Trump-backed mega bill clears House budget panel

Bloomberg News

A Trump-backed tax and spending bill cleared the House Budget Committee Sunday night along party lines after conservative lawmakers on the panel — who on Friday blocked the legislation's passage because it did not make large enough cuts to Medicaid — reversed course. 

The sweeping bill — containing several provisions favorable to banks — is now back on track for consideration by other committees, but could still be changed prior to a final deal. House leaders say they still need to tweak it to lock down full support, and it faces a steep climb in the Senate, where Republicans say it won't move without big changes.

It's not yet clear what changes were made to break the committee deadlock. The hard-line conservative members —  including Republican lawmakers Chip Roy of Texas, Ralph Norman of South Carolina, Josh Brecheen of Oklahoma and Andrew Clyde of Georgia — had opposed the measure heading into the weekend, but changed their votes to "present" on Sunday to allow the bill to pass the budget committee. 

Last week the House Ways and Means Committee advanced a portion of the bill that preserves credit unions' federal tax exemption — a key win for the credit union industry — but leaves the door open to future threats. Though the latest draft did not include a repeal, some Republicans had floated eliminating the exemption to fund extensions of the 2017 Trump tax cuts.

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While the exemption remains intact in the current version, the fact that some Republicans floated eliminating it as a potential offset to fund other provisions suggests the idea could resurface. As negotiations continue the credit union exemption could reemerge as a bargaining chip in the final stretch.

Several bank-friendly provisions have surfaced in the legislative package under negotiation. The bill would make permanent the pass-through tax deduction, a move that would benefit many community banks organized as Subchapter S corporations with less than 75 shareholders. It also includes a rural lending measure that would support small banks in agricultural areas by exempting taxation interest on loans backed by farmland or residential mortgages under $750,000. Another proposal would create government-subsidized savings accounts for children that could open new business opportunities for banks and brokers. In addition, the bill would repeal a reporting requirement for payment platforms.

House Speaker Mike Johnson, R-La., said late Sunday that he wants a full House vote on the package by Thursday and has set a deadline to pass the bill by Memorial Day. The House Rules Committee is set to take up the measure at 1 a.m. Wednesday morning.