House Republicans have a big problem: There aren’t enough of them.
Because their 220-213 majority is so thin, Speaker Mike Johnson must thread the needle on at least two and possibly three issues to reach a majority in the House.
The battle over Medicaid cuts is still raging. Hardline budget hawks insist on massive cuts in the program, while moderates insist that the GOP has to calibrate the cuts more finely.
On Friday, a group of blue-state Republicans made it clear that they would torpedo the entire reconciliation unless they could give some relief to their constituents on deductions for state and local taxes (SALT).
The 2017 tax cuts limited the deduction to $10,000 per taxpayer that they can write off on their federal returns. While that’s fine for most taxpayers, it was a killer for the upper-middle class and the rich.
Most blue-state Republicans have staked their political futures on increasing the SALT deduction. And several of them have already indicated their intention of blowing up Donald Trump’s “Big, Beautiful Bill” if they don’t get the increase in SALT that they have promised their constituents.
Rep. Nick LaLota, Republican of New York, makes it graphically clear what he will do.
“There’s a green ‘yes’ button and there’s a red ‘no’ button to press. Come time, if there’s not enough SALT in this bill, I’m pressing the red ‘no’ button,” he said. “It is a hill I am willing to stake my entire congressional career on.”
The problem for the rest of the GOP caucus is that raising the limit on SALT deductions means either increasing the deficit or lowering the amount of Trump’s tax cuts when they are renewed later this year.
So far, there’s no progress.
Republicans are juggling several other big-ticket tax cuts, namely the roughly $4 trillion cost of extending the rest of the 2017 tax bill, and many do not want to dedicate significant resources to what they see as a handout to rich residents of blue states. In the House, lawmakers have given themselves a $4.5 trillion allowance for cutting taxes, a sum that could shrink if the party does not also cut $2 trillion in spending.
“My bottom line is, we need to have a fiscally responsible package,” said Representative Greg Murphy, Republican of North Carolina. “It is pathetic that we have to bail out high-tax states.”
Republicans created the $10,000 limit in the first place to help offset the cost of the tax cuts they passed in 2017, including lowering individual income rates and creating a larger standard deduction. Experts across the ideological spectrum support the SALT cap and even favor eliminating the state and local tax deduction entirely.
The issue is that a family with two children living in high-cost-of-living states like New York and New Jersey needs that extra cash for college, as well as other middle-class expenses. The Republicans in these swing districts have promised these people relief. Not delivering isn’t an option.
This puts Speaker Johnson in a bind. He’s already trying to juggle demands from hardliners to cut $2 trillion in the next 10 years. They, too, are threatening to abandon the bill unless they get what they want.
At some point near the end of GOP negotiations, Donald Trump is going to have to swoop in and either bash heads together or sweet-talk members into coming to an agreement.
He will probably have to do both.
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