U.S. House Speaker Mike Johnson said he had agreed with Republicans’ reservations to state tax breaks, proving that Donald Trump’s exhibition fiscal legislation was a barrier.
Johnson added that he would take out more than $300 million on the floor of the House, with Republicans having the fastest 220-213 majority votes on Wednesday.
"We plan to do this tonight if possible," he said.
Global markets have been watching the bill’s progress, a warning from economists about the growing U.S. fiscal deficit and anxiety in the bond market about the country’s debt burden.
Traders dare to bet that the budget bill would lead to a boom in government debt issuances when longer fiscal yields rise. The fiscal return on fiscal revenue rose by 0.05 percentage points to 5.02% over the past 30 years.
Many Republican lawmakers from high-tax countries have threatened to derail the legislation, which the president calls it his “big and beautiful bill” that includes massive tax breaks and in-depth cuts to Medicaid.
But on Wednesday, Johnson said a "agre" had been reached to raise the cap on state and local taxes (called salt taxes) that could be deducted from federal taxes.
"I think the Salt Caucus calls themselves everything they want, but I think they know what huge improvements their constituents have brought, and that gives them a lot of things to go home and talk about," Johnson said.
The Senate also needs to pass Republicans to control the legislation. Democrats in both parliament are expected to vote against the bill.
Johnson tried all night to unite the warring factions at the House Republican meeting to discuss many of the issues in the legislation.
To win votes from a handful of Republicans in New York, New Jersey and California, Johnson proposed to raise the salt deduction limit to $40,000 and had some income limits.
The bill will be at the heart of Trump's legislative agenda for the second term of his term and expands many of the tax cuts he paid in 2017.
Its passage will mark a major political victory for the president, whose approval rating has been in trouble after weeks of market turmoil caused by his trade war.
Trump himself went to Congress on Tuesday to try to calm Republican opposition to the bill.
But its proposed tax cuts also shocked investors, who fear the bill would increase the debt burden in the United States and damage its fiscal position. Some Republicans are seeking deeper tax cuts, while others are demanding more spending cuts.
As Trump promised during his 2024 campaign, this will also extend personal income tax relief, as well as increased standard deductions and child tax credits, taxes on tips and overtime pay.
The non-partisan committee of the non-partisan federal budget estimates that the bill will increase U.S. national debt by 3.3 tons over the next decade.
This will allow the public to increase their debt from 98% of today's GDP to 125% of record GDP by the end of the period, the committee said.
Moody's deprived the U.S. of triple credit rating last week because of fears of deficit deficits and long-term fiscal yields have also increased.
Trump tried to appeal to moderates by saying the bill did not cut anything "meaningful" but was just "waste, fraud and abuse."
Russell Vought, director of the Office of Management and Budget, said the legislation included the biggest spending cuts in the past three decades. However, conservatives have pushed for further cuts.
South Dakota Republican Dusty Johnson "clearly stated that he wants us to pass the bill" in a meeting with Congressman Trump on Tuesday. “He hopes we don’t mess it up anymore.”
Other reports by Kate Duguid