Update 876 – Reconciliation vs. Clock:
GOP Struggles to Meet Trump Deadline
Hill Republicans are currently racing to pass a massive reconciliation bill – coined the “One Big Beautiful Bill Act” (OBBB) – comprising much of Trump’s economic agenda for his second term. The problem? Trump’s relentless pressure to get the measure to his desk by July 4 — leaving Congress less than 10 days to navigate numerous procedural hurdles, complete and agree on text, and secure a majority for final passage – is an unrealistic, almost impossible, timeline. Leadership now plans to delay the July 4 recess until the bill passes, in an attempt to jam GOP dissenters.
The midterm perils are obvious for Republicans supporting OBBB and endorsing over $4 billion in tax cuts skewed towards the ultra wealthy, partially paid for by over $1 trillion in cuts to Medicaid and SNAP. Equally obvious is Trump’s willingness to weigh in roughly with dissenters. What procedural and political steps lie ahead for Congress? And what are the real-world implications of the bill? See below…
Best,
Dana
Background on Republican Reconciliation Bill
Coming to a crossroads is Republicans’ months-long effort to pass a massive bill through reconciliation — a privileged process that allows legislation to circumvent the Senate’s 60-vote filibuster threshold if it meets the strict rules of the process (more on this below). Reconciliation efforts are common when one party has a trifecta; Republicans used it to pass the Tax Cuts and Jobs Act (TCJA) in 2017, and Democrats used it to pass the American Rescue Plan (ARPA) in 2021 and the Inflation Reduction Act (IRA) in 2022.
This time around, congressional Republicans are primarily looking to the reconciliation process to pass key parts of President Donald Trump’s economic agenda, including several hundred billion in mandatory funding for immigration enforcement and defense, as well as trillions of dollars in tax cuts skewed towards the ultra-wealthy. The Institute on Taxation and Economic Policy (ITEP) projects that 69 percent of the tax cuts’ benefit will go to the top 20 percent of earners, while the bottom 20 percent of earners will receive only 1 percent of the benefit (based on House-passed OBBB):
Source: ITEP
Republicans plan to offset the cost of these priorities in part with historic cuts to healthcare (Medicaid) and food assistance (SNAP), which, combined, total over $1 trillion. The Congressional Budget Office (CBO) estimates that 16 million Americans will become uninsured and millions of Americans will lose some or all of their food assistance due to the provisions included in the Republicans’ initial reconciliation proposals (based on House-passed OBBB).
The House passed its version of the OBBB at the end of last month, and the Senate is currently considering its own version, which is still in flux. The Senate was originally expected to produce a markedly more moderate bill than the House. Instead, it chose to double down on Medicaid cuts and make some tax provisions permanent (e.g., business provisions), while limiting Trump’s populist “no tax on…” proposals and paring back the House’s State and Local Tax (SALT) deduction increase. The Senate bill also softens the repeal of IRA green energy tax credits and some cuts to SNAP, though these provisions are similarly harmful compared to the status quo.
The administration has signaled that it wants the bill to arrive at the President’s desk by July 4th. With both chambers originally slated for a recess next week, at a minimum, the House will now be required to stay in session to meet Trump’s deadline. All of the changes made in the Senate threaten support for the package both within the Senate and across the Capitol, leaving Republicans scrambling for something that can pass and go to the President.
Senate Process: the Byrd Bath
Outside of ongoing negotiations on specific provisions, the Senate is also facing difficulty on some fronts with meeting the strict rules of reconciliation, which could lead to significant shifts in the contents of the package. The most prominent guardrail on the reconciliation process is the Byrd rule, which outlaws “extraneous” provisions that:
- Fail to change outlays or revenues.
- Cause an increase in outlays or a decrease in revenues if the committee responsible has not met its reconciliation instructions included in a concurrent budget resolution.
- Fall outside the jurisdiction of the committee that submitted the provision.
- Make changes to outlays or revenues that are merely incidental to the overall purpose of the provision.
- Increase the federal deficit in any fiscal year beyond the 10-year period covered by the reconciliation measure.
- Propose changes to Social Security.
To ensure compliance with these requirements, the Senate conducts what is known as a “Byrd bath” before a reconciliation bill is considered on the floor. During this process, the Senate parliamentarian reviews the reconciliation bill’s provisions – often with both parties presenting a “case” for or against the provisions – to determine if any violate the Byrd rule (Senators may also challenge provisions during floor consideration of the measure). If the parliamentarian agrees that a provision is extraneous under the Byrd rule, it can be removed from the bill unless 60 senators vote to waive the rule for that provision. Provisions can be tweaked to comply with the Byrd rule, and non-extraneous provisions can pass by a simple majority.
Currently, the Senate parliamentarian is Elizabeth MacDonough, a Harry Reid appointee who has been in the position since 2012 and is widely regarded as fair and nonpartisan. Though the Byrd bath process is ongoing, MacDonough’s review of the Senate’s OBBB proposals has already resulted in considerable changes to the reconciliation package.
Several high-profile provisions have been ruled extraneous under the Byrd rule, potentially reshaping the scope and viability of the bill, including:
- Agriculture/SNAP – The parliamentarian ruled out a main source of savings included in the Agriculture title of the OBBB that would require states to pay a portion of SNAP benefit costs based on their programs’ error rates ($41 billion in estimated savings). This proposal has now been revised slightly to provide states with more notice of when they will be responsible for covering a portion of SNAP costs, and the revised version is awaiting approval from the parliamentarian. She also ruled against a provision that would revoke SNAP eligibility for immigrants who are not citizens or lawful permanent residents (e.g., refugees).
- Banking – The parliamentarian ruled that several provisions Republicans included in the Senate Banking Committee’s portion of the reconciliation package were extraneous, including provisions to zero out funding for the Consumer Financial Protection Bureau, reduce salary levels for some Federal Reserve staff, cut theTreasury Department’s Office of Financial Research, and dissolve the Public Company Accounting Oversight Board.
- Immigration – The parliamentarian also found that certain immigration provisions were impermissible. Among the provisions struck down, the Homeland Security and Governmental Affairs text that would have provided “$10 billion in grant funding to reimburse states for border security efforts during the Biden years.” Provisions related to state and local law enforcement grant eligibility, limitations on lawsuits against the federal government, and state and local authority to arrest noncitizens were also struck down.
While the Senate will work to “fix” these provisions, and the many others that did not pass the parliamentarian’s muster, some of the most significant rulings are still outstanding at the time of writing. This includes the Finance Committee’s text, which is arguably the most consequential as it contains tax and healthcare provisions.
One major ruling will be in whether or not the Senate will be able to use a “current policy baseline,” an account device/gimmick which would wipe out the cost of extending $3.7 trillion worth of TCJA provisions, despite the fact that they are scheduled to expire at the end of the year under current law. This budget maneuver would allow the Senate to argue that the over $4.2 trillion tax package costs less than $450 billion/10 years. As can be imagined, an adverse ruling on this front could have significant implications for the balance of the bill, which can’t add to the deficit outside the 10-year budget window.
Senate leadership could still choose to ignore or overrule the parliamentarian on some or all of these fronts, though Senate Majority Leader John Thune (R-SD) has signaled that he does not intend to do so.
Opposition Facing the OBBB
As the Senate steams ahead with the reconciliation process, much uncertainty remains surrounding opposition from both sides of the Republican party. Moderates in the House and Senate are concerned about the degree of cuts to healthcare and SNAP, while conservatives are wary of the bill’s deficit impact and the inclusion of a debt limit increase – something fiscal hawks rarely support. These sources of opposition underscore the difficulty congressional Republicans will have in meeting their self-imposed July 4 deadline.
Senate Opposition
Senate GOP moderates, including Senators Josh Hawley (R-MO), Lisa Murkowski (R-AK), Susan Collins (R-ME), Thom Tillis (R-NC), and Jerry Moran (R-KS), have been sounding the alarm on Medicaid cuts for months. Despite their concerns, the Senate went further than the House on its proposals for Medicaid cuts by strengthening restrictions on provider taxes and work requirements. This has led to opposition, especially as it relates to the potential impact these reforms could have on rural hospitals. As a potential fix, the Senate is exploring a proposal from Senator Collins to create a $100 billion relief fund for rural hospitals, nursing homes, and community health centers. But this idea does not seem sufficient enough to gain the support of Senators Tillis or Hawley – and potentially Collins herself – who are wholly opposed to the Senate’s more strict cap on provider taxes that fund state Medicaid programs. Recent reporting also indicates that Senate leadership may pare back the relief fund to $15 billion, well short of moderate Senators’ demands.
Conversely, fiscal conservatives – namely, Senators Ron Johnson (R-WI) and Rand Paul (R-KY) – have stated they oppose the package. Johnson, who is primarily concerned about the bill’s significant impact on the deficit, went as far as to release his own budget report last week outlining the ways in which the OBBB does not address Washington’s “spending problem.” Paul shares the same concerns but has also stated his opposition to the $5 trillion debt limit increase ($4 trillion in the House version) included in the OBBB to address the looming default crisis. It is unclear that leadership will be able to win over fiscal conservatives in the Senate, especially considering the expected changing/softening of provisions that have been nixed by the parliamentarian and concessions moderates are demanding.
House Opposition
Before remarking on House opposition, it’s crucial to keep in mind that the House’s version of the bill only passed by one vote (215-214), with Representatives Warren Davidson (R-OH) and Thomas Massie (R-KY) voting no and House Freedom Caucus Chair Andy Harris (R-MD) voting present. Moderates voiced opposition ahead of the vote, but ultimately caved and supported the measure. In short, the House had found about as careful a balance as possible to push the OBBB through. Now, the Senate has made significant changes to the bill, reigniting opposition from both groups.
As for conservative members of the House GOP, several have directly stated they oppose the OBBB this week. Yesterday, Representative Eric Burlison (R-MO) called the Senate proposal “watered-down” and “another swamp product,” stating that he would vote no “if leadership tries to jam it through.” HFC Chair Andy Harris (R-MD) and HFC member Chip Roy (R-TX) made similar statements, in addition to other members of their Caucus.
On the other hand, 16 moderate House Republicans, led by Representative David Valadeo (R-CA), sent a letter to leadership yesterday advocating against the more significant Medicaid cuts included in the Senate proposal. The group cited the Senate’s changes to the curtailment of provider taxes and state directed payments as their concerns, but came well short of threatening to vote no on the House floor.
Additionally, a group of House moderates from blue states – including some of the members who signed onto the letter mentioned above – are concerned about the cap on the State and Local Tax (SALT) deduction. This is a problem that is unique to the House, as there are no Republican Senators who represent blue states. Before passing the House version of the OBBB, these moderates struck a deal for a $40,000 SALT cap for incomes under $250,000 (single filers) and $500,000 (joint filers) at a projected 10-year cost of around $350 billion. The Senate chose to roll back this deal, re-proposing the current $10,000 SALT cap, which is scheduled to expire at the end of the year. Negotiations are underway to find a compromise, with one potential option being to keep the $40,000 cap on the deduction while lowering the income threshold. This would lower the cost of the provision – the main goal of the Senate – but is likely not enough to get the support of SALT caucus Republicans who already feel like they compromised on the initial deal. Yesterday, Treasury Secretary Scott Bessent claimed that this issue would be resolved within “24-48 hours,” though this issue currently remains unresolved.
Process Ahead
As is outlined above, there are myriad unresolved issues that Republican leadership will need to address if it wants to pass the OBBB by Trump’s July 4 deadline. Not only will Republicans have to navigate the “no vote” threats in each chamber, but they will also have to address the reality that appeasing the concerns of any one group could endanger the support of another. Congress had originally been scheduled to go on recess next week, complicating the already-tight timeline.
It appears for now that Senate Majority Leader Thune is not slowing down to resolve these disputes. Instead, he has made clear that the Senate will remain in session until the bill is passed, regardless of ongoing opposition from within his own party. Thune has publicly stated his “confidence” that the legislation will be approved by Congress and signed by the president before the July 4 deadline. He has also been explicit that, once the Senate acts, the House will need to get on board, signaling little appetite for further concessions or prolonged negotiations. Trump stated yesterday that “NO ONE GOES ON VACATION UNTIL IT’S DONE” in reference to the Independence Day recess next week, and Thune seems to think this demand will be enough to jam his Senate and the House into compliance.
The Senate will now work to finish drafting proposals based on parliamentary rulings and ongoing negotiations ahead of floor proceedings that are expected to begin on Friday. After up to 20 hours of debate begins the hours-long “vote-a-rama” on amendments. Senators are allowed to offer an unlimited number of amendments, dozens of which will be considered in rapid succession. This process is very time-intensive, and the Senate isn’t expected to finish its process until Sunday at the earliest. If it is successful, then the House will be the only thing standing between passage of a wide cross-section of Trump’s policy agenda, maybe motivating dissenters to cave to the Hill leadership and the administration.
But in the case that the House does not accept the proposal sent over by the Senate, it can either ping-pong an amended proposal back to the Senate for its consideration, or a conference committee could be used to resolve differences between the two chambers. Given the high stakes for Republicans and demands on the timeline from Trump, these options are currently not likely and have been ruled out by Republican leadership. Members of the GOP may benefit by currying favor with the administration in dropping their demands, though the same can’t be said of the majority of voters who oppose the package.