Stop Making Reconciliation Worse

As lawmakers continue to negotiate new policies and adjustments to the House’s reconciliation bill, the “One Big Beautiful Bill Act,” the list of expected changes appear to be moving the bill in the wrong direction.  

Updates to the package from May 18th would reverse or delay federal worker retirement reforms – including many with historic bipartisan support – while cancelling some IRA rescission and restoring several tax breaks. Recent press reports have indicated the next version of the bill will also raise the cap on the state and local tax (SALT) deduction to $40,000, phased down between $500,000 and $800,000 of income, compared to $10,000 for all taxpayers this year and $30,000 for taxpayers making below $400,000 in the current version of the bill.  

While there has also been reported discussions of some changes to lower the cost of the bill – such as moving up the start date for work requirements – the additional savings from these changes appear to be much smaller than the additional costs and revenue loss from the SALT, retirement, and other adjustments. Overall, this backsliding has the potential to add hundreds of billions in costs to a bill that would already add more than $3 trillion to the debt.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

The House’s reconciliation framework has been an insult to fiscal responsibility, adding more than $3 trillion to the debt and setting up a massive cliff of tax cuts and spending expirations that could cost trillions more to extend.  

The mission now should be to improve the bill so it doesn’t add to the debt, not to make it even worse – but that’s unfortunately what’s happening.

Leadership’s wheeling and dealing has already increased the bill’s cost by $50 billion by blocking a federal worker retirement reform that even President Obama supported, restoring IRA spending, and keeping a tax break that lets major sports leagues and groups like the AARP earn royalty income tax-free.

And now apparently they want to further expand the SALT cap to help wealthy households pay even lower taxes at the cost of more tax complexity and hundreds of billions less in revenue.

These changes would also worsen the bill and make it more costly.

We are hearing about some encouraging improvements, such as starting spending cuts sooner to make it more likely they actually happen. But even there, there is little discussion of any structural entitlement reforms.

Policymakers should avoid missing the forest for the trees in this process: reconciliation is an opportunity to lower deficits and narrow the gap between spending and revenue, yet we’re taking an already massive debt increase and worsening it at the last minute.

Rather than ditching life vests to make room for more water, policymakers should be negotiating towards a better, cheaper, and more thoughtful approach to this process. At a bare minimum, leadership should not entertain any new changes that raise the bill’s price tag even further. 

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.