U.S. Senate Majority Leader John Thune and U.S. House Speaker Mike Johnson hold a press conference on the Republican budget resolution at the U.S. Capitol on April 10, 2025. The Republican leaders each face a challenge in uniting their divided conferences to pass a massive tax and spending plan supported by President Donald Trump. (Photo by Kayla Bartkowski/Getty Images)
WASHINGTON — Republicans in Congress have a difficult few months ahead of them as they look to broker agreement within their exceptionally narrow majority on policy issues that have already begun to divide centrists from far-right members of the party.
The negotiations will be the first test of the sort for Speaker Mike Johnson and Senate Majority Leader John Thune, who weren’t in the top posts eight years ago when the GOP passed its last reconciliation package.
Tax law and funding cuts to Medicaid are the issues most likely to prevent one “big, beautiful bill” from moving through both chambers and reaching President Donald Trump’s desk.
Republican leaders will also need to be cautious as the package takes shape about what types of proposals their more vulnerable members vote on, especially if they hope to hold onto at least one chamber of Congress following next year’s midterm elections.
“The swing-district Republicans are in a tougher spot because their voters do want to see some of those tax cuts extended, but they don’t want to see it at the expense of programs like Medicaid,” said Dr. Ben Sommers, Huntley Quelch professor of health care economics at Harvard.
“And so they’re walking a tightrope,” he said. “And at least until there’s a final bill on the floor, a lot of them are going to just keep pushing that final decision down the road and hope that something else happens and that they don’t have to make that tough call.”
The decision to bundle together a permanent extension of the 2017 tax law, hundreds of billions in new spending on border security and defense, a rewrite of the nation’s energy policy and spending cuts means that centrist Republicans will have to cast one take-it-or-leave-it vote.
Breaking up the sweeping package into two or more bills would have given at-risk Republicans the opportunity for more tailored votes, but GOP leaders ultimately rejected that idea — a choice that will put moderates under increasing pressure as the legislation takes shape in the coming weeks.
Democrats in both chambers are expected to unanimously oppose the package.
Normally that would present a challenge in the Senate, where 60 votes are usually needed to limit debate on a bill and move onto final passage. But GOP leaders are using the reconciliation process to pass their bill, meaning they only need the support of a simple majority in the Senate.
Slim margins
House committee chairs are expected to release and mark up 11 bills after the chamber returns from a two-week break in late April, though that’s only the first step.
Once the pieces are all bundled into one package, it will need to get across the House floor without losing more than three Republican votes, a much narrower threshold than the dozen GOP lawmakers in that chamber who voted against the final version of the 2017 tax law.
Republican leaders will then need to keep the party from making significant changes to the package in the Senate, where lawmakers will be able to offer as many amendments as they want when the bill comes to the floor.
That vote-a-rama will test party unity, with Democrats likely to propose amendments re-writing or eliminating specific sections of the bill — especially those addressing tax provisions benefiting the wealthy or corporations, and Medicaid spending cuts.
If more than three Senate Republicans break from the party to alter various elements, it could endanger final approval. However, if GOP senators from swing states vote to keep unpopular provisions in the bill, it could lead to them losing their next reelection bid to a Democrat.
Difference of opinion on Medicaid
The disagreement between centrist Republicans and far-right lawmakers over potential spending cuts to Medicaid is already on full display.
During floor debate on the budget resolution that cleared the way for Republicans to write the massive reconciliation package, Texas Rep. Chip Roy excoriated the state-federal health program for lower income Americans and some people with disabilities.
“Medicaid is debilitating the vulnerable, not helping them,” Roy said. “We are shoveling money out to the able-bodied on the back of expansion of Obamacare.”
On the other ideological side of the conference, a group of 14 centrist House Republicans sent a letter to GOP leaders a few days after voting to adopt the budget resolution to announce they “cannot and will not support a final reconciliation bill that includes any reduction in Medicaid coverage for vulnerable populations.”
“Cuts to Medicaid also threaten the viability of hospitals, nursing homes, and safety-net providers nationwide,” they wrote. “Many hospitals — particularly in rural and underserved areas — rely heavily on Medicaid funding, with some receiving over half their revenue from the program alone.
“Providers in these areas are especially at risk of closure, with many unable to recover. When hospitals close, it affects all constituents, regardless of healthcare coverage.”
Failed Obamacare repeal
Republican leaders in Congress will want to avoid a repeat of the last time the party tried to overhaul health care in a reconciliation package.
During Trump’s first term, following years of GOP politicians pledging to repeal and replace the Affordable Care Act, also known as Obamacare, they sought to do just that through the same complex reconciliation process they’re using now.
Ultimately, twenty Republicans voted against the bill in the House and three GOP senators — Alaska’s Lisa Murkowski, Arizona’s John McCain and Maine’s Susan Collins — blocked that chamber’s repeal-and-replace bill.
Collins said in a floor speech at the time she voted against the House’s version of the bill for several reasons, including that it would have made “sweeping changes to the Medicaid program — an important safety net that for more than 50 years has helped poor and disabled individuals, including children and low-income seniors, receive health care.”
Murkowski wrote in a statement that she voted against the Senate’s so-called “skinny” repeal bill because “both sides must do better on process and substance.”
“I know that access to affordable care is a challenge for so many. I hear from fishermen who can’t afford the coverage that they have, small business owners who can’t afford insurance at all, and those who have gained coverage for the first time in their life,” Murkowski wrote. “These Alaskans have shared their anxiety that their personal situation may be made worse under the legislation considered this week.”
Medicaid cuts could hurt state budgets
GOP lawmakers in Congress won’t be the only members of the party that leaders need to keep in the fold. Republican governors may not have a vote in either chamber, but they do have considerable sway with their congressional delegations and many red states have a substantial percentage of their Medicaid programs covered by federal dollars.
Nevada Gov. Joe Lombardo released a letter last month seeking to assuage fears about potential federal cuts to Medicaid, writing that he was “actively engaged in conversations with the White House and others in the federal government to relay our state’s concerns.”
“An abrupt reduction in federal funding would not only disrupt care for those who rely on Medicaid, but would also destabilize public and private healthcare providers, leading to workforce reductions, service limitations, and financial strain on already overburdened health care facilities,” Lombardo wrote.
National Governors Association Chair Jared Polis, a Colorado Democrat, and Vice Chair Kevin Stitt, an Oklahoma Republican, wrote in a joint statement released in March that the organization is “committed to advocating for a robust and efficient health and human services system, including Medicaid.”
“Without consultation and proper planning, Congressionally proposed reductions to Medicaid would impact state budgets, rural hospitals and health care service providers,” they wrote. “It is necessary for Governors to have a seat at the table when discussing any reforms and cuts to Medicaid funding.”
Federal spending cuts to Medicaid could lead some of the 40 states that have expanded the program under Obamacare to roll it back, though Missouri, Oklahoma and South Dakota have the expansion in their constitutions, making the impact of congressional action more complicated for their budgets and residents.
Leighton Ku, professor of health policy and management at The George Washington University, said during an interview that even though GOP governors aren’t members of Congress, they still hold “powerful influence.”
“We’re talking about deep cuts in federal spending that will have profound effects on state economies and state employment,” Ku said. “Governors, particularly those who expanded Medicaid, should feel fairly nervous about: What are the implications for their states in terms of both their political futures as well as what it will do to their state economies?”
“Again, we’re talking about the possibility of maybe somewhere on the order of a million jobs being lost simply because of the Medicaid cuts,” he added. “And that should cause some trepidation among governors.”
Republicans in Congress, Ku said, are trying to reduce spending. But when it comes to Medicaid, where the cost of administering the program is split between states and the federal government, any change to the federal share will come at the expense of the states.
“So the states end up being losers,” he said. “And this will cause states’ governors some unease. Again, it depends on where they lie politically: They may still be willing to accept cuts if it fits in with their ideologies.”
State and local taxes
Republicans also find themselves in a sticky situation when it comes to a major tax provision set to expire at the end of 2025: a limit on the amount of state and local taxes a taxpayer can deduct on their federal tax return. The limit is often simply referred to as the SALT cap.
Like proposed Medicaid cuts, the SALT debate has potential to change the calculus of Republicans willing to vote for the one large reconciliation bill.
For many years prior to the 2017 Tax Cuts and Jobs Act, taxpayers were able to take full advantage of deducting state and local taxes from their federal taxable income. But in that law, GOP lawmakers changed course and enacted a $10,000 cap on the SALT deduction to raise revenue to cover some of the law’s massive tax breaks.
The ability to deduct all eligible state and local taxes on federal tax returns was a win for wealthy households located in states and municipalities with steeper taxes.
At the time, Democrats, who wholesale opposed Trump’s tax agenda, saw the SALT cap as an attack on high-earning, high-tax blue states. But the SALT cap drew ire from across the aisle as well, said Kyle Pomerleau, senior fellow and federal tax policy expert for the American Enterprise Institute, a conservative think tank.
“The original bill also had a few Republicans that didn’t vote for it because of the cap. So this has been controversial to some degree from the very beginning,” Pomerleau said.
With such a narrow majority in the House, Republicans from high-tax areas, including those representing New York’s Long Island and Staten Island and California’s wealthy suburbs, will have leverage in the coming debate.
“Republicans generally don’t come from those states. There’s only a handful of them. But that brings us back to the vote margin that Republicans have,” Pomerleau said. “They have a lot of power this time around to really get what they want. These lawmakers who represent people that are concerned about this cap are going to want that cap raised.”
The issue is one of the few tax topics not polarized by party because it is defined by location, said Garrett Watson, director of policy analysis at the Tax Foundation, a think tank that generally supports lower taxes.
“It’s an interesting sort of debate, just because a lot of tax policy debates have political, partisan, ideological components, right? That’s somewhat predictable,” Watson said. “What’s interesting about SALT is actually it’s also a strong geographic story.”
Watson published the Tax Foundation’s 2023 county-by-county maps of state and local taxes paid as well as deducted from federal taxes in 2020. The data showed the top reporting counties were concentrated in California and New York.
Raising cap would cost federal government
But many Republicans would be happy if the cap on SALT deductions stayed in place to offset the cost of extending the 2017 tax cuts.
Raising the cap beyond the current $10,000 limit could reduce federal revenue between $200 billion to $1.2 trillion over the next decade, depending on what level Congress decides, according to a January analysis from the Urban-Brookings Tax Policy Center, a nonpartisan think tank that leans center-left.
In other words, households deducting more from their federal taxable income means the federal government reaping less revenue.
“Just to give you some order of magnitude, we looked at what would happen if you raised the cap from $10,000 to $20,000. That would cost (the federal government) $250 billion over 10 years. That’s a big number,” said Howard Gleckman, a senior fellow at the Tax Policy Center.
Deficit hawks, like Roy of Texas and Rep. Thomas Massie of Kentucky, have spoken out in recent months against raising the cap.
And while more federal revenue is lost with each dollar the cap increases, the benefit mainly goes to high-income earners, according to another Tax Policy Center analysis.
“We estimated when you raise the (SALT cap) from $10,000 to $20,000, 93% of the benefit goes to the top …20% , which are people making more than $200,000,” Gleckman said. “And half of it goes to people in the top 5% who are people who make more than $400,000.”
Most taxpayers take the standard deduction, which in 2025 sits at $15,000 for single taxpayers or $30,000 for married taxpayers filing jointly.
“That’s why the vast majority of people get no benefit from this. It’s only people who make a lot of money, who itemize, and who pay a lot of tax who get caught up in the cap,” Gleckman said.
But they may have an outsized voice as Congress hammers out its reconciliation bill in the coming months.
Johnson, a Louisiana Republican whose constituents would not benefit from raising the SALT cap, will have a “tough balancing act,” Gleckman said.
“Mike Johnson looks at the narrow majority he has in the House, and he sees if he loses half a dozen seats from places like New York and California because he doesn’t fix the cap then he could not be speaker anymore,” he said.
Republicans in the bipartisan SALT caucus include Reps. Mike Lawler, Nick LaLota, Andrew Garbarino and Nicole Malliotakis, all representing New York, as well as Tom Kean Jr. of New Jersey, and Young Kim of California.
Rachel Snyderman, managing director of economic policy at the Bipartisan Policy Center, said “complicated political tetris” is likely to emerge as lawmakers negotiate the reconciliation bill.
“The caucus that has called for (the cap’s) elimination over the past years has only gotten louder and more vocal and see this year as the opportunity to flex their muscle,” Snyderman said.
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