| Hello John, At long last, the U.S. Senate has unveiled its version of the budget reconciliation bill, aka the “One Big, Beautiful Bill.” It generally tracks with what the House passed, though there are some significant differences that could make coming to a final agreement difficult. Several of the differences result from the more restrictive rules that the Senate must follow in the reconciliation process — the “Byrd rule” — which prevents the inclusion of provisions considered “extraneous” to the budget process. We won’t go over every difference between the two bills, but will focus on the few key areas that could make or break the entire effort. But first, let’s begin with what the bill gets right: - It makes the tax cuts permanent, including the pro-business provisions.
- Joe Biden’s green energy tax giveaways are scaled back substantially.
- States are essentially barred from overreaching AI regulations, allowing this technology to flourish, unhindered by progressive governments in states like California setting standards for the nation.
- The state and local tax deduction is capped at $10,000.
That is all great stuff, particularly the permanence part, which will prevent a repeat of this exercise in future years and make it much harder to undo these tax cuts. Indeed, Congress’ inability to make the 2017 tax cuts permanent is why we’re here to begin with. However, all is not smooth sailing from here. While we’re hopeful the full Senate passes the bill in the coming days, ahead of the July 4 deadline, several provisions risk bringing the whole thing crashing down once it gets back to the House. Here are a few provisions in the bill to note: The first of these is the state and local tax deduction. The 2017 tax law limited SALT deductions to $10,000 a year, and members of Congress from high-tax states have been complaining since then that it penalizes (mostly wealthy) taxpayers in their states. But the truth is that any SALT deduction is a subsidy from low-tax states to high-tax states like New York and California. Here’s the problem: In the House, the majority is so slim that a handful of members can exert tremendous leverage. Members from New York and California muscled through an increase in the SALT deduction from $10,000 to $40,000, which increased the cost of the House bill by roughly $600 billion over 10 years. The Senate bill would keep the original $10,000 SALT deduction limit. This has already led one House member from high-tax New York to declare he would not accept “a penny less” than the $40,000 deduction and said if the Senate lowers the SALT deduction, he would “vote No and the bill will fail in the House.” Senate Majority Leader John Thune has said the $10,000 deduction cap is a “marker” for talks with House Republicans. He is confident they will find a compromise number that satisfies both sides. We’ll see if it’s enough. Another major area of contention is the Medicaid program. The House bill has some good provisions, like removing those who have no business receiving government benefits, including those here illegally. Requiring states to do a better job of ensuring everyone in the program is eligible (ineligible Medicaid recipients cost taxpayers $1.1 trillion over the last 10 years) allows us to focus resources on the most vulnerable. The Senate bill includes similar provisions, but it also takes much-needed steps to gradually lower the provider’s tax cap over five years from 6% to 3.5%. This would limit the states’ ability to game the system and push their costs onto federal taxpayers. What’s a provider tax, you ask? Watch this video by our friends at the Paragon Health Institute, and you will see why these taxes have been called a scam by Democrats and Republicans alike. Of course, states will howl about this provision, but it’s the right thing to do. Lastly, the Senate goes a little lighter on Joe Biden’s green energy taxpayer handouts. While it essentially tracks what the House did, many of the subsidies are phased out over several years instead of ending immediately. When subsidy provisions are allowed to stick around for a few years, future Congresses tend to renew them, and they never go away. But before we can even worry about what the House will think of all this, it still has to pass the Senate, and it may be very close. President Trump has stated he wants the bill on his desk for July Fourth, so now is the time to get a hold of your senator and tell them to get on with it. There is no time to lose. Let the Senate know you want the One Big Beautiful Bill to pass. It only takes a minute, and we’ll walk you through it. | 
