A sweeping overhaul of Medicaid provider taxes, central to President Donald Trump’s ambitious tax cut and spending legislation, has hit a major roadblock in the U.S. Senate after the chamber’s parliamentarian ruled it violates procedural rules.
The guidance, delivered late Wednesday, is a significant setback for Republicans who had hoped to finalize the legislation by Friday, ahead of a self-imposed July 4 deadline. The ruling forces GOP leaders to revise parts of the bill that were expected to yield massive savings to offset $3.8 trillion in tax breaks.
Republicans had counted on the Medicaid cuts and similar reductions to nutrition assistance programs to fund extensions of Trump-era tax reductions, which are due to expire in December. The parliamentarian also struck down GOP proposals that sought to bar certain immigrants from accessing government health care programs.
Senate Majority Leader John Thune said Republicans are exploring “contingency plans” but signaled the path forward would now be more complicated. “We’re plowing forward,” Thune said Thursday, though the planned weekend vote appeared increasingly unlikely.
Democrats Declare Victory — For Now
Democrats were quick to claim the ruling as a victory for vulnerable communities. Senate Finance Committee ranking member Ron Wyden called the rejected provisions a “massive Medicaid cut” that would have jeopardized care for children, seniors, disabled Americans and working families.
Senate Minority Leader Chuck Schumer and Senator Elizabeth Warren joined Wyden at a press briefing, where they accused Republicans of attempting to gut safety net programs while enriching the wealthy.
“This would have meant $250 billion less for health care,” Wyden said.
Trump Urges Speed as GOP Scrambles for Fixes
At the White House, President Trump hosted House Speaker Mike Johnson and Republican lawmakers to push for rapid progress on what he called a “big, beautiful bill” that includes hundreds of tax breaks and spending cuts. Surrounded by truckers, tipped workers, ranchers and firefighters, Trump urged unity among Republicans and warned against “grandstanders” delaying the process.
“There are hundreds of things in this bill. It’s so good,” Trump said.
Trump has made the tax package a priority, especially ahead of the 2026 midterm elections, and sees it as critical to delivering on campaign promises of economic relief and stricter immigration controls.
Internal GOP Divisions Deepen
The parliamentarian’s decision has exposed deeper divides within the Republican conference. Several GOP senators — especially those representing rural states — had already voiced concerns about slashing Medicaid funding via a freeze or cut in state-imposed provider taxes.
Senator Josh Hawley of Missouri said he spoke with Trump personally, who advised reverting to the House version of the bill. Senator Susan Collins of Maine has called for as much as $100 billion in backup funds to help rural hospitals cope, far exceeding the $15 billion rural fund some GOP leaders had proposed.
“There are hospitals that will close if we go too far,” warned Senator Thom Tillis of North Carolina.
Broader Challenges to the Bill
The parliamentarian, who enforces the Byrd Rule to keep non-budgetary policy out of reconciliation bills, has rejected multiple other provisions in recent days, including GOP attempts to curtail immigrant access to health care, eliminate the Consumer Financial Protection Bureau, and restrict student loan forgiveness.
Still, key Republicans, including Senator Lindsey Graham, chair of the Budget Committee, have dismissed calls from the right to fire the parliamentarian.
“We’re working with the office to find a pathway forward,” Graham said in a statement.
Senator Kevin Cramer added that Republicans remain committed to the chamber’s rules. “It’s the institutional integrity,” he said. “Even if I’m convinced 100% she’s wrong.”
Meanwhile, Treasury Secretary Scott Bessent persuaded Republicans to drop another revenue-generating measure — the so-called “revenge tax,” or Section 899 — which would have targeted companies with foreign ownership. Bessent said he reached separate tax agreements with the affected countries, effectively nullifying the need for the provision.
What Comes Next
The Senate GOP now faces a rapidly narrowing window to amend the bill and keep the momentum alive. With only a slim 53-47 majority, any delays or defections could be fatal to the bill’s passage. Democrats remain united in opposition.
The nonpartisan Congressional Budget Office has warned that under the House-passed version of the bill, more than 10.9 million people would lose Medicaid coverage. The Senate version was expected to result in even deeper losses.
With pressure mounting from both the White House and constituents, Republican lawmakers must now decide whether to trim their ambitions or risk a procedural collapse in the final stretch.
For now, the fate of Trump’s signature legislative effort hangs in the balance a high-stakes standoff that will determine the future of tax policy, health care access, and the strength of America’s social safety net.
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