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A House Budget Committee vote on a major bill to support President Donald Trump‘s agenda faced opposition on Friday. It marked the first legislative defeat of Trump’s second term in the White House, with 16 representatives in favor and 21 opposed.
Dubbed by Trump as “one big, beautiful bill,” the package sought to extend his first-term tax cuts that are set to expire in 2025. The projected cost of the cuts were $3.72 trillion over 10 years, according to figures from the Joint Committee on Taxation that were cited in a report by The Hill.
Among other provisions, the bill seeks to raise the cap on the state and local tax deduction (SALT) beyond the current $10,000 level set in 2017. The SALT provision would raise the cap to $30,000 for those with a modified adjusted gross income of $400,000 or less.
Raising the cap to $15,000 for singles and $30,000 for couples could cost $530 billion over 10 years, according to estimates from the Committee for a Responsible Federal Budget. A workaround has allowed certain business owners in more than 30 states — including California, New York, New Jersey and Connecticut — to fully deduct SALT, saving billions while other taxpayers remain subject to the cap.
Trump and some Republicans say it would help working-class Americans by ending taxes on things like tips and overtime pay, but critics argue the plan mostly benefits the wealthy.
Democrats have slammed the bill as a giveaway to billionaires. They pointed to estimates showing that proposed cuts to Medicaid and Affordable Care Act subsidies could cause 8.6 million people to lose health insurance coverage.
To help offset the lost revenue, the plan includes new limits on Medicaid, which serves 71 million low-income Americans, and other spending cuts totaling $912 billion over the next 10 years.
The bill is a point of contention in Congress. Fiscal conservatives argue that the bill doesn’t go far enough in reducing Medicaid spending, while Republicans from competitive swing districts are concerned about threatening their constituents’ access to health care and food assistance.
Five of the 21 Republicans on the House Budget Committee opposed the measure. They vowed to withhold support unless Speaker Mike Johnson (R-La.) backs deeper Medicaid cuts and a full repeal of Democratic green energy tax credits.
The move is a setback for Johnson and Trump. The speaker, who spent the past few days trying to revive the more than 1,000-page bill, met with hard-line representatives in an effort to “keep this thing moving forward.”
But the defeat may not be the end of the bill. Instead, it signals that Republicans will need to regroup and revise it to address conservative demands for stricter Medicaid work requirements, scaled-back renewable energy tax credits enacted under former President Joe Biden, and the implementation of deeper spending cuts.
Earlier this week, Johnson held a video call with members of the House Ways and Means Committee and the SALT Caucus — a group that includes blue-state Republicans advocating for a higher SALT cap. The call concluded without a final agreement, according to NBC News.
