GOP bill clears key House panel

Win McNamee/Bloomberg

The House Budget committee late Sunday passed the Republicans' massive tax and budget reconciliation bill, queuing it up for potential changes and another key vote later this week.

Four Republican conservatives who tanked the legislation Friday agreed Sunday to vote 'present' after a weekend negotiations that included the White House. The 17-16 party-line vote advances the bill to the Rules Committee, where changes are likely to be incorporated to assuage holdouts.

"I joined with 3 of my colleagues to vote 'present' out of respect for the Republican Conference and the President to move the bill forward," Rep. Chip Roy, R-Texas, posted on X after the late-night vote.

"It gives us the opportunity to work together this week to get the job done in light of the fact our bond rating was dropped yet again due to historic fiscal mismanagement by both parties," said Roy, who also sits on the Rules committee. "But we have to do more to deliver for the American people."

Moody's Investors Service Friday downgraded the U.S. sovereign rating to Aa1 from Aaa, marking the third ratings agency to strip the U.S. of its triple-A rating. Moody's cited large annual fiscal deficits and growing debt as part of what prompted the downgrade.

The municipal bond market has so far escaped becoming a target in the bill.

Roy and other House Freedom Caucus members want the reconciliation bill to cut more spending, especially to Medicaid and clean energy credit programs. Conservative lawmakers also want the bill to halt what Roy called a "perverse funding structure" of FMAP, the formula by which the federal government calculates Medicaid payments to states.

Democrats have said that 13 million Americans will lose health care under the bill. Republicans peg the number at around 8 million.

Republicans have also yet to hammer out a deal on the state and local tax deduction cap, which has emerged as a major hang up. The current bill lifts the cap to $30,000 from $10,000, but that remains too low for the SALT Caucus. Republican leaders have reportedly floated a $40,000 compromise.

The House Rules Committee is currently scheduled to hold its hearing on the package Wednesday morning at 1 a.m. 

House Speaker Mike Johnson, R-La., still hopes to pass the "big beautiful bill" before this week's Memorial Day break. Then it will head to the Senate, where it's expected to undergo another swath of changes. Republican leaders have said they want to send it to President Donald Trump's desk by July 4.