote a letter to leadership and Guthrie saying they oppose any cuts to Medicaid that would reduce coverage for vulnerable populations.
“As Members of Congress who helped to deliver a Republican majority, many of us representing districts with high rates of constituents who depend on Medicaid, we would like to reiterate our strong support for this program that ensures our constituents have reliable healthcare. Balancing the federal budget must not come at the expense of those who depend on these benefits for their health and economic security,” the letter said.
The letter was signed by Van Drew and Reps. David Valadao (R-CA), Don Bacon (R-NE), Rob Bresnahan (R-PA), Juan Ciscomani (R-AZ), Jen Kiggans (R-VA), Young Kim (R-CA), Rob Wittman (R-VA), Nicole Malliotakis (R-NY), Nick LaLota (R-NY), Andrew Garbarino (R-NY), and Jeff Hurd (R-CO).
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Although meetings this week have not tipped the scale in any direction, centrists remain confident consensus can be found.
“I remain optimistic about how things look, because I know leadership understands the importance of having all parts of the Republican coalition together on this reconciliation bill, so I expect that they’ll take that into account as these as they implement these instructions,” Hurd told the Washington Examiner Thursday.
Fiscal hawks
Smith, the chairman of the tax-writing committee, has one of the most difficult tasks: he will have to iron out an extensive tax-cut bill while balancing the offset in spending from looming budget hawks.
A handful of fiscal conservative members have made clear their votes are contingent on the budget bill not adding to the national deficit.
“If you go in there and ask for $1.5 trillion in cuts, you’re not going to get 1.5 trillion in cuts. You better ask for a whole heck of a lot, ask for $8 or $9 trillion,” Rep. Tim Burchett (R-TN) told reporters Thursday.
“We say we’re going to make all these cuts, and then we turn right around and we give all the money to the war pimps at the Pentagon and to me, that’s not savings,” the Tennessee firebrand continued.
Roy, who was the first to vocalize repealing the Inflation Reduction Act in reconciliation, continues to say he wants to see the “math add up” when looking at offsetting tax cuts, vowing to not vote for a bill that does not include these offsets.
“We have $300 billion of spending between defense and border and in the packages, so we gotta find even more savings,” Roy said Thursday.
House Budget Chairman Jodey Arrington (R-TX), a long-time fiscal hawk, said the speaker promised the final product for reconciliation would not increase the deficit.
The SALT caucus
SALT, the State and Local Tax deduction, has also been a major thorn in the side for Johnson.
Republican lawmakers from high-tax blue states like New York, California, and New Jersey have outsize power to force changes to the $10,000 SALT cap during reconciliation because of the House’s ultra-slim Republican majority.
In lifting the cap, Republicans would be undoing a reform they won in 2017. The cap is popular with most rank-and-file members and was used to offset some of the costs of the first Trump tax cuts for things like the lower tax rates, the doubled standard deduction, and the boosted child tax credit.
In 2017, then-House Speaker Paul Ryan lost the votes of a dozen members, mostly from California, New York, and New Jersey. But Ryan had a sufficiently large majority that he didn’t need their votes. Now, Johnson can only afford to lose three votes, depending on attendance.
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LaLota, Malliotakis, Kim, and Garbarino, as well as Rep. Mike Lawler (R-NY), are among the members seeking a bigger SALT cap.
While all parties to negotiations are expressing optimism that an agreement will be reached, Malliotakis told reporters on Friday that the matter likely won’t be resolved until next week. Members of the self-described SALT caucus also met with Johnson on Thursday evening.
One of the main questions is how high the group wants to see the cap for individuals and married couples. Lawler has a bill to raise the cap to $100,000 for individuals and $200,000 for couples, although that is well above what will likely be accepted. Still, members have said that $25,000 is too low.
“I think the number needs to be higher than the $25,000, but it doesn’t need to necessarily be that much higher to protect those individuals,” Malliotakis said.
Of crucial note, if the cap goes too high, it could endanger the votes of the deficit hawks, who are concerned about the price tag of the legislation. The costs are high. Raising the cap to $40,000 would cost somewhere in the ballpark of $910 billion over a decade, according to the Committee for a Responsible Federal Budget.
SALT critics also point to the notion that it disproportionately benefits the wealthy. The Tax Policy Center found that the highest-income 20% of households would receive more than 96% of the tax cut if the cap were fully repealed.
Raising the SALT cap has been panned by many lawmakers in red states.
“I don’t support continuing to subsidize blue state high-tax jurisdictions,” Roy, the Texas Republican, told reporters. “So I’m not all that interested in hearing about my blue state colleagues complaining about it. But then again, you got to figure out how to get a deal done.”
But the SALT caucus isn’t just being so aggressive on holding the line because they think it’s good policy; getting a bigger SALT cap is very much an issue of political survival for the SALT caucus. Many of them are in toss-up districts and could be tossed out of office in 2026 if they don’t deliver on their promises to raise the cap.
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It will be up to the Ways and Means Committee markup hearing to sort out the looming tax issues.
“You’re talking about the income threshold, you’re talking about the marriage penalty, you’re talking about the deduction itself. Is there going to be a phase out? Malliotakis said. “There’s a lot of questions.”