A look at key flashpoints in the coming Senate reconciliation debate

WASHINGTON — The Senate this month will navigate a minefield of concerns from across the ideological divide among Republicans as well as lobbyists and stakeholders as it works to tweak and approve the House-passed “big, beautiful” budget bill.

Democrats, meanwhile, are lining up an assault on the filibuster-proof bill using all the procedural tools at their disposal, particularly by subjecting the mammoth package to a thorough scrubbing for compliance with the “Byrd rule” barring extraneous provisions. Any section found to violate the rule, which among other things requires a budgetary impact that can’t be just “merely incidental” to some other long-sought policy goal, can be stripped from the bill unless backers can get 60 votes to keep it.

The White House and GOP leaders have an ambitious timeline to get the package done by the July Fourth recess, though many see the August recess as a more likely backstop.

From Medicaid to food stamps, from clean energy to immigration, below is a roundup of the key issues to watch as the Senate gears up for the reconciliation debate.

Medicaid

Concern from Republican senators that Medicaid provisions in the House-passed budget reconciliation bill could harm rural health care facilities is emerging as a prominent obstacle to the party’s plan to finalize the bill by July 4.

At least three Republicans from states with large rural populations — Sens. Josh Hawley of Missouri, Susan Collins of Maine and Lisa Murkowski of Alaska — have reservations about the House version, which features a hard-fought compromise on Medicaid cuts.

High on the list for these senators is a provision that would add new restrictions on state taxes on health care providers. The House bill would prevent states from establishing new provider taxes, which states use to finance their share of Medicaid and leverage more funding from the federal government. States would also be prohibited from increasing existing provider tax rates.

“That’s a provision that concerns me,” said Hawley. “Our rural hospitals in Missouri depend on those arrangements.”

Another point of concern is the House bill’s provision for frequent eligibility checks for Medicaid, which some say may make it more difficult for people to sign up for plans.

People who lose Medicaid coverage for not complying with work requirements could also be prohibited from receiving subsidies in the marketplaces, potentially leaving them uninsured.

—Lia DeGroot, with Jessie Hellmann and Sandhya Raman contributing.

SNAP benefits

Sen. Charles E. Grassley’s opposition to sharing food stamp costs with states increases the likelihood that the Senate Agriculture Committee will draft reconciliation provisions widely divergent from those in the House reconciliation bill.

Grassley, R-Iowa, a member of the Senate Agriculture Committee, said in May that he opposes the Supplemental Nutrition Assistance Program cost-sharing that the House bill relies on to reduce the deficit by $128 billion from fiscal 2028, when the cost-sharing begins, to fiscal 2034. The House relied on that $128 billion for nearly 45% of its $286 billion in deficit reduction from food stamps, according to the Congressional Budget Office.

The Senate panel’s directions are to find at least $1 billion in deficit reduction over 10 years, far less than the $230 billion that the House Agriculture Committee was directed to find.

Grassley’s defection on a committee divided 12-11 would mean Republicans, if Democrats stick together, wouldn’t have a majority for the proposal that constitutes House Agriculture’s largest single piece of deficit reduction. And Senate Agriculture Republicans come largely from small rural states.

—Olivia M. Bridges

Clean energy tax credits

Senate Republicans’ views on clean energy tax credits — some wanting to shelter them, others to eliminate them — suggest uncertainty about the bill’s outcome until very late in the legislative process.

Four Senate Republicans warned in April against a full-scale repeal of clean energy tax credits, saying it would weaken U.S. leadership on energy. That puts them in disagreement with Senate Energy and Natural Resources Chairman Mike Lee, R-Utah, who said he wanted a full repeal of the energy tax credits in the 2022 climate law.

The House reconciliation bill left some clean energy credits in place temporarily but is phasing them out more quickly than initially planned thanks to Republican holdouts who accelerated the schedule in the final negotiations before the bill’s May 22 passage.

Sen. John Curtis, R-Utah, said in a statement that the House bill will go through “a lot of work before it’s a finished product,” adding that it’s important to make cuts while also being “very careful and surgical.”

Curtis was one of the four senators who signed an April letter to Senate Majority Leader John Thune, R-S.D.

“While we support fiscal responsibility and prudent efforts to streamline the tax code, we caution against the full-scale repeal of current credits, which could lead to significant disruptions for the American people and weaken our position as a global energy leader,” said the letter from Curtis, who was joined by Murkowski, Thom Tillis of North Carolina and Jerry Moran of Kansas.

Four Republicans in a Senate divided 53-47 could be decisive on the issue.

But Lee sounded determined in an April post on social media site X that “every last one” of the tax credits enacted by the 2022 law be repealed.

“It can, it must, and it will be,” Lee wrote. “Or it won’t pass.”

—David Jordan and Valerie Yurk

Spectrum

Lawmakers are also grappling with competing claims to various bands of the radio waves that are critical for both military and commercial communications.

While members of the House and Senate Armed Services committees jointly wrote the defense portions of the reconciliation bill, looking to resolve possible areas of disagreement out of the gate, the issue of preserving the Pentagon’s access to highly sensitive portions of spectrum used for missile defense systems, radars and more has emerged as a possible sticking point for a number of defense hawks.

Spectrum auctions are projected to generate scores of billions in revenue, a funding source that the bill’s proponents are loath to abandon.

Some of the most vocal members of the Senate Armed Services Committee on this topic — among them, Sens. Deb Fischer, R-Neb., and Mike Rounds, R-S.D. — have pushed back against the House bill’s approach to spectrum for failing to preserve the Defense Department’s access to certain airwaves.

Under the bill, the Federal Communications Commission would see its authority to auction off parts of the spectrum renewed through fiscal 2034, but the language aims to fence off certain bands (including the mid-band that DOD uses for radars, among other things) from potential sale to wireless companies.

President Donald Trump pledged in a post on his Truth Social account May 20 that he would “free up plenty of SPECTRUM for auction” and argued that the U.S. could use the bands for both 5G and 6G cellular networks as well as for national security purposes. House Energy and Commerce Committee leaders project that the auction authority would generate $88 billion in revenue over the next decade.

But Fischer countered that the Pentagon must be able to maintain its use of the mid-band — the 3.1 to 3.45 gigahertz range — as well as portions of the 7 and 8 gigahertz range.

—Briana Reilly

Immigration

The House-passed version of the budget reconciliation package may undergo key changes on immigration-related issues when the Senate hammers out its version, with major players pulling in opposite directions on topline spending.

Sen. Rand Paul of Kentucky, chair of the Senate Homeland Security Committee, has expressed skepticism about the level of funds for border wall construction in the House bill, asserting during a recent committee hearing “we should reassess … what we want to do and how much it costs.”

The House package designates $46 billion for a barricade along the U.S.-Mexico border. When Secretary of Homeland Security Kristi Noem sought to justify the need for the appropriations during the hearing, Paul said the numbers she provided were “way off.”

Paul openly considered whether construction of the border wall would even be necessary given that the Trump administration is claiming success over a 95 percent reduction of illegal encounters at the border, which the president’s allies have credited to his handling of immigration.

But Paul often has idiosyncratic views within the Republican Party and it’s unclear whether he will be able to exert enough pull to limit the allocation for border wall construction, especially when Trump’s allies are eager to spend money to fulfill that policy goal.

Sen. Lindsey Graham of South Carolina, in contrast, has offered a robust vision for spending in the Senate bill as part of a blueprint he made public in February. The blueprint seeks to add $85.5 billion for border security, national security and domestic energy production, although his office didn’t offer a more definitive breakdown of the proposed funds.

Graham’s statement, however, checks off several priorities for immigration enforcement, including funds for a border wall, an increase in the number of detention beds and an increased number of immigration officers conduct mass detention and removals of criminal illegal aliens.

—Chris Johnson

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