By the end of this month, House Republicans are determined to finalize the intricate details of President Trump's significant legislative package, which proposes sweeping changes to tax, immigration, and energy policy. House Speaker Mike Johnson, R-La., has already successfully pushed a budget blueprint through the chamber. However, this week presents a more challenging task as three key House committees work to define policies that could have profound impacts on Americans' finances and healthcare.
Speaker Johnson is confronted with the challenge of balancing demands between two factions within his party. On one side, swing district Republicans express concern that significant cuts to safety net programs and popular tax incentives could jeopardize their re-election campaigns. Conversely, more conservative members argue that voters have granted them a GOP trifecta to significantly reduce the deficit and reform government programs. Johnson remains optimistic, asserting, "I think the final product is going to be favorable to everybody," during a recent statement.
The fiscal equation Republicans are grappling with involves achieving $1.5 trillion in spending cuts, as outlined in their blueprint, to offset the costs of extending President Trump's 2017 tax cuts. A considerable segment of the GOP conference aims for $2 trillion in total savings. Texas Republican Chip Roy indicated last week that approximately 20 issues remain unresolved. Johnson aims to pass the bill through the House and send it to the Senate by Memorial Day, targeting President Trump's signature by July 4.
The real deadline for Republicans looms in mid-July when Treasury Secretary Scott Bessent warns that Congress must increase the country's borrowing authority to avert a potential government default. The GOP's plan includes raising the debt ceiling for five years as part of this legislative package. This timeline will be tested as Republicans navigate contentious and expansive policy changes in the coming days.
One of the significant areas under discussion is Medicaid, which provides coverage for approximately 72 million low-income, elderly, and disabled Americans. The House Energy and Commerce Committee, overseeing this program, released their proposed changes, focusing on a few reforms that garner support from both conservative and moderate GOP lawmakers. Key proposals include implementing work requirements for able-bodied adults receiving benefits, mandating that enrollees report at least 80 hours of work per month.
Additionally, the committee aims to refine the enrollment process and limit states' ability to raise taxes on healthcare providers, a practice that attracts more federal matching funds. The bill outlines a broader goal of eliminating waste, fraud, and abuse within the program. However, it does not propose drastic changes to the federal funding structure for Medicaid expansion, which increased eligibility for lower-income, childless, working-age adults under the Affordable Care Act. Some conservative hardliners had advocated for reduced federal contributions to states with this expanded coverage.
Another critical component involves making the 2017 Trump tax cuts, set to expire at the end of 2025, permanent. The House Committee on Ways and Means has introduced additional tax breaks that align with President Trump's 2024 campaign promises, including exemptions for tips and overtime pay. However, if Republicans cannot achieve the necessary $1.5 trillion in spending cuts, they may need to scale back their tax cut ambitions.
Interestingly, the proposed plan currently lacks any new income taxes on high earners. Although President Trump considered raising the tax rate for high earners—those making between $2.4 million and $5 million—from 37% to 39.6%, he recently retracted this idea, noting that it could be weaponized by Democrats in future campaigns. GOP leaders, including Johnson, have publicly opposed any tax increases.
One of the most contentious issues remaining in the budget discussions is the state and local tax deduction (SALT). The 2017 tax bill capped deductions for state and local taxes at $10,000, disproportionately affecting taxpayers in blue states. During his 2024 re-election campaign, Trump pledged to eliminate this cap; however, doing so would significantly increase the costs of the GOP package, and most Senate Republicans do not support removing it. The Ways and Means Committee has suggested raising the SALT cap to $30,000, but some GOP lawmakers representing high-tax states insist on a cap exceeding that figure.
Rep. Nick LaLota, R-N.Y., has been a vocal advocate for a higher SALT deduction and emphasized that the bill must address this issue to secure their votes. Given the razor-thin majority Republicans hold in the House, dissent from this group could jeopardize the overall bill. "There is no bill unless there's a fix on SALT," LaLota stated firmly.
In addition to Medicaid and tax policies, Republicans are discussing plans to shift some costs of the Supplemental Nutrition Assistance Program (SNAP) to the states, a move expected to lead to significant cuts in the number of recipients. Many Republicans from swing districts are urging caution, emphasizing the need to ensure that no cuts in benefits arise from these changes.
As House Republicans navigate these complex negotiations, the outcome of this legislative package will have lasting implications for millions of Americans' financial well-being and access to essential services.
