By David Morgan and Bo Erickson
WASHINGTON (Reuters) -U.S. congressional Republicans are struggling over how to pay for President Donald Trump’s multi-trillion-dollar tax-cut and immigration reform agenda, with the fate of the Medicaid healthcare program and the nation’s debt ceiling hanging in the balance.
The debate has Trump’s party torn between its traditional aversion to adding to the nation’s $36.6 trillion debt and some members’ desire to protect Medicaid benefits to working-class voters who have become an important part of their base, as well as tax breaks for residents of higher-tax, typically Democratic states that helped Republicans win their current narrow House of Representatives majority.
The nonpartisan Committee for a Responsible Federal Budget estimates that extending Trump’s signature 2017 tax cuts and some of his other proposals like cutting taxes on tips and overtime, could add $11 trillion to the debt over the next decade. Additional funds to tighten border security, step up deportation efforts and boost military spending would add to the tab.
Members of the ultraconservative House Freedom Caucus are aiming for $2 trillion in spending cuts over a decade, with $880 billion of that sum expected to come from Medicaid and green energy tax credits.
Moderate Republicans are pushing to limit to $250 billion the cuts to Medicaid, which covered about 35 million people in states Trump won in last year’s presidential election, and retain some green tax credits for farmers.
“They seem really far apart within our conference,” said Republican Senator Cynthia Lummis, a hardline conservative who wants to see trillions of dollars in spending cuts to move towards a balanced budget.
Top Senate Republican John Thune and his House counterpart Speaker Mike Johnson this week said they also aim to use the sweeping tax-cut bill to raise the nation’s debt ceiling, which must be done by sometime this summer to avert a devastating default.
“It provides people like me who want deeper cuts with a little more leverage,” said Lummis, of Wyoming.
Democrats, angered by the risk to Medicaid and more broadly by Trump’s campaign to radically reshape the federal government, have signaled that they will not back the plan.
“They’re raising the debt to accomplish dangerous things that will hurt the safety, security, health and welfare of the American people,” top House Democrat Hakeem Jeffries told Reuters. “They’re the ones who have decided that rather than engage in responsible negotiations, they want to go it alone.”
REPUBLICANS TESTED
Republicans will also face opposition from within. Senator Rand Paul of Kentucky said he will not support a Trump agenda bill that raises the debt ceiling.
“I’m for making the tax cuts permanent, and I’m open to discussion as to what the tax cuts are,” Paul told Reuters. “I’m just not open to adding four or five trillion to the debt limit.”
Repeated congressional brinkmanship over the debt has led two of the three largest global rating agencies to cut the federal government’s once top-tier credit rating and investors have warned the U.S. Treasury bond market’s safe-haven status could also be at risk.
Some lawmakers from Republican states that expanded Medicaid under the Affordable Care Act have vowed to hold the line against benefit reductions, opting instead to support work requirements for able-bodied beneficiaries.
Republican Senator Josh Hawley of Missouri said he would support work requirements, but noted that many of his constituents rely on Medicaid and a related healthcare program for children in low-income families: “21% of Missourians get Medicaid or CHIP. So that’s a lot of people – working people.”
Representative Don Bacon of Nebraska said that about twenty House Republicans support a more modest $250 billion savings from Medicaid that would include work requirements and the elimination of waste, fraud and abuse. The group would not support hundreds of billions in cuts beyond that.
SALT STRATEGY
Republicans are also debating whether to keep the current $10,000 deduction limit for state and local taxes, which is important to high-taxed states like New York, California and New Jersey. Republicans hold 19 House seats in those largely Democratic states, without which they would not have the majority.
“The fact that so many members are citing SALT as a priority is hard to ignore,” said Representative Nicole Malliotakis, of New York, referring to the acronym for state and local taxes.
Raising the current cap on SALT deduction will provide extra pressure for Republicans to cut spending. In the end, however, lawmakers noted that the House last month passed a measure that took the first step toward extending the tax cuts with only one Republican “no” vote, which they said reflected Trump’s hold over the party.
“The greatest whip is actually in the White House and a lot of our members will listen to what he says,” said Representative Mike Kelly of Pennsylvania.
(Reporting by David Morgan and Bo Erickson; Editing by Scott Malone and Deepa Babington)
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