President Donald Trump’s ambitious $4.5 trillion tax cut and spending bill advanced in the Senate on Saturday after Vice President JD Vance and Senate GOP leaders successfully brokered a fragile truce with internal party holdouts.
The Senate voted 51-49 to begin formal debate on the legislation following hours of closed-door negotiations. The vote was kept open for nearly four hours, underscoring the razor-thin margin and high stakes. Senators Thom Tillis (R-NC) and Rand Paul (R-KY) voted against the motion. At the same time, Senator Ron Johnson (R-WI) switched his vote after securing a commitment to phase out the enhanced 90% Medicaid match under the Affordable Care Act — a change that could yield hundreds of billions in savings but risks alienating moderates.
Trump’s Signature Bill Moves Forward
The procedural win signals progress toward Trump’s self-imposed July 4 deadline for final passage. However, further adjustments are expected as Republicans navigate ideological divides over spending cuts, healthcare reforms, and energy incentives.
The bill, which includes $4.5 trillion in tax cuts, has been structured to minimize its official budget impact. GOP leaders aim to count only $693 billion in the formal cost estimate by using a legislative mechanism that excludes extensions of Trump’s 2017 tax cuts.
Conservatives have demanded deeper spending reductions to offset the cuts, while moderates have pushed back on proposed rollbacks to Medicaid and other safety-net programs. Senators from states with large renewable energy industries are also concerned about the accelerated phase-out of green energy tax incentives.
Key Compromises and Changes
The latest draft includes notable concessions:
- Medicaid Cuts: A new $25 billion rural hospital fund was introduced to appease moderates concerned about the Medicaid rollback. Senator Susan Collins (R-ME) had advocated for a $100 billion package.
- SALT Deduction: The state and local tax (SALT) deduction cap would rise from $10,000 to $40,000 for five years before reverting. A phaseout applies for earners above $500,000.
- Green Energy: Tax credits for wind, solar, and EVs would phase out faster. The EV consumer credit ends after Sept. 30, 2025, instead of the original year-end deadline.
- Medicaid Provider Tax Cap: A delay until 2032 was granted for the full implementation of a 3.5% cap on provider taxes, a key concern for hospital funding.
Debt Ceiling and Additional Tax Breaks
The bill also proposes a $5 trillion increase to the US debt ceiling, preventing a potential default in August. Additional temporary tax breaks are included for tipped workers, seniors, overtime earners, and vehicle buyers.
Democrats have requested a complete reading of the 1,000+ page bill, potentially delaying a final vote until Monday. Senate Republicans are aiming for a Sunday passage to give the House time to vote ahead of the July 3 deadline.
Trump Applies Pressure, Vance Steers Strategy
Trump, monitoring the developments from the Oval Office, reportedly threatened to back a primary challenger to Senator Tillis. Earlier in the day, the president played a round of golf with Senator Paul, a frequent critic.
Vice President JD Vance played a central role in Saturday’s breakthrough, personally lobbying senators and mediating disputes over Medicaid and energy policy. With his involvement, GOP leaders are hopeful they can finalize the package in the coming days.
