Tax Bill Lacks Votes as Senate Aims for SALT, Medicaid Deals (2)

Republican leaders are aiming for quick negotiations over needed changes to the newly unveiled Senate tax bill which lacks the votes to secure majorities in both chambers as written.

The prospect of prolonged talks with holdouts in both the conservative and moderate wings of the party threaten Senate Majority Leader John Thune’s goal of passing President Donald Trump’s tax-cut legislation by July 4.

The Senate bill makes much more aggressive cuts to Medicaid spending than the version the House passed last month, an aspect that is already drawing pushback from moderate Republicans and lawmakers concerned about the political ramifications of restricting health benefits for their constituents.

Finance Chair Mike Crapo told reporters he’s “not surprised” by the reaction so far to the Medicaid changes, and said they are vetting the bill with colleagues. Those provisions will likely score as saving several hundreds billions of dollars more than the House bill, he said.

Vice President JD Vance met with Senate Republicans at the Capitol on Tuesday to urge them to support the bill and said he’s confident they are on track to pass the bill around July 4.

“We have got to work through some issues,” Vance told reporters following the meeting. “It’s part of the legislative process.”

Senate Majority Leader John Thune

Photographer: Eric Lee/Bloomberg

The Senate bill takes a hardline stance against raising the $10,000 cap on the state and local tax deduction, earning it an immediate thumbs-down from a faction of New York, New Jersey and California House members who have threatened to block the bill if it doesn’t include the $40,000 SALT cap deal they struck with House Speaker Mike Johnson.

Crapo also told reporters that the SALT provisions will have to be worked out with the House and the White House. The cap in the Senate bill is considered a placeholder.

“That’s a very big piece obviously,” he said.

Generous tax breaks for tips, overtime and pass-through businesses were also scaled back to reduce the price tag of the bill. Even still, conservatives say they aren’t satisfied with these efforts to reduce the overall cost and are plotting to delay a planned Senate vote next week to August.

“This is just the opening shot,” said Texas Senator John Cornyn, a leadership ally, adding that many Republicans just saw the bill for the first time on Monday.

Earlier: Harvard Wins Reprieve, SALT Stalls: Tax Bill Winners and Losers

The Senate can only pass the bill if a minimum of 50 out of 53 Republican senators vote for the measure and Vance breaks the tie. There are already more than three Republican senators who have said they have problems with the bill.

“This bill needs a lot of work,” Missouri Senator Josh Hawley said after learning the bill restricts a tax on Medicaid providers, a move that would reduce reimbursements to states and he says would mean the closure of rural hospitals.

Hawley that he spoke to Trump about the bill, noting that Trump told him he was “surprised” by the Senate’s Medicaid cuts. The president has said he doesn’t want to curb to benefit programs — but he’s also told lawmakers he’s open to eliminating “waste and abuse” giving Republicans wide latitude to frame the reductions stamping out fraud.

Senators Susan Collins of Maine, Lisa Murkowski of Alaska and Jim Justice of West Virginia had already objected to the less stringent Medicaid cuts in the House bill. Justice said Tuesday he has “concerns” about the Senate provider tax provision, while Murkowski said Medicaid is a “priority” issue for her and she’s not satisfied with the work requirements.

A group of moderates who advocate for clean energy tax breaks, including North Carolina’s Thom Tillis and Utah’s John Curtis said they are still studying the bill and suggested they may need more tweaks to lengthen the phaseout of tax credits for renewable energy.

Collins said she is seeking “many” changes to the bill, pointing to lengthy and complicated talks to iron out all the disagreements.

Conservative Demands

Wisconsin Senator Ron Johnson said he is a hard “no” on the proposed bill both because he wants steeper spending cuts and because the Senate draft scales back a proposed 23% tax deduction for pass-through business income to 20%. He said he and other senators are prepared delay the bill past the July 4 deadline to create more time for negotiations.

“This is an artificial deadline. There is no reason to try and rush this,” he told reporters Tuesday. “If we rush it we are not going to get a good result.”

Johnson told CNBC earlier Tuesday that he counts Florida’s Rick Scott, Utah’s Mike Lee and Kentucky’s Rand Paul in his camp of bill opponents. Scott has also said he wants more spending cuts.

Paul said Tuesday he opposes the bill if it includes a debt ceiling increase. Senate leaders want to raise the debt ceiling by $5 trillion so that Congress does not have to deal with the issue again before the 2026 midterm elections.

“I can’t vote to raise the debt ceiling $5 trillion because really what that means is we’re going to get more of the same,” Paul said Tuesday on Fox Business.

SALT Debate

The Senate bill’s placeholder of a $10,000 cap on the SALT deduction sets up a negotiation with the House on its $40,000 cap. The inclusion of the $10,000 cap drew howls of protest from a group of swing-district House Republicans for whom SALT is a top political priority.

New York Representative Nicole Malliotakis described it as “a slap in the face to the Republican districts that delivered our majority and trifecta.”

Thune has said that he believes a compromise between the two positions will be found and Tillis has said the Senate is mulling accepting a $30,000 cap in the end, something initially proposed by House GOP leaders before SALT-focused members negotiated an increase.

(Updates with Vance remarks starting in the fifth paragraph)

--With assistance from Gregory Korte and Cam Kettles.

To contact the reporters on this story:
Erik Wasson in Washington at ewasson@bloomberg.net;
Alicia Diaz in Washington at adiaz243@bloomberg.net;
Steven T. Dennis in Washington at sdennis17@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Magan Crane, Laura Davison

© 2025 Bloomberg L.P. All rights reserved. Used with permission.