The parliamentarian has already struck down several provisions of the bill. The so-called “Byrd droppings” have included one provision to sell public lands and another that would have defunded the Consumer Financial Protection Bureau, meaning Republicans will need to either rewrite those sections of the megabill or abandon them altogether.
But on Thursday, the parliamentarian, Elizabeth MacDonough, stepped into an issue that has been a flashpoint in the Republican Senate conference as it crafts the bill and tries to rush it to Trump’s desk. A major avenue the GOP is using to obtain its targeted cost-cutting is changes to Medicaid. One of the Republicans’ targets is the “provider tax loophole.” States will often tax medical providers, such as hospitals and nursing homes, to fund their Medicaid programs. They will then return that money to the facilities, count it as a Medicaid expense, and receive a portion of it back from the federal government.
Many Republicans have described this system as a costly gimmick. For certain Republican senators, though, the money is a key resource that keeps hospitals in their states afloat. That’s why a provision that incentivizes states to lower their provider taxes alarmed some Republicans, including Sens. Thom Tillis of North Carolina, Susan Collins of Maine, and Josh Hawley of Missouri. In response to their concerns, the conference floated proposals for a rural hospital fund that would support facilities that might be affected by the provider tax provision.
Senators were considering their options when they woke up Thursday morning to learn that the parliamentarian had struck down the provider tax framework. Hawley said the ruling gave the Senate “a chance to get it right.”
“This is a chance for the Senate to fix this problem—that they created—and not defund rural hospitals,” he told TMD.
In the wake of the parliamentarian’s ruling, Republicans are proposing two possible avenues. One is to fire MacDonough, a move Sens. Tommy Tuberville of Alabama and Roger Marshall of Kansas have endorsed.
“She’s been here since 2012. She has a lot of power,” Marshall told reporters. “I don’t think anyone should stay here that long and have power where she doesn’t answer to anybody, so I think we should have a term limit on how many years a parliamentarian can be there. There’s this old saying that absolute power corrupts absolutely. I think it just goes to people’s head. I think that her rulings … would look like, politically, that she’s leaning to the left.”
But other GOP senators are not so keen to dismiss MacDonough, who was appointed by the late Democratic Sen. Harry Reid in 2012 when he was majority leader—and retained by Democrats after she blocked a provision of theirs in a 2021 reconciliation bill that would have increased the federal minimum wage to $15. Earlier this month, Senate Majority Leader John Thune threw cold water on overruling the parliamentarian, and he pushed back against firing her on Thursday. “That would not be a good outcome for getting a bill done,” he said.
Instead, Republicans will try to rewrite the section dealing with the provider tax. “We’re looking for how to achieve the same cuts, regardless of the ruling of the parliamentarian,” Sen. John Cornyn of Texas, who sits on the Finance Committee that has jurisdiction over that part of the bill, told reporters. He said the GOP had “a number of options” and did not express interest in dismissing or overruling MacDonough. “I think we’re doing the usual process and trying to figure out how to achieve the same goal without having to go there,” he added.
It’s unclear how Republicans plan to rework the bill, but whatever they do, it will need to pass muster with the parliamentarian and unite moderates and spending hawks in both the Senate and the House of Representatives, which will have to approve any changes the upper chamber makes.
One of those changes is the level of the cap on the state and local tax (SALT) deduction, a provision that matters to people living in mostly blue states with high property and income taxes. A collection of House Republicans, primarily from New York, successfully convinced Speaker Mike Johnson to raise the cap on the SALT deduction from the current $10,000 to $40,000 in the version of the bill the House passed last month. But the Senate version leaves the $10,000 cap in place, which hasn’t pleased the SALT caucus in the House. Republican Sen. Markwayne Mullin of Oklahoma, who often acts as an unofficial liaison between the two chambers, has attempted—unsuccessfully thus far—to negotiate with the group. “We’re still working through it. Every day we’re getting closer. We’re just letting everybody talk and figure out where we’re going to have a landing spot at,” he told reporters Thursday.
But earlier in the week, Rep. Mike Lawler of New York told TMD he was not willing to budge from the SALT deal he and his cohort negotiated. “Markwayne’s a good guy, and he’s a friend, but the bottom line here is the deal that we negotiated in the House with the House leadership, with the White House, that’s the deal,” he told reporters. “So that’s what ultimately is going to be in the final passage.”
With July 4 one week away, Republicans in the Senate have a host of provisions to hammer out, and Trump is waiting to see the results of their work.
