Senate Republicans Propose Deeper Cuts to Medicaid, More Limited Tax Cuts

Strategic Insights -

Senate Republicans are advancing a proposal that would cut Medicaid spending deeper than the House's version, while also scaling back Trump's tax cuts and reducing the federal deduction for state and local taxes (SALT). This move sets up a showdown with the Republican-led House, which adopted its own version of the tax bill in late May. The Senate Finance Committee aims to complete work on the package by July 4, before reconciling changes with the House and passing the bill before August.

Key Takeaways:

  • The Senate proposal would make deeper cuts to Medicaid than the House's version, which is expected to save at least $625 billion and cause 7.6 million Americans to lose their health insurance over the next 10 years.
  • The Senate's version would create a new tax deduction on overtime of up to $12,500 for an individual who makes $150,000 or less in a year, compared to the House's version which has no limit and would apply to people who make $160,000 or less.
  • The Senate's proposal would also create a tax deduction on tipped wages of up to $25,000 for people who make $150,000 or less, compared to no limit and would apply to people who make $160,000 or less in the House's version.
  • The Senate's version would increase the child tax credit to $2,200, compared to the House's version which would increase it to $2,500 per child through 2028 and $2,000 after that.
  • The Senate proposal would slow the phase-out of multiple clean energy provisions that the House had sought to eliminate more quickly.
  • The Senate had made it clear they planned to make some changes to the SALT provision, including adding a cap to the deduction, which could disrupt the delicate balance in the House, where Republicans have only a three-vote margin.

Statistics:

  • The House's version of the bill is expected to add $2.4 trillion to the deficit over the next 10 years.
  • The Senate's proposal would cut Medicaid spending deeper than the House's version, potentially causing 7.6 million Americans to lose their health insurance over the next 10 years.
  • The Senate's version would create a new tax deduction on overtime of up to $12,500 for an individual who makes $150,000 or less in a year.
  • The Senate's proposal would also create a tax deduction on tipped wages of up to $25,000 for people who make $150,000 or less.
  • The Senate's version would increase the child tax credit to $2,200.

Sources:

  • "Senate Republicans propose deeper cuts to Medicaid than House's budget bill" by Riley Beggin, USA TODAY, June 16
  • "House-passed version of the bill would extend Trump's 2017 income tax cuts" by Riley Beggin, USA TODAY, May 22
  • "Congressional Budget Office estimate released June 12 shows that the bill would decrease resources for low-income households while boosting resources for middle- and high-income households"
  • "Senate Majority Leader John Thune, R-South Dakota"
  • "Senate Finance Committee"