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One Big Beautiful Bill update
The overarching focus in Congress this week was House Republicans’ efforts to pass a big reconciliation package of President Trump’s priorities on taxes and spending. While there was plenty of sound and fury, they ultimately were able to get it through the House. They hope that passage in the House will provide momentum for the Senate to move forward with its version of the bill in June. However, the Senate process will be more complicated and more time-consuming. The Senate will work on their own draft of the bill rather than just taking and amending the House bill. Some details of the Senate bill will begin to trickle out next week. While the Senate will begin considering their version of the reconciliation bill on the Senate floor in June, we think the process likely will extend into July despite President Trump’s interest in seeing a bill signed into law by 4 July. It will be important for Republicans to pass the bill by the August recess given that the reconciliation package includes a needed increase to the debt ceiling. Given the time crunch, we think that the bill the Senate passes may be the one to become law (there may not be time for the Senate and House to ping pong versions or engage in formal conference negotiations to iron out differences between their two bills). Pay close attention to the Senate debate as the upper chamber may have the final word.
State and Local Tax (SALT) deduction
One of the more contentious issues has been how to address the $10,000 SALT cap. Lawmakers from high tax states (including New York, New Jersey, and California) believed they had the upper hand in negotiations as their votes were critical to getting the bill approved. They were able to get an increase in the cap to $40,000 (with an income limitation of $500,000) in the House bill. As the bill moves to the Senate, it’s worth noting that there aren’t any Republican Senators from these high-tax states. Republican Senators will look to lower the $40,000 cap, but they ultimately understand that this bill will need to pass the House again and that can’t happen without an increase in the existing SALT cap.
The final word
2028—right around the corner
With Democrats struggling with their messaging against the Republican agenda, the 2028 shadow primary is beginning to be held less and less in the shadows. Democrats eyeing the White House are increasingly open about their 2028 ambitions, abandoning the old playbook of denials and no comments in favor of early moves and visible positioning. These include Governors Andy Beshear (KY), Gavin Newsom (CA), JB Pritzker (IL), and Josh Shapiro (PA) as well as former cabinet officials Gina Raimondo and Pete Buttigieg. They are signaling interest with donor outreach, national travel, media presence, and appearances in early primary states. Their urgency is fueled by the party’s leadership vacuum post-2024, poor polling, and the high financial and organizational hurdles of modern presidential campaigns. With no clear heir apparent and pressure to define a post-Biden vision, potential contenders for 2028 are stepping up earlier and more visibly than in previous cycles.
For more, see Washington Weekly , 23 May 2025.
