Senators have been meeting all week in an attempt to find common ground on a reconciliation package that will implement much of President Trump’s domestic policy agenda. It is still very unclear what the Senate’s reconciliation bill will look like. Punch news reports that Senate Republicans are looking to rewrite two of the hardest-fought provisions in the House’s bill. Senate Finance Committee Chair Mike Crapo (R-Idaho) told GOP senators Wednesday that he plans to scale back the House’s deal raising the cap on the amount of state and local taxes (SALT) that can be deducted and to rework the House repeal of clean energy tax credits from the Inflation Reduction Act (IRA). Once completed, the Senate bill must go back to the House for its adoption. Having passed its version of the legislation on a 215-214 vote, House Speaker Mike Johnson has little wiggle room in his quest to get the reconciliation bill done by July 4.
The House had to walk a tightrope on the IRA clean energy cuts, and now the Senate is as well. Senate Majority Leader John Thune (R-SD) is trying to be cautious of the House’s needs, but he can only do so much. A group of 38 House Republicans sent him a letter with a stern warning urging him and the Senate Republican Conference to stay away from "budget gimmicks" as they make changes to the budget bill. The letter warned, "any additional tax cuts" should be accompanied with "dollar for dollar real, enforceable spending reductions" if the Senate hopes to have enough House GOP support to get the legislation to President Trump's desk.
The Senate Finance Committee is planning to make key business tax breaks for R&D spending, interest expenses and buying machinery and equipment permanent in their rewrite of the House-passed package. This is a top priority for many Finance Committee Republicans. Permanence increases the tax bill’s cost, so GOP, senators have to find savings elsewhere, such as with SALT. In order to reduce the overall cost Republicans want to lower some of Trump’s tax priorities, including eliminating taxes on tips, overtime, and increasing the standard deduction for seniors.
The Senate Agriculture Committee completed action on its portion of the reconciliation bill with changes that would yield a net spending reduction of $144 billion over 10 years, according to the panel. The Congressional Budget Office estimated the agriculture provisions in the House version of the One Big Beautiful Bill Act would cut spending by $238 billion through 2034. Both measures also would roll conservation funding included in the IRA into the farm bill baseline, resulting in a permanent increase in spending levels for four major programs. The $12 billion in additional funding would increase the future baseline for those programs by 32%, according to committee staff.
Much is still in flux and it could be some time before the Senate is able to draft a bill that carries majority support.