Speaker Mike Johnson thought this was the week when Republicans would come to some major decisions about the reconciliation bill.
Instead, it’s becoming another week of denial and disagreement.
On Tuesday, Johnson moved to appease the centrist wing of the House Republican conference. On Wednesday, the blowback was swift.
Dozens of hardline conservatives and fiscal hawks — many part of the group that held up the budget framework for days last month — are pushing back against Johnson’s comments that he won’t make adjustments to the FMAP, the formula of how much the federal government pays for Medicaid compared to states.
Johnson also said it’s likely there won’t be a per capita cap put on the federal government’s contributions to state Medicaid programs — another item on the conservative wishlist.
Once again, Johnson is staring down a common problem of his speakership: It only takes a small handful of Republicans to sink his plans. With so many GOP lawmakers feeling so strongly about Medicaid and the state and local tax deduction, consensus is elusive.
And the House is only the beginning of the reconciliation mess. Whatever gets through the House will have to get through the Senate, with Republican senators already all but promising that they will amend the House legislation and send it back to that chamber for another vote.
Demonstrating the difficulty of finding a majority, hours after Johnson said there wouldn’t be cuts to FMAP — a promise he made because more moderate Republicans vowed to oppose the legislation if there were — senators said Wednesday that there would have to be some cuts to FMAP. (Meanwhile, the Congressional Budget Office said Wednesday that cuts to FMAP would result in 5.5 million fewer people on Medicaid in a decade, and another 2.4 million people without health insurance at all.)
Still, conservatives are insistent that they won’t accept a reconciliation bill without significant Medicaid cuts.
Rep. Lloyd Smucker, an influential member on both the Budget Committee and Ways and Means, led a letter with 30 other members calling for a “genuinely fiscally responsible” budget. He told reporters the letter was a direct response to Johnson’s comments on the FMAP and other “public comments that have been made in terms of savings.”
“This is a significant group, it’s a large group, and all we’re asking is to just stick to the agreement,” said Freedom Caucus Chair Andy Harris, who signed the letter.
Smucker also said the letter was a reminder to leadership that if they renege on the agreement he and others got from the White House and from Senate Majority Leader John Thune, they’ll tank the bill.
There’s also an enforcement mechanism behind the letter, through an amendment Smucker added to the budget framework last month. If the House fails to produce $2 trillion in cuts, Ways and Means would automatically be prevented from enacting the entire $4.5 trillion in Trump’s tax cuts.
“I don’t get a choice in the matter. It requires me to send it back with new instructions to Ways and Means,” Budget Chairman Jodey Arrington said of the amendment.
He didn’t sign onto Smucker’s letter, but said he fully supports the group’s message.
“We want to support the policy goals on security, on tax and the other economic policies. What most of the fiscal hawks are concerned about is doing all of that in a responsible way, and not walking away from this exercise with higher deficits and an accelerated deficit trajectory than what we would have had otherwise,” Arrington said.
“That just doesn’t seem very Republican to me,” he said. “But more than that, it’s wholly irresponsible to do.”
Through the letter, conservatives reiterated that any reconciliation bill should not add to the deficit — a principle that Republicans almost certainly won’t abide by with tax cuts that are projected to lower revenue by $4.5 trillion over the next decade. Still, conservatives have suggested that fewer spending cuts would have to mean fewer tax cuts — something President Donald Trump would almost certainly oppose.
These conservatives are aware that they’re preparing to approve a bill adding trillions to the debt, which is why they argue Republicans need to get serious about spending cuts.
“What we have presented is a teardrop in the ocean,” Rep. Ralph Norman said. “I mean, the $1.5 to $2 trillion is nothing, really. So if we can’t do it now, I don’t know when.”
That threshold has been a non-starter for moderates who have long pushed to reduce the top line number for spending cuts.
The more moderate Republicans who met with Johnson Tuesday night have three major buckets of cuts they support: work requirements for able-bodied Medicaid recipients, no Medicaid for undocumented immigrants and instituting more frequent eligibility checks. Those three changes alone, however, would be well below the $880 billion threshold that was outlined in the House budget.
In fact, the only real way to get to that $880 billion number would be to change the FMAP breakdown. (Under the Affordable Care Act, states that expanded Medicaid coverage had 90% of the new costs covered by the federal government, meaning the federal government pays more to cover people who weren’t originally eligible for Medicaid.)
Conservatives, many hailing from the 10 red states that didn’t expand Medicaid because of the concerns over paying for even just 10% of the costs of new enrollees, are desperate to change the breakdown.
From the moment the news broke that Johnson didn’t intend to change the FMAP breakdown, Rep. Chip Roy has been tweeting about how the speaker will have to adjust his stance.
“I’m not assuming I’m going to get everything I want,” Roy told NOTUS on Wednesday, “but the math’s got to add up.”
The other major sticking point for the reconciliation bill is the state and local tax deduction. Ways and Means Republicans met Wednesday afternoon to discuss raising the deduction from the current $10,000 to something higher. Still, multiple members said there’s no firm number yet on the table — and neither leadership nor Republicans most affected by the SALT deduction want to be the first to throw out a number.
Rep. Nicole Malliotakis of New York said the committee is still discussing various options, but confirmed that the SALT caucus didn’t offer a firm number. (There are also a number of other considerations with SALT, such as whether it would address the marriage penalty, if there’s an income cap, if the deduction would be allowed for a second home and if there’s a phase down.)
Malliotakis said the goal is to settle SALT in the committee on Thursday.
“It’s a give and take,” she said. “We’ll get it done. It’s just everybody’s got to be a little more willing to compromise. I’m willing to compromise on all of it, on SALT, on Medicaid.”
Still, conservatives like Roy insist factions like the Freedom Caucus aren’t the problem when it comes to negotiating.
“My colleagues doth protest too much,” Roy said.
“If they want to, you know, have their cake and eat it too, they’re in the wrong place,” he said. “You’re not getting SALT and saying no to reform and saying that we can’t make the fixes we need to get the deficit down.”
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Katherine Swartz is a NOTUS reporter and an Allbritton Journalism Institute fellow.