House Republican leaders have a mega-problem that could be made much worse after next year’s midterm elections, should they go according to history and the party in power in the White House loses seats: Right now, the GOP caucus already isn’t big enough to allow much margin of error on any legislation, but especially those that are most important to the agenda President Trump and other Republicans ran on.
With a narrow 220-213 majority, Speaker Mike Johnson must carefully navigate at least two—and possibly three—major issues to secure enough votes for passage in the House. The debate over Medicaid cuts remains unresolved, as hardline budget hawks push for deep reductions, while moderates argue the cuts need to be more targeted and politically sustainable. On Friday, a group of Republicans from blue states issued a clear warning: they would sink the entire reconciliation package unless it includes relief for their constituents on the state and local tax (SALT) deduction.
The 2017 tax reform capped the SALT deduction at $10,000 per filer, a change that disproportionately impacted upper-middle-class and wealthy residents in high-tax states. For many blue-state Republicans, expanding the SALT deduction has become a political imperative—and several have already signaled they are prepared to derail President Trump’s “Big, Beautiful Bill” if the cap isn’t lifted to deliver on campaign promises to their voters.
Rep. Nick LaLota, Republican of New York, has made it crystal clear what he plans to do. “There’s a green ‘yes’ button and there’s a red ‘no’ button to press. Come time, if there’s not enough SALT in this bill, I’m pressing the red ‘no’ button,” he said. “It is a hill I am willing to stake my entire congressional career on.” The challenge for the rest of the GOP caucus is that raising the SALT deduction cap would either increase the federal deficit or force a reduction in the scope of Trump’s tax cuts when they come up for renewal later this year. At this point, there’s been no meaningful progress toward a resolution.
The New York Times:
Republicans are juggling several other big-ticket tax cuts, namely the roughly $4 trillion cost of extending the rest of the 2017 tax bill, and many do not want to dedicate significant resources to what they see as a handout to rich residents of blue states. In the House, lawmakers have given themselves a $4.5 trillion allowance for cutting taxes, a sum that could shrink if the party does not also cut $2 trillion in spending.
“My bottom line is, we need to have a fiscally responsible package,” said Representative Greg Murphy, Republican of North Carolina. “It is pathetic that we have to bail out high-tax states.”
Republicans created the $10,000 limit in the first place to help offset the cost of the tax cuts they passed in 2017, including lowering individual income rates and creating a larger standard deduction. Experts across the ideological spectrum support the SALT cap and even favor eliminating the state and local tax deduction entirely.
The core issue is that families with two children living in high-cost states like New York and New Jersey rely on the extra savings from a higher SALT deduction to cover essential middle-class expenses, including college tuition. Swing-district Republicans have made explicit promises to deliver that relief, so failing to do so is a political non-starter.
This leaves Johnson in a difficult position. He’s already under pressure from fiscal hardliners demanding $2 trillion in spending cuts over the next decade, with some threatening to walk away from the bill if their demands aren’t met. As negotiations near their conclusion, it’s likely that Donald Trump will need to step in—either by applying pressure or brokering a deal—to bring the fractured GOP caucus into alignment.
