By David Morgan
WASHINGTON (Reuters) -Congressional Republicans, under pressure to move forward on President Donald Trump’s tax cut and border security agenda, are at odds over how much spending they can cut from the federal budget without leaving constituents who rely on social safety net programs out in the cold.
Senate Republicans have been locked in closed-door debates about whether to overhaul the Medicaid health insurance program for low-income Americans to help pay for extending Trump’s $4.6 trillion in 2017 tax cuts and other tax proposals, the mass deportation of unauthorized immigrants and a boost in military spending.
A main question for Republican senators is whether they can meet or exceed the $1.5 trillion to $2 trillion in spending cuts over the next decade laid out in the budget blueprint for the Trump agenda that squeaked through the Republican-controlled House of Representatives last month.
“We have a lot of people who would like to go a lot farther, some who would like not to go that far,” Republican Senate Majority Leader John Thune of South Dakota told reporters.
Hardline House Republicans say they are ready to block any Senate budget blueprint that does not safeguard their spending cuts.
Hanging in the balance is the future of Medicaid, a politically risky source of savings for Republicans that benefits more than 35 million Americans in states Trump won in the 2024 election, a Reuters analysis of Medicaid data shows.
The program, funded jointly by federal and state governments, covers one in five Americans.
It cost the federal government $618 billion last year, according to the nonpartisan Congressional Budget Office, making it the third largest line item after the Medicare program for older Americans and the Social Security retirement program.
Some Republicans think adequate spending cuts can be achieved only by overhauling Medicaid, vowing to improve the program rather than cut benefits.
Others would rather see social safety net programs preserved – especially at a time of a growing recession risk.
Senator Ron Wyden, top Democrat on the Senate Finance Committee, said Trump talked often about helping the middle class while on the campaign trail.
“When the campaign is over, they’re back to helping people at the top and paying for it by sticking it to folks of modest means,” said the Oregon Democrat. He described the Republican tax-cutting plans “back to supercharging trickle-down.”
DEBT CEILING AS LEVERAGE
Debate over the Trump agenda also involves another hot-button fiscal issue: the debt ceiling.
Senate Republicans who favor deeper spending cuts hope to use the congressionally mandated borrowing limit on the nation’s $36.6 trillion of debt as leverage to get their way.
Having avoided a weekend government shutdown, Congress faces a high-stakes mid-year deadline for passing Trump’s agenda, given that House Republicans included a $4 trillion debt ceiling increase in their budget blueprint.
If lawmakers fail to raise the ceiling before the Treasury exhausts its ability to pay its bills, the country will face a catastrophic default.
Senate Finance Committee Republicans, who discussed spending cuts with Trump at the White House last week, said the president wants the debt limit to remain part of the legislation.
“We need things like the debt limit, because it’s the only leverage we have to get down to reasonable spending levels,” said Senator Ron Johnson, of Wisconsin, who attended the White House meeting.
Repeated congressional brinkmanship over the debt has led two of the three largest global ratings agencies to cut the federal government’s once top-tier credit rating.
With a 53-47 majority, Senate Republicans need only 51 votes to pass a blueprint and unlock a parliamentary tool known as budget reconciliation to circumvent Democrats’ ability to use the Senate filibuster to block Trump’s legislative agenda.
“We’ve still got a lot of things that we’ve got to reconcile with the House,” said Senator Thom Tillis, another Republican who met with Trump last week. “Part of what we were doing is making sure that the president agreed.
And it was a good meeting that way.”
House Speaker Mike Johnson wants to get the Trump agenda through Congress by early May, giving the Senate little time to agree on a budget blueprint that can pass muster with Johnson’s narrow 218-214 House majority.
MEDICAID DIVIDE
Senate Budget Committee Chairman Lindsey Graham, who is responsible for producing the Senate blueprint, said matching the House on spending would require a Medicaid overhaul.
“If you don’t reform Medicaid, I don’t think you’ll get there,” Graham, of South Carolina, told reporters.
“It needs to be reformed.”
Not all Republicans agreed.
“It depends on what else is out there,” said Senator Bill Cassidy of Louisiana, who chairs the Senate Health, Education, Labor and Pensions Committee.
The House plan for Trump’s agenda calls for $880 billion in cuts over a decade from the healthcare and energy sectors and another $230 billion from agriculture, numbers that have raised concerns about the possibility of reductions for Medicaid and nutrition programs for the poor including the Supplemental Nutrition Assistance Program.
The House would also cut $330 billion from education programs over a decade.
Trump has promised that those who rely on Medicaid, Medicare and Social Security will not see reduced benefits.
While a majority of House Republicans appear to be on board with changes to Medicaid, especially those in deeply conservative districts, Republican senators who serve broader statewide constituencies that include independents and Democrats have been slower to join the band wagon.
One proposal would scale back a 90% federal matching rate for Medicaid recipients covered through the Affordable Care Act to medical assistance rates available to traditional Medicaid beneficiaries, which vary between 50% and 77%.
“I’m in conversation right now with my state to see what kind of impacts that might have,” said Republican Senator Shelley Moore Capito, adding that she is wary of Medicaid changes.
About 28% of Capito’s home state, West Virginia, is enrolled in Medicaid or a related program for low-income children, according to the non-partisan Kaiser Family Foundation.
Republicans have also discussed limiting Medicaid spending growth to the rate of medical inflation and limiting federal involvement to financial contributions with benefits defined by states.
“Medicaid needs to be looked at more systematically,” said Tillis, who favors imposing work requirements on able-bodied adults.
“The concern that I have, that people say don’t touch it, is they are literally creating a cliff for the beneficiaries who need it,” the North Carolina Republican said.
“It has to get on sound fiscal footing, and it can be done in a way that is not any of the doom and gloom that I’ve heard.”
(Reporting by David Morgan, additional reporting by Andy Sullivan; Editing by Scott Malone and Alistair Bell)
