House Republicans are facing a deepening divide over SALT deductions and Medicaid cuts in President Trump’s reconciliation bill, threatening to derail the Memorial Day deadline for the budget package.
At a Glance
- Republican lawmakers from high-tax states are pushing to lift the SALT deduction cap, creating tensions within the party
- Disagreements over proposed Medicaid reforms have fractured GOP unity, with Chair Brett Guthrie’s proposals conflicting with Speaker Johnson’s position
- The House Freedom Caucus insists on significant deficit reduction measures, while the SALT Caucus prioritizes tax relief
- Key committees including Ways and Means and Energy and Commerce have yet to reach consensus
- The Senate prefers a more moderate reconciliation package, further complicating negotiations
Growing Tensions Over “Big Beautiful Bill”
House Republicans are deeply divided over what President Trump has dubbed his “big beautiful bill,” with factions forming around state and local tax (SALT) deductions and Medicaid reforms. The SALT Caucus, including Representatives Nicole Malliotakis, Andrew Garbarino, and Young Kim, is advocating strongly for lifting the cap on SALT deductions that primarily benefits residents in high-tax states. Meanwhile, House Energy and Commerce Chair Brett Guthrie has proposed Medicaid reforms that conflict with Speaker Mike Johnson’s stated positions.
The internal discord has put the Memorial Day deadline for completing the reconciliation package in serious jeopardy. Key committees tasked with drafting portions of the legislation, including House Energy and Commerce and Ways and Means, have yet to reach consensus on critical provisions, highlighting the challenge of balancing regional interests with national budget priorities.
The SALT Deduction Dilemma
At the heart of the controversy is the SALT deduction cap, which limits the amount taxpayers can deduct for state and local taxes to $10,000. This cap, implemented under the 2017 Tax Cuts and Jobs Act, disproportionately affects residents in high-tax states like New York, New Jersey, and California. Republican representatives from these areas face enormous pressure from constituents to restore the full deduction, putting them at odds with fiscal conservatives in the party who view the cap as necessary for budget discipline.
“There’s a lot of different parameters and there’s a lot of different opinions. So we just got to figure it out,” said Rep. Nicole Malliotakis, R-N.Y.
The SALT Caucus members have signaled they may withhold support for the reconciliation package if their concerns aren’t addressed, creating a delicate balancing act for GOP leadership. With Republicans holding only a narrow majority in the House, every vote is crucial for passing legislation, giving these members significant leverage in negotiations.
Medicaid Reform Standoff
Further complicating matters are disagreements over proposed Medicaid reforms. House Energy and Commerce Chair Brett Guthrie has proposed changes that could potentially leave millions without coverage, a position that has met resistance from Speaker Johnson. While Republicans broadly agree on limited reforms such as federal work requirements and more frequent eligibility checks, these measures fall short of the substantial spending reductions demanded by fiscal hawks within the party.
“I just don’t think you get the necessary deficit reduction without keeping a lot of things on the Medicaid table,” said Rep. Andy Harris, R-Md.
The House Freedom Caucus has been particularly vocal about the need for significant deficit reduction as a core component of any reconciliation package. A group of 31 House Republicans has already issued warnings against diluting budget cuts, emphasizing that any final legislation must adhere to the House budget framework. This hardline stance further narrows the path to consensus within the party.
Leadership’s Delicate Balancing Act
Speaker Mike Johnson finds himself in a precarious position, attempting to navigate these competing interests while maintaining party unity. His leadership has already been tested by earlier revolts from GOP hardliners who blocked action on spending bills and forced an early Thanksgiving break last year. Those tensions emerged after Johnson proceeded with a “clean” stopgap spending measure that passed with Democratic support, angering conservatives who wanted spending cuts and policy priorities included.
“He’s the chairman, they’re working through it. I said likely for a reason because it’s not a final decision. At the end of the day, I defer to my chairs, but we’ve got to build consensus around all the ideas,” said House Speaker Mike Johnson.
Adding another layer of complexity, the Senate prefers a more moderate reconciliation package, setting up potential conflicts between the chambers even if House Republicans can reach internal agreement. With the Memorial Day deadline looming, Johnson and GOP leaders face significant hurdles in crafting a bill that can satisfy the diverse interests within their caucus while adhering to their fiscal principles.
