If the Senate modifies its proposal for a state and local tax (SALT) credit limit, moderate House Republicans from high-tax blue states are cautioning that Senators may not approve the “big and beautiful bill” in its final form.
This warning from the House emerged shortly after Senate Majority Leader John Thune (R-S.D.) informed reporters of likely adjustments to the SALT provisions as part of several changes to the extensive legislation.
The House bill aims to raise the SALT deduction limit to $40,000, quadrupling the current $10,000 cap. Several moderate House members from New York, New Jersey, and California are stating that their support for the bill hinges on substantial SALT relief.
Members are now warning that changes made to these provisions could hinder the bill’s progress in the House of Representatives once they are sent back from the Senate.
“If the Senate modifies the House’s $40,000 SALT agreement, it’s like digging up buried radioactive waste. I shared this on social platform X. It’s better to leave it as is,” said one member.
He went on to clarify his views, explaining that it took four months for the House to reach a compromise regarding SALT and related regulations. Altering the agreement would complicate and prolong the process that was painstakingly negotiated.
“I urge them to keep the bill intact, and I respect the Senate’s prerogatives,” he added.
Another member of the group, Rep. Mike Lawler (R-N.Y.), was more succinct: “Let’s be clear – SALT, no trade.”
“If the Senate changes the $40,000 figure we’ve negotiated, it will destabilize the bill’s final passage,” Lawler said. I posted about it on X.
Speaker Mike Johnson (R-La.), a crucial player in the House’s SALT negotiations, reported that he spoke with members of the Caucus on Wednesday, indicating that Thune would signal changes to their provisions and potentially introduce a proposal in the Senate.
“I communicated with the SALT Caucus on the floor and will relay that to the Senate. Once again, it’s sensitive. We need to preserve the balance we’ve struck in the House,” Johnson told reporters. “It took me nearly a year to reach that point, so I don’t intend to throw it away.”
When asked if there was any flexibility around the $40,000 deduction cap, the Speaker responded, “I’m looking for it. We’ll see.”
The SALT deduction cap was always anticipated to be contentious in the Senate.
While numerous vulnerable Republicans in the House are attentive to SALT, Senate Republicans do not represent constituents from New York, New Jersey, or California.
The SALT issue surfaced during a recent Senate Republican meeting, where some expressed a desire to lower the cap, yet remained cautious about causing issues for Johnson.
“Our aim is not to create problems for the House, but we understand the Senate will want to modify the bill,” Sen. Mike Rounds (R-S.D.) noted.
One Senator expressed a belief that enticing some senators to back a lower ceiling might be challenging, yet the smoothest course might be for the upper chamber to defer to Johnson.
“That might be easier said than done,” a Senate GOP member remarked. “It could completely unravel the bill.”
The Senator highlighted that reducing the ceiling from $40,000 to $30,000 could push some House Republicans to vote against the bill. However, he also suggested that House SALT Republicans might be bluffing.
“That might get your attention because otherwise, I’d say, ‘I’ll oppose the bill and, as a Republican, I’ll vote for a $4 trillion tax increase,’” the member added. “That’s the original dilemma.”
Thune indicated the Senate could modify SALT provisions, though Sen. Markwayne Mullin (R-Okla.), a former House member with significant connectivity between the chambers, disagreed.
“It was a challenging fight over there,” Mullin remarked, alluding to an anticipated cost of approximately $300 billion. “It’s a large figure, but it was essential for passing the bill. We don’t want to do anything that jeopardizes its success.”
“The body here will ultimately make its decision,” he continued. “I’m somewhat skeptical about overshooting SALT.”
House Republicans within the SALT Caucus assert they are not bluffing.
“I wouldn’t gamble on a few perplexed Republicans, including some disappointed New Yorkers,” Lawler said. “I won’t bet on us.”
Lawler responded that “it’s reasonable to consider,” as the Senate hinted that the House would reject the bill with a reduced deduction cap.
Rep. Young Kim (R-Calif.), another SALT Caucus member, expressed confidence in the process.
“Leadership is actively working and engaging in the Senate, and I’m sure many of the elements we’ve secured at home are still viable,” Kim stated. “So, we won’t comment on how we’ll vote until we see the final package.”
“We’re already collaborating to ensure that what we passed in the House is preserved in the Senate version,” she continued.
When asked if there was room for negotiation regarding the SALT deal, Lawler reiterated, “I want to see what they actually bring back. I don’t understand the rationale behind disrupting what is effectively the product of considerable labor, struggle, and ultimately compromise.”
When the reporter noted that his comments weren’t entirely definitive, he replied: “I want them to raise it. If they came to us with $50,000, I’d support it immediately.”
Source: thehill.com