Senate Republicans are scrambling to salvage President Donald Trump's sweeping domestic policy package after Senate Parliamentarian Elizabeth MacDonough ruled multiple high-profile provisions-including a major Medicaid cost-cutting measure-violate budget rules, jeopardizing GOP efforts to pass the bill under reconciliation before the July 4 deadline.
The most significant blow came Thursday when MacDonough struck a provision capping state health care provider taxes, a measure Republicans had counted on to generate roughly $250 billion in savings. Without it, GOP leaders must now identify alternative offsets to fund Trump's push to make corporate tax cuts permanent.
"We have contingency plans, plan B, plan C," Senate Majority Whip John Thune (R., S.D.) told reporters as lawmakers met to discuss next steps. Sen. Josh Hawley (R., Mo.) added, "We have no idea what's going to happen here, we got to work on some kind of a fix."
The setback threatens to delay or derail what Trump has called his "big, beautiful bill," a sprawling package combining tax cuts, energy credits, immigration policies, and spending reforms. On Tuesday, Trump urged lawmakers to remain in Washington through the July 4 recess to finish negotiations, posting on social media: "Lock yourself in a room if you must, don't go home, and GET THE DEAL DONE THIS WEEK."
In addition to the Medicaid rollback, MacDonough ruled out a proposed charitable tax credit favoring religious schools, a break for private and religious educational institutions, and new penalties for leaking confidential tax data, a measure inspired by past leaks of Trump's financial records.
Sen. Ron Wyden (D., Ore.), ranking Democrat on the Finance Committee, confirmed that Democrats are also challenging provisions related to Opportunity Zones, clean energy credits for foreign entities, and a new child-focused savings plan dubbed "Trump accounts."
"Democrats are continuing to make the case against every provision this Big, Beautiful Betrayal of a bill that violates Senate rules," said Sen. Jeff Merkley (D., Ore.), who serves as the top Democrat on the Budget Committee.
The Republican plan has been further complicated by internal disagreement over the Medicaid cuts. Senators from rural states, including Hawley, Lisa Murkowski (R., Alaska), Susan Collins (R., Maine), and Jerry Moran (R., Kan.), have expressed alarm that reducing federal Medicaid reimbursements could push small hospitals into insolvency.
"The rural hospitals would like a few small tweaks," Hawley said, favoring the House's more moderate approach to Medicaid reform. He added that Trump recently told him he doesn't want the legislation to become "a Medicaid cuts bill," but rather a "tax-cut bill."
Sen. John Kennedy (R., La.) warned the parliamentarian's ruling "substantially reduces savings" and could provoke backlash from fiscal conservatives. "I think my colleagues who view the bill more as a spending reduction bill ... are probably going to be screaming like they're part of a prison riot," Kennedy said.
Sen. Ron Johnson (R., Wis.) called the ruling "a big ol' grenade," pushing GOP leaders to reconsider how they generate budget savings. He suggested focusing on other mandatory spending rather than targeting Medicare or Medicaid.
Senate Finance Committee Chair Mike Crapo (R., Idaho) said Republicans are now reworking the bill in line with the parliamentarian's guidance. "This is regular process. Now we know what the guidance was, we will react to it," he stated.
Crapo is also working closely with Budget Committee Chair Lindsey Graham (R., S.C.) and Thune to draft Byrd Rule-compliant language. Graham blasted the rejected Medicaid provision as "one of the biggest scams I've ever seen in Washington," and said Republicans are committed to keeping the bill alive.
