Massive Tax Bill Close to Stalling
Author: Greg Valliere
May 6, 2025
HOUSE SPEAKER MIKE JOHNSON conceded yesterday that the package probably won’t pass by Memorial Day, his original goal. The new target is to finish by the July 4th break, but even that will be an uphill fight.
THERE ARE DOZENS OF PROVISIONS in the bill that have encountered opposition, but two stand out — how to pay for the bill, and how much to cut Medicaid spending (or, to be accurate, how much to slow the growth of Medicaid).
SUPPORTERS SAY “waste, fraud and abuse” will be targeted, with no benefit cuts, along with new spending for state and local real estate tax breaks, agricultural outlays and prescription drug price relief — just a few of the issues that both houses will have to resolve.
BOTTOM LINE: Speaker Johnson is a clever and aggressive negotiator, so he probably will steamroll a bill through the House just before the summer recess, which will last for all of August. That would infuriate Trump, who wants a bill — and some fiscal stimulus — by the end of this month. The deficit is not a top priority for Trump.
THE FINAL BILL WILL HAVE LESS IN MEDICAID savings than Johnson wants, so there’s a growing likelihood that accounting gimmicks — including assumptions of strong economic growth and a big contribution from the states — will play a role.
THE STIMULATIVE IMPACT ON THE ECONOMY will come in 2026, which Trump and the Republicans could live with, ahead of an election. All of the House and a third of the Senate are up for re-election next year, when the stakes will be much higher than passing a bill this summer.
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