Mike Lawler: New SALT Deal a 'Big Win'

Representative Mike Lawler (R) NY shares his thoughts on tentatively reaching a deal on SALT with his Republican colleagues in the Senate. Rep. Lawler talks about how this deal could benefit additional states outside of New York, New Jersey, and California & the potential hurdle the House is facing as the self-imposed tax bill deadline looms. Representative Lawler speaks with Kailey Leinz and Joe Mathieu on the late edition of Bloomberg's "Balance of Power."

President Donald Trump amped up pressure on Congress to speed passage of his tax-cut bill as Republicans reached a tentative deal on the state and local tax deduction, one of the key sticking points in the negotiations.

“The House of Representatives must be ready to send it to my desk before July 4th — We can get it done,” Trump said on Truth Social Friday.

The new deadline — before July 4 — is somewhat of a reversal for the president who, hours earlier told reporters that it wouldn’t be the “end-all” if Congress missed the self-imposed Independence Day goal.

On Friday afternoon, the tentative SALT deal suggested that Republicans may have momentum on their side. The agreement involved raising the limit on the state and local tax deduction to $40,000 a year for a five-year period, Senator John Hoeven told reporters.

New York Republican Mike Lawler, a key negotiator, later confirmed the deal and told Bloomberg TV he believes it “will pass.” The new cap would provide complete SALT relief to more than 90% of his constituents, he estimated.

But the SALT Caucus isn’t united on the agreement, with Nick LaLota of New York refusing to back the deal because it would ultimately revert back to the $10,000 cap.

“While I support the President’s broader agenda, I can’t in good conscience back the same unfair $10,000 SALT cap I’ve spent years criticizing,” the New York Republican said in a statement. “My constituents would see that for what it is —hypocrisy.”

His opposition is potentially problematic for Republicans in the narrowly divided House, where every vote matters.

Lawler, LaLota and other GOP lawmakers from New York, New Jersey and California had pressed to preserve a deal included in the House bill that increased the deduction cap to $40,000, up from the $10,000 in current law, for 10 years. The original Senate draft kept the write-off at $10,000.

The latest deal retains a House proposal to phase out the deduction for taxpayers with at least $500,000 in income, a person familiar said, who requested anonymity to discuss private conversations.

Republicans also plan to drop new limits they had sought on pass-through businesses’ deductions of state and local tax taxes, the person said.

Until now, some business owners in most states haven’t actually needed to abide by the SALT cap that applies to everyone else, thanks to legal workarounds approved by legislatures in New York, New Jersey, Connecticut, California and dozens of other states.

The House version of Trump’s massive tax and spending package put curbs on those workarounds.

The SALT provision has been one of several holdups for the Trump tax bill in the Senate.

Senate Republican Leader John Thune is also trying to navigate competing demands from conservatives and moderates on social safety net cuts and the elimination of clean energy tax credits. He will need to resolve most of the disputes to secure the votes he needs to pass the bill.

Senators said the tentative plan is to begin voting on the bill Saturday midday.

The massive tax and spending package is the legislative centerpiece of Trump’s economic agenda. The Senate version makes permanent individual and business tax breaks enacted in 2017, while adding temporary new breaks for tipped and overtime workers, seniors and car-buyers.

The bill would add hundreds of billions of dollars in new spending for the military, border patrol and immigration enforcement. To partly pay for the revenue losses, the bill reduces spending on Medicaid health insurance for the poor and disabled, food assistance for low-income Americans and financial aid to college students.

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