Faster Medicaid cuts and a larger SALT deduction

WASHINGTON — Speaker Mike Johnson, R-La., is exploring ways to placate two rival factions who have emerged as the biggest roadblocks in the House to a massive bill for President Donald Trump’s agenda: blue-state Republicans who want larger tax breaks for their constituents and conservatives who want Medicaid cuts to kick in sooner.

Johnson suggested to reporters Wednesday that provisions for a higher state and local tax (SALT) deduction and to enforce new Medicaid work requirements sooner could be incorporated into the final package as he stares down a self-imposed Memorial Day weekend deadline for passage.

“I am convinced that we’ll be able to adjust the dial, so to speak, so that we can come to an agreement that will meet the criteria that everybody has and that we can move this thing forward,” Johnson said after meeting with pro-SALT Republicans and hard-right Freedom Caucus members.

“If you do more on SALT, you have to find more savings. So these are the dials, the metaphorical dials, that I’m talking about,” he said. “We are trying to do this in a deficit neutral way — that was the commitment that we made all along.”

Asked if Republicans will speed up the Medicaid work requirements to extract larger savings in a revised plan, Johnson replied: “Everything is on the table.”

House Majority Leader Steve Scalise, R-La., told NBC News that the work requirements for Medicaid will kick in earlier than 2029, when the current bill would trigger them. Asked what the new timeframe would be, Scalise said, “We don’t have an exact date, but it’ll be sooner than what’s in the current bill.”

That approach has potential to win over conservative hard-liners who want the new Medicaid rules to take effect earlier.

“That is the compromise that could work,” Rep. Tim Burchett, R-Tenn., said.

Republicans say they’ve made steady progress on the bill this week even as some key issues remain unresolved. Eleven House committees have now passed their portions of the legislation, sending them to the Budget Committee to cobble together into one package as early as Friday.

But multiple Republicans on that panel have voiced skepticism for the emerging package, including Reps. Ralph Norman, R-S.C., Chip Roy, R-Texas, and Josh Brecheen, R-Okla., citing issues with the level of spending cuts and uncertainty on matters like SALT. Republicans can lose just one vote on the Budget Committee for the bill to advance.

“At this point I’m still a ‘no’ on the budget proceeding,” Norman said Thursday afternoon after a GOP meeting, adding that he plans to meet with Johnson later. “We’ve still got a spending problem. We’ve got a deficit problem.”

Roy said he’s also a “no,” insisting that the Medicaid work requirements take effect immediately.

In the full House, Johnson can afford just three Republican defections on the final bill, so even small factions like the SALT Caucus hold enormous power in the negotiations. Those members also tend to hail from critical battleground districts that will determine the balance of power in the next election.

But it’s far from clear that approach will work, as the specter of more immediate Medicaid cuts could alienate other politically vulnerable Republicans who are already catching heat for the bill’s existing spending reductions and limits to the health care program.

The two sides on Thursday still remained far apart and Johnson said he expected talks to extend into the weekend, even as he has stuck by a Memorial Day deadline to pass the massive tax cuts, energy and border package through the lower chamber. Tensions have also been boiling over inside the House GOP over the SALT issue all week, with cracks emerging even among the pro-SALT members about whether to take an offer to lift the $10,000 cap to $30,000.

But moderates and conservatives emerged from Johnson’s office Thursday saying that their two-hour meeting was positive and that no red lines were drawn by either side.

“We are still working through the numbers,” said moderate Rep. Mike Lawler, R-N.Y., a SALT Caucus member who says he will vote against the bill unless the deduction cap is hiked higher than the current $30,000 proposal. “The bottom line is, [a higher SALT cap] is going to be in the bill, and we’re going to work through it.”

“The core issue is that if the SALT cap goes up, then there’s more money you have to go find,” added conservative Rep. Byron Donalds, R-Fla., a Freedom Caucus member who is running for governor.

But such a trade could create a Rubik’s cube problem for House Republicans. While deeper Medicaid cuts and a larger SALT deduction may be a palatable trade to a few dozen hard-liners and a handful of blue-state members, it may leave a bitter taste for others — most notably politically vulnerable members. While Republicans opted against some of the most dramatic potential cuts to the health care program, their current proposal would still cause 8.6 million people to lose their insurance coverage, according to an early estimate from the nonpartisan Congressional Budget Office.

It is unclear Johnson has the votes to pass the existing Medicaid cuts, which include new work requirements and a host of stricter eligibility checks and paperwork, which critics say will create onerous burdens for rightful recipients.

Rep. David Valadao, R-Calif., who has the highest share of Medicaid recipients of any GOP-held district, said he’s undecided on the existing Medicaid provisions.

“I haven’t looked at the details yet, so we’re still getting through it and seeing the actual impact,” he said.

Freshman Rep. Rob Bresnahan, R-Pa., who narrowly flipped a Democratic-held district last year, also said he isn’t taking a position on the Medicaid provisions just yet.

Another vulnerable Republican, Rep. Don Bacon of Nebraska, said he would be “amenable” to shifting up the date when the Medicaid provisions kick in.

Valadao, Bresnahan and Bacon all represent the few dozen GOP-held swing districts that Democrats are targeting in their quest to capture the House next year. And they see Medicaid as their most potent issue, arguing that the existing bill will impose suffering among the vulnerable.

“The self-described moderates spent months falsely promising the American people they would draw a red line on cuts to Medicaid. Now they want to trigger these cuts before the midterms? Good riddance,” said Justin Chermol, a spokesperson for the Democratic Congressional Campaign Committee.

Meanwhile, some conservatives have expressed deep reluctance about spending more money to provide SALT relief to people in high-tax blue states. Rep. Beth Van Duyne, R-Texas, a fiscal hawk who attended Thursday’s meeting, said walking into the speaker’s office that she thinks “it’s gonna be tough” to raise the SALT cap. 

But Rep. Anna Paulina Luna, R-Fla., who was not in the meetings, said “if we do land the plane, it’ll be because” of Trump.

“President Trump has been largely responsible for all the deals landed in the House,” she said.