Pity Speaker Mike Johnson this morning.
Not only does he have to deal with Elon Musk trying to sabotage the “big, beautiful bill,” Johnson is now staring down Senate tax writers who are doubling down on threats to scale back his carefully negotiated deal to raise the state and local tax deduction cap.
Senate Finance Republicans left the White House on Wednesday without decisions on key tax provisions in the bill. But two things are clear: Senators want to make President Donald Trump’s business tax incentives permanent, not just extend them for five years as the House did. And to help pay the roughly half-trillion-dollar price, they’re ready to carve up the House’s deal to quadruple the SALT deduction limit.
SALT Republicans don’t have the same leverage in the Senate that they do in the House — because they simply don’t exist in the other chamber.
“There’s not a single [Republican] senator from New York or New Jersey or California,” said Finance Chair Mike Crapo (R-Idaho). That means there’s not much appetite “to do $353 billion for states that, basically, the other states subsidize.”
But Senate Republicans are keenly aware of the House’s precarious math problem. If they send a package back to the House with significant SALT changes, it could derail the timeline for Trump’s biggest legislative priority.
“We are sensitive to the fact that, you know, the speaker has pretty narrow margins, and there’s only so much that he can do to keep his coalition together,” Sen. Todd Young (R-Ind.) told reporters. “At the same time it wouldn’t surprise people that the Senate would like to improve on their handiwork.”
Where’s Trump? The president on Wednesday didn’t directly tell lawmakers not to meddle with the House’s SALT deal. But he, too, is playing the numbers game. “He said, ‘You do this, do we lose three votes here? If you do that, do you lose three votes here?’” Sen. Ron Johnson (R-Wis.) told reporters after the meeting.
Senate Majority Leader John Thune also conceded the difficult calculus on SALT, telling reporters “we understand that it’s about 51 and 218” and “we will work with our House counterparts and the White House” to move the megabill.
There’s been a breakthrough elsewhere, though: With Commerce preparing to release its draft bill Thursday, Sen. Mike Rounds (R-S.D.) told POLITICO on Wednesday that he’s satisfied a planned spectrum auction will protect national security, with specific frequencies used by the military shielded through 2034.
One potential wrinkle: Rounds later suggested to POLITICO that the deal that was still being finalized Wednesday could look to free up other frequencies “that the business community is going to be concerned with.”
What else we’re watching:
— Appropriations moving: Speaker Johnson plans to meet Thursday with top GOP appropriators about what funding totals to use in drafting the dozen government funding bills they’ll write this summer. House Appropriations is forging ahead with markups Thursday on two of the 12 bills, even before GOP leaders and his dozen subcommittee chairs — “the cardinals” — have settled on numbers for the full slate.
— Senate Banking meeting: Senate Banking Republicans will propose provisions that would change the pay scale for Federal Reserve employees and zero out funding the Consumer Financial Protection Bureau as part of the Senate version of the GOP megabill, according to a committee staff memo obtained by POLITICO. Banking Republicans are scheduled to meet Thursday morning to discuss the proposal.
— Lutnick on the Hill (again): Commerce Secretary Howard Lutnick is back on Capitol Hill on Thursday to testify in front of House Appropriations. Expect him to be back in the hot seat after Sen. John Kennedy (R-La.) grilled him Wednesday over the Trump administration’s tariffs.
Jasper Goodman, John Hendel and Jennifer Scholtes contributed to this report.
