House Speaker Mike Johnson, R-La., has told Republicans that he is pursuing a slimmed-down package of tax cuts over concerns that not enough spending cuts could be found to offset the original $4.5 trillion proposal, Politico reported Thursday.
Instead, Republicans will seek a $4 trillion package with $1.5 trillion in cuts, according to the report. Republicans would need $2 trillion in offsets to move forward with the $4.5 trillion tax package.
“There is no way we’re going to hit $2 trillion,” one senior GOP aide told Politico.
Further, Politico reported that it will be a struggle to hit $1.5 trillion in cuts.
House Ways and Means Committee tax writers had already begun working on the scaled-down package, Politico reported Wednesday.
The lower ceiling, however, will not accommodate making President Donald Trump’s 2017 tax cuts permanent, in addition to the domestic policy agenda he ran on, according to Politico.
“To fully extend and build upon the 2017 tax cuts, this means that the reconciliation bill must include at least $2 trillion in verifiable savings either through spending reductions or scaling back the size of the tax package,” 32 House fiscal conservatives told party leaders in a letter on Wednesday.
Further complicating efforts is the stand that blue state Republicans are taking in order to make a deal on state and local tax, or SALT, deductions.
Rep. Mike Lawler, R-N.Y., one of the few Republicans in Congress who represent a district former Vice President Kamala Harris won in 2024, said if there is not a fix to SALT, there will be no bill.
A cap on SALT will disappear in 2026 unless Congress passes legislation, which is what Lawler and some other Republicans are aiming for, lessening their incentive to make a deal.
“If nothing passes, SALT comes back unlimited, so it is on leadership to offer a number and negotiate from there,” Lawler said. “We are not negotiating against ourselves.”
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