Senate weighs undoing House’s ‘big, beautiful’ deal on SALT

“I think there’s going to have to be some adjustment,” Senate Majority Leader John Thune (R-SD) said on Wednesday. “You know, senators just are in a very different place, as you know, than the House is on that.”

The comment marks the latest policy fault line for Republicans, who must resolve a spate of disagreements over Medicaid, green energy tax credits, and more before the bill can be sent to Trump’s desk.

Except the SALT cap is the rare issue that virtually unites Senate Republicans. None of them represent the blue states where higher-income earners want to see the exemption restored to its pre-2017 levels, making the cap a rare chamber vs. chamber dispute.

Thune’s comment set off a wave of upset by New York Republicans in the House, with Rep. Nick LaLota (R-NY) comparing the change to digging up radioactive waste.

“The 120 days or so that we fiercely negotiated and ultimately compromised on a number was at times very painful,” LaLota told the Washington Examiner. “To change that compromise number would be to unearth a radioactive material that’s safely buried that nobody should want to talk about or change or disrupt.”

Speaker Mike Johnson (R-LA) later huddled on the House floor with members of the SALT Caucus to assure them he would speak with Senate leadership about the difficulty of reaching a compromise on the cap.

In interviews with almost a half-dozen members of the Senate Finance Committee, Republicans acknowledged that Johnson’s three-seat majority will dictate what can be changed, including on SALT.

The legislation was still being negotiated hours before it was brought to the floor for a House vote, with Johnson eventually relenting to the $40,000 figure after a wave of last-minute bartering.

“I think everything we do on the tax bill — we got to keep in the back of our mind that it only passed by one vote in the House and has got to pass the House again,” said Sen. Chuck Grassley (R-IA), a senior member of the committee.

But Republicans also reject the notion that the SALT deal should go untouched. The cap could rise somewhere below the $40,000 threshold but still higher than the $10,000 set in Trump’s 2017 tax law, though the exact number is still under discussion.

Notably, the Trump White House put raising the SALT cap as one of its tax priorities heading into reconciliation when it released a list back in February.

“I think generally, there’s a concern with the level that they did,” said Sen. Thom Tillis (R-NC), one of the Senate tax writers. “I understand why they did it, so we’re just trying to figure out if there’s something short of that that still will be well-received when we go back — not as well-received as what they sent us, but this is the art of the compromise.”

The Senate is taking the same approach on other points of friction. Tillis is one of several Republicans balking at a last-minute concession handed to House fiscal hawks: a quicker phaseout of the Biden-era green energy tax credits.

Republicans on the Senate Agriculture Committee are also concerned by the House plan to shift the cost of food stamps further onto states.

Each of these provisions could be tweaked or reversed to allow for passage in the Senate, where Thune has his own three-seat majority to navigate. But SALT Caucus members are preemptively warning that any change risks unraveling the entire bill once it gets back to the House.

“In New York, you’d call it a third rail,” said Rep. Nicole Malliotakis (R-NY). “And if you mess with SALT, you’re messing with the entire legislation.”

Fiscal hawks have delivered similar warnings over the spending reductions in the tax bill, which total somewhere over $1 trillion across 10 years.

LaLota said he wasn’t “offended” by the Senate weighing different ideas, and Thune could ultimately have a light touch after conversations with both Johnson and the White House.

“Let’s see what they actually do in terms of legislation,” LaLota said.

But SALT Republicans also risk being jammed with a lower cap due to how quickly Trump wants the bill on his desk. The legislation includes a hike in the federal debt ceiling, predicted to be breached sometime in August.

For that reason, Treasury Secretary Scott Bessent has asked for the bill to pass by mid-July at the latest.

“Whether it’s $40, $30, $20,000 — they’re all greater than $10,000, and I think that if we were to lower the $40,000 to a number between $20 and $40 and give the moderates or the blue-state Republicans in the House a binary choice, I don’t see how they’d vote no, but they’d have to explain that,” said Sen. Kevin Cramer (R-ND).

MUSK CALLS FOR REPUBLICANS TO ‘KILL’ TRUMP’S ‘BIG, BEAUTIFUL BILL’

Senate tax writers got their latest chance to hash out the finer details of the megabill at the White House on Wednesday as Thune prepares for a floor vote in late June.

Asked about the SALT provision, Thune told reporters after the meeting that Trump understands the delicate balance in both the House and Senate, again teasing that the cap would have to be lowered. He called the $10,000 limit imposed as part of the 2017 Tax Cuts and Jobs Act one of its “best reforms.”