Senate consideration of the chamber's version of the House-passed One Big, Beautiful Bill Act (OBBBA, H.R. 1) to extend Tax Cuts & Jobs Act (TCJA) provisions beyond 2025 and cut mandatory spending could begin later this week and last into the weekend, but some members have lingering concerns. Open policy issues still to be resolved ahead of a potential Senate vote on the bill this week include the approach to Inflation Reduction Act (IRA) energy tax credit changes, the state and local tax (SALT) deduction cap, and Medicaid. Senator Thom Tillis (R-NC) has been highlighting the effects of the Medicaid changes to his and other states and warning that they could result in Republican losses in the midterm elections — he is running for re-election — though other GOP Senators expressed a resolve to proceed with the cuts.

While work continues to appease Republican senators — leaders can only lose three votes and pass the bill — the plan may be to force the House to vote on and pass the Senate bill regardless of whether some members are taking issue with what the other chamber has done. Republican leaders have always wanted to avoid a ping-pong of proposals or a House-Senate conference committee, which would prolong the process.

Punchbowl News reported that as Senate Republicans returned to Washington Monday night, meeting for what was widely viewed as a "gut check" for members' concerns about the reconciliation bill, Senate Majority Leader John Thune (R-SD) suggested the House would ultimately accept what the Senate passes. Thune was responding to Senator Bill Cassidy (R-LA), who insisted that what is being developed by Senate Republicans can't pass the House, for reasons including the targeting of Medicaid provider taxes. The report said Thune is seen as benefiting from the urgency from President Trump's eagerness to sign the measure by July 4. The President convinced holdout members to vote for House passage and may do so again.

On health issues, Leader Thune said following the regular Tuesday party lunches, "We are working on a solution for rural hospitals, and that's something that's been in the works now for several days in response to a number of concerns that our colleagues have mentioned about ensuring that the impact on rural hospitals be lessened, be mitigated." On confidence in the bill generally, he said, "when push comes to shove, you're looking at whether or not you're going to allow the perfect [to] become the enemy of the good. And there are a lot of things in this bill … and when people sit down and evaluate how they're going to land in the end, you have to recognize that this is a process whereby everybody doesn't get everything they want."

Politico reported on Republican Senators pushing for changes: "Sens. Ron Johnson [R-WI], Mike Lee [R-UT] and Rick Scott met [R-FL] separately with Donald Trump at the White House Monday as the president ramps up pressure on fiscal hawks to fall in line. Trump told Scott he wants a repeal of green credits under the Biden-era climate law and supports a balanced budget, the Florida senator said. The trio relayed Trump's message to House Freedom Caucus members Monday night, but were publicly mum on other details."

On timing, Thune said in a June 24 Axios report that this Friday was looking more likely for an initial vote than Thursday, meaning consideration could last into the weekend. "I think we get on it, and then we will plow through, and we'll get into vote-a-rama and grind it out until — until whenever," he said. "Vote-a-rama" refers to the rapid consideration of amendments to close debate on a budget reconciliation bill that is limitless and usually lasts all night. Semafor reported, "It's not totally inconceivable that negotiations could continue past the vote to proceed to the bill and into the final amendment of the vote-a-rama — what's called a 'wraparound amendment.'"

Leader Thune has said the Senate won't leave for the July Fourth recess without passing a bill, and the holiday deadline is also being pushed by President Trump and Speaker Mike Johnson (R-LA), who told his members not to leave town in case the Senate passes a bill in time for the House to vote. "To my friends in the Senate, lock yourself in a room if you must, don't go home, and GET THE DEAL DONE THIS WEEK. Work with the House so they can pick it up, and pass it, IMMEDIATELY. NO ONE GOES ON VACATION UNTIL IT'S DONE," the President said on social media June 24.

But reluctant House members are already signaling that they won't accede to being "jammed" by the Senate. "We may not leave town for a while then," Rep. Chip Roy (R-TX), a Freedom Caucus member who has been vocal about several issues in relation to the bill, said in a Politico report, adding the Senate bill is "not even close" to the House budget plan Speaker Johnson promised conservatives earlier this year.

Two members voted against the House bill May 22 — Reps. Thomas Massie (R-KY) and Warren Davidson (R-OH) — and Freedom Caucus Chair Andy Harris (R-MD) voted "present," while two other Republicans didn't vote. Rep. Harris said on social media that the Senate bill backtracks on the approach to energy credits and, "If the Senate tries to jam the House with this version, I won't vote 'present.' I'll vote NO." Rep. Roy made a similar post, citing concerns with energy tax credit rollbacks and "watering down food stamp reforms." Additionally, in a June 23 letter, Rep. Roy and 23 other members called on Speaker Johnson and Leader Thune to restore health savings accounts (HSA) provisions passed by the House but omitted by the Senate.

While the Finance Committee proposal's deeper cuts to Medicaid are causing problems in the Senate, the less-onerous approach to energy credits is creating opposition in the House. The New York Times noted in a June 24 story on House member objections that while the Senate bill would more deeply cut Medicaid, including by targeting the provider tax, "it also would slow the House's timetable for phasing out federal tax credits for clean energy projects, preserving breaks for companies that build nuclear reactors, geothermal plants, hydropower dams or battery storage through 2033. And it would take longer to phase out a lucrative tax credit for businesses that build wind and solar farms."

The Senate Finance Committee language retains the current policy $10,000 SALT deduction cap as a placeholder for negotiations, instead of the $40,000 cap in the House bill (provided fully only for households with less than $500,000 in annual income). Senate Republican leaders want the House relief dialed back, arguing that it would provide a subsidy to Democratic-controlled states. Senator Markwayne Mullin (R-OK) has suggested a proposal to retain the $40,000 cap with an as-yet-unannounced lower income threshold that he discussed with House members may be the Senate's final offer on the issue. "We're to the point where people have to make a decision if it's worth voting against. And that's on both sides," he said.

A preliminary Joint Committee on Taxation (JCT) current-law estimate of the Senate bill requested by Democrats said the legislation would increase the deficit by $4.2 trillion, rather than the $441.5 billion cost over 10 years projected under the Senate's "current policy" baseline.

Global tax — Meanwhile, the Trump Treasury Department is telegraphing that nations involved in the OECD process need to reach agreement on whether the US tax system can co-exist alongside Pillar 2 so that the Administration can work with Congress to refine the Section 899 retaliatory tax provision. At the OECD/U.S. Council for International Business conference in Washington June 23, Deputy Assistant Secretary for International Tax Affairs Rebecca Burch warned that getting a deal on Pillar 2 has to be done in a matter of days and not weeks, implying that a softening of proposed IRC Section 899 is still possible, but a Pillar 2 deal has to be reached in the next few days before the tax bill is completed for that to happen.

Congress — The Senate is expected to vote this afternoon on the nomination of Ken Kies to be Treasury Assistant Secretary for Tax Policy.

Two EY Alerts on energy provisions have been posted:

• "Senate Finance Committee modifies energy credit phaseouts in reconciliation bill" is available here
• "House and Senate proposals would define foreign entities of concern and impose limitations on renewable energy tax credits" is available here

Another EY Alert, "Tax reconciliation bill released by the Senate Finance Committee would significantly affect cost recovery and accounting method provisions," is available here.