Trump’s Bill Stalls After Medicaid Setback
Donald Trump’s hallmark legislative effort, the “Big Beautiful Bill,” is facing fresh turbulence after the Senate parliamentarian struck down its proposed $230 billion in Medicare cuts—marking the second time key provisions have been disqualified under budget reconciliation rules. Earlier this spring, the parliamentarian also removed language that would have imposed stricter work requirements on Medicaid recipients and limited certain Affordable Care Act subsidies. The newly eliminated Medicare provision aimed to slow spending by capping annual reimbursement growth to hospitals and outpatient providers to 0.5–0.75 percentage points below medical inflation, generating hundreds of billions in projected savings over a decade. With that offset erased, the bill’s fiscal framework is now in jeopardy, swelling its potential deficit impact beyond $700 billion.
The setback arrives as Republicans enter a make-or-break week to salvage the legislation before the self-imposed July 4th deadline. Trump and GOP leaders have pitched the bill as a signature achievement—combining tax relief, regulatory rollback, and entitlement reform to supercharge growth. However, repeated procedural defeats are fueling criticism that the bill is poorly constructed and politically untenable. Senate moderates are balking at deeper spending cuts, deficit hawks are resisting ballooning red ink, and, notably, Senate Minority Whip John Thune has indicated he will not support any effort to overrule the parliamentarian’s decisions. Republican leadership now faces a delicate balancing act: rewrite the legislation to restore budget compliance or risk a humiliating collapse that could undermine both their economic agenda and their 2026 election prospects.
Base Scenario – Fractured Compromise (60%)
In this scenario, Republicans scramble to rework the Medicaid financing provisions and replace the lost savings with smaller spending cuts and scaled-back tax relief. Though bruised, the leadership brokers a fragile consensus among moderates, deficit hawks, and Trump loyalists. The bill passes the Senate in a narrowly revised form shortly after the July 4th deadline, but only after removing or diluting several high-profile reforms. The final package delivers modest tax incentives and limited regulatory relief rather than the sweeping overhaul Trump initially promised. This outcome remains the most probable because Senate Republicans have strong incentives to secure a legislative win—even an imperfect one—before the summer recess, especially as repeated failures could prove politically catastrophic ahead of the 2026 midterms.
Upside Scenario – Last-Minute Salvage (20%)
Under this more optimistic path, GOP leaders swiftly broker a deal to replace the struck Medicaid savings with alternative offsets—potentially targeting narrower health program efficiencies or delaying some tax incentives to contain deficits. A combination of behind-the-scenes negotiations and procedural maneuvering preserves the bulk of the bill’s tax cuts and regulatory rollbacks. The legislation clears the Senate just before the July 4th deadline, giving Trump a marquee achievement to showcase. Although still controversial, the passage in this form would inject momentum into the Republican agenda and temporarily quiet criticism of Trump’s legislative competence. This scenario is less likely because moderates remain resistant to further entitlement reductions, and the time frame is exceedingly tight.
Downside Scenario – Collapse and Delay (20%)
In this adverse outcome, repeated procedural defeats and mounting intraparty divisions stall negotiations completely. Senate moderates balk at any additional cuts, deficit hawks refuse to accept ballooning red ink, and no compromise emerges in time. The bill either dies outright or is shelved for a lengthy rewrite process stretching deep into the fall. Failure to deliver a major legislative success before the summer recess damages Trump’s credibility and fractures the GOP coalition. Investors and businesses, anticipating stimulus, recalibrate expectations downward, while Democrats seize the narrative to depict Republicans as incompetent stewards of both healthcare and the economy. This scenario remains a credible risk, given the bill’s procedural fragility, unresolved policy tradeoffs, and the fractious nature of the Senate majority.
