Campaign promises: Hawley speaks to members of the media in Washington. The Missouri Republican senator says the bill needs a lot of work and that it will close hospitals in rural America. — Bloomberg
WASHINGTON: Senate Republicans propose to cut trillions of US dollars in taxes for households and businesses in their version of President Donald Trump’s signature economic package, a plan that comes at the expense of curbing health coverage for some low-income Americans and adding to US deficits.
The bill would preserve Trump’s first-term tax cuts and create several new breaks that he championed on the campaign trail, including eliminating taxes on tips.
To offset the cost, senators are proposing to repeal some clean energy tax credits and scale back Medicaid benefits spending more deeply than in the House-passed bill.
Within hours of the bill’s release, cracks were forming among Republicans about the scope of the Medicaid cuts.
“This bill needs a lot of work,” US Senator Josh Hawley, a Missouri Republican, told reporters Monday. “This will close hospitals in rural America.”
Republicans can only afford to lose three votes in the Senate, putting pressure on Republican leaders to broker compromises to push Trump’s agenda through the chamber.
The bill expands some tax breaks while raising the debt ceiling by US$5 trillion, instead of US$4 trillion in the House-passed measure.
It largely hews to the House bill as Senate Republican leaders aim to avoid a protracted negotiation on the substance of the legislation that could risk the US defaulting on a payment obligation when the Treasury Department can no longer employ extraordinary debt limit measures, as soon as mid-August.
Notably absent from the bill is a deal on the state and local tax (Salt) deduction, one of the most contentious issues facing lawmakers in the negotiations.
The draft includes the current US$10,000 Salt cap as a placeholder while lawmakers continue to debate the politically important write-off.
“We understand that it’s a negotiation,” Senate Majority Leader John Thune told reporters on Monday.
“Obviously, there had to be some marker. We are prepared to have discussions with our colleagues here in the Senate and figure out a landing spot.”
Thune added that his chamber plans to vote on the bill next week in order to meet a July 4 deadline to send the legislation to Trump.
Finance Committee chairman Mike Crapo and other Senate Republicans have pushed to reduce the US$40,000 cap included in the House version.
House lawmakers representing high-tax states have threatened to block the measure if the cap is lowered.
Current law allows only a US$10,000 cap for individuals and couples, though the limit is set to expire at the end of the year.
The committee draft’s biggest change is making permanent three business tax breaks that in the House version expire after 2029.
That includes the research and development deduction, a provision expanding debt interest write-offs and expensing for new equipment, including most machinery and factories.
The interest expensing changes benefit banks, while research-heavy sectors like pharmaceuticals and information technology should benefit from the longer research and development break. — Bloomberg
