Republican lawmakers’ demands threaten to trip up Trump’s agenda

Enough House Republicans are drawing red lines in pursuit of steeper state and local tax deductions and deep spending cuts to prevent President-elect Donald Trump’s agenda from being passed.

Even as lawmakers work on a consensus approach to a budget reconciliation package that will be the chief legislative vehicle for the Trump agenda, some key factions say their support depends on satisfying their demands.

Rep. Michael Lawler and his fellow New York Republicans are set to meet with Mr. Trump and make the case for lifting the cap on the state and local tax deduction from federal income taxes, also known as SALT, to keep up with the cost of living in high-tax states.

“I will not support a tax bill that does not lift the cap on SALT,” he said.

Many of The debt hawks in the House Freedom Caucus are setting another red line by advocating steep spending cuts.

“I’m trying not to have red lines,” Rep. Eric Burlison, Missouri Republican, told The Washington Times. “But I will say, if they’re going to be disingenuous about spending cuts, and we’re not going to make spending cuts, I’m not going to be happy with that. And I won’t support it.”

Other House Republicans scoffed at their colleagues’ legislative demands.

“People are already putting out red lines; shame on them,” Rep. Don Bacon, Nebraska Republican, told The Times. “These guys don’t know how to play ball. They play solitaire.”

Both chambers have thin margins, and any loss of support could sink Republicans’ plans to move quickly on their ambitious agenda without the help of Democrats, as the filibuster-proof reconciliation process allows.

Groups of House Republicans are taking their demands to Mr. Trump at weekend meetings at his Mar-a-Lago club in Palm Beach, Florida.

The SALT cap, which limits the deduction to $10,000 for single and joint filers on federal income taxes, was enacted in 2017 to offset the cost of the Trump tax cuts. The provision expires at the end of this year, along with a host of tax cuts for individuals and small businesses.

Mr. Lawler hopes Mr. Trump will make good on a campaign promise to raise the cap.

Mr. Lawler put a marker down with legislation introduced this week to increase the SALT deduction cap to $100,000 for single filers and $200,000 for joint filers. According to the Committee for Responsible Federal Budget, that would cost $920 billion in lost tax revenue on top of the $3.9 trillion cost of extending the expiring Trump tax cuts.

Rep. Nicole Malliotakis, New York Republican, was more open to compromise on SALT. She described trying to change the formula as akin to twisting a Rubik’s cube.

“You change one thing, and it affects everything else,” Ms. Malliotakis said. “And so it’s just trying to figure out what could be a good compromise and satisfy the SALT members, as well as everyone else in the conference.”

Support for lifting the SALT cap is confined mainly to lawmakers from high-tax states such as New York, New Jersey and California.

Sen. Kevin Cramer, North Dakota Republican, said he hated the unrestricted SALT deduction, which allowed wealthier people to claim tax deductions on their second and third homes. He prefers to keep the $10,000 cap, but he said it would not be a deal-breaker and he is willing to follow Mr. Trump’s lead on the issue.

On the spending and debt front, the hard-liners have said they won’t support House Speaker Mike Johnson’s plan to increase the debt ceiling in the bill without progress on major spending cuts.

They are looking for at least $2.5 trillion in spending cuts over a decade to accompany an expected $1.5 trillion increase in the borrowing limit.

Those figures stem from a tentative agreement between House Republicans and key Trump advisers in December to momentarily quell a revolt against Mr. Johnson’s government funding extension that would have extended the debt limit for two years without any spending cuts.

Senate Republicans were much more reticent to make specific demands at this stage.

“I don’t want to put red lines out there,” Sen. Cynthia M. Lummis, Wyoming Republican, told The Times. “I just want to get as much done as we can that reduces inflation and gets our country and our economy moving again.”

Increasing defense spending is one item on many Senate Republicans’ wish lists that could conflict with deficit hawks in the House.

“One of the things we’ve looked at is addressing military [spending] and the top line in the military because Democrats are always trying to take that military line down unless they get more on the nonmilitary spending side,” Sen. John Hoeven, North Dakota Republican, told The Times. “So as an appropriator, I think that’s certainly very important to us.”

Senate Majority Leader John Thune, South Dakota Republican, previewed his conference’s reconciliation priorities in a floor speech Wednesday and mentioned defense spending.

“We’re working on investing in improvements to military readiness that will help restore American strength so that we can deter our adversaries and keep the peace,” he said.

Sen. Ted Cruz, Texas Republican, told The Times that border security and extending the 2017 Trump tax cuts to “make them bigger and bolder” are must-haves given the “clear mandate from voters” on those issues. He declined to name specific provisions as red lines but said several were being debated.

Other Senate Republicans have priorities, particularly on the tax cuts, but wouldn’t call them red lines.

Mr. Hoeven said he would like to find a way to make individual and small tax cuts permanent, which Republicans could not win in the 2017 law because they had to comply with Senate rules that prevent reconciliation legislation from adding to the deficit outside the 10-year budget window. That’s why so many of the Trump tax cuts are set to expire at the end of this year.

Mr. Hoeven said one way could be to use a current policy baseline, effectively eliminating the cost of extending any provisions already in law.

Mr. Cramer said he hopes Republicans will revive an idea they left on the table in 2017: reducing the seven individual income tax brackets. Again, he said that’s not a deal breaker for him.

“The best possible outcome on the tax bill is to get something that can pass,” he said.