Republicans’ battle over deductions for state and local taxes persists as Speaker Mike Johnson (R-LA) looks to compromise with blue-state GOP lawmakers as the budget megabill cycles through committees.
Though the Ways and Means Committee passed its tax legislation out of committee on Wednesday, it did so without a decision on SALT. Several blue-state Republicans have rebelled against increasing the SALT cap from $10,000 to $30,000. Though this triples the cap, they maintain that $30,000 is too low.
Johnson now anticipates that discussions over the SALT cap will have to go into the weekend, despite telling reporters Tuesday evening that he was optimistic a deal would be reached later that night or by Wednesday.
“We’re getting closer, but they’re basically two different factors: red states and blue states, folks,” Johnson said during the GOP’s weekly press conference. “We got more red state folks in our conference, and they have concerns about it. We have blue state people who have realities they gotta deal with at home.”
“I am trying to be the sort of the neutral umpire in the negotiation and build consensus,” the speaker added.
He said discussions over SALT continued until 1:30 a.m., but a compromise is still a way off, though everyone is negotiating in “good faith.”
Tensions were high Tuesday evening after Rep. Nicole Malliotakis (R-NY) publicly endorsed the $30,000 cap increase and was reportedly kicked out of the SALT meeting with Johnson.
“As the only SALT caucus member on Ways and Means, all I know is they can sit and negotiate with themselves all they want, but there will be no changes unless I and the committee agree,” she said after.
Other New York Republicans, such as Reps. Mike Lawler and Nick LaLota, stand firm against the $30,000 cap, arguing it does nothing for their constituents and that they will not vote for the GOP’s “one big beautiful” reconciliation package without a significant change to SALT.
LaLota told reporters they are “far away” from a deal and talks will cease “as soon as there’s an offer that we could say yes to.” When asked what number he would be comfortable with, he said the burden falls to House leadership and the Ways and Means Committee.
“I’m not sure exactly when, but there’s no deal without a true SALT fix,” LaLota said, noting that the “whole onus can’t be on” the SALT Republicans.
“It’s got to be fair for Long Islanders, New Yorkers, folks in New Jersey and California, because we share a lot of the burden,” the Republican added. “We’re donor states. We send way more to Washington than we get back. I’m a little tired of being lectured about how somehow SALT is a subsidy to the largess of blue states like mine.”
Lawler has also empathetically said he would vote against the reconciliation package if the SALT cap is not increased.
“We have been very clear from the very beginning: if there was not a fix in this bill for SALT, there would not be a bill. And as far as I’m concerned, it’s not a fix,” Lawler said.
He said he understands the speaker is “trying” but warned leadership that a new SALT proposal will be needed soon if Republicans want to meet their ambitious deadline to pass the megabill through the House by Memorial Day.
SALT Republicans are one of several factions of the GOP that Johnson has to win over to pass the bill, as he faces a slim majority. He can only afford to lose three Republicans and still pass the legislation along party lines.
The SALT and Freedom Caucuses are battling over who takes the mantle as the loudest antagonist of the megabill. Typically the rabblerousers who push back against leadership every step of the way, some HFC members are now expressing frustration with the SALT GOP lawmakers.
“I get you’re in that situation, but it costs money, and you can’t be the same group of people b****ing or complaining about spending cuts in other areas. If you want your SALT deductions, it’s got to be paid for,” Rep. Eric Burlison (R-MO), a HFC member, said. “So, you can’t have your cake and eat it, too … so don’t complain.”
“I’ll tell you, people back home are frustrated when they say, what’s happening when all of these people from these blue states demanding — are basically the tail wagging the dog? Telling a Republican conference how it’s going to be. That’s — that’s messed up,” Burlison added.
However, Lawler said the stall in legislation could have been avoided had leadership made it a priority. Much of leadership’s focus over the last few months centered on getting fiscal hawks on board with the level of spending cuts and appealing to centrist Republicans who are concerned about cuts to Medicaid.
“This is why this should have been dealt with months ago,” Lawler said. “We had been asking repeatedly for meetings, for conversations, for numbers, for information, and unfortunately, we’re not given it, and basically presented with a take it or leave it.
“And that’s just not the way to negotiate. Certainly not the way to run a two-car parade, let alone the House of Representatives,” he added.
HOUSE REPUBLICANS PASS $4 TRILLION TAX CUT OUT OF COMMITTEE AS MEMBERS DEBATE SALT CAP
The speaker remains confident that a deal can be reached, but the clock is ticking. The Budget Committee is expected to start piecing together the reconciliation sections from each committee on Friday, with a vote intended for sometime next week.
“Look, when you have a bill this big, with this many pieces and this many components and this complex and comprehensive, virtually no one’s gonna be 100% satisfied with every piece of the bill, it’s just not possible,” Johnson said. “Everybody’s having to give a little, and they’re willing to do that because they know the stakes are so high, as my leaders here articulated. So we’ll get there, we’ll get this done.”