The Senate has to do…something with President Trump's Big Beautiful Bill. Preferably pass it. In some version.

From news reports and asking around on the Hill, here are the biggest tradeoffs the Senate is focused on.

Making R&D full expensing permanent. Senate Majority Leader John Thune has said publicly that making key business tax incentives permanent is "a red line" for many Finance Committee Republicans, reflecting widespread belif that temporary tax policies create planning uncertainty for businesses. The R&D expensing issue is exemplary because some businesses can face significant tax increases in case of a return to traditional five year amortizing. The House bill provides temporary relief through 2029, but Senate Republicans are pushing for permanent restoration of immediate R&D expensing, viewing it as essential for maintaining America's competitive position against countries like China, which offers a 200% "super deduction" for R&D expenses.

SALT. As you know, the House increased the SALT deduction from $10,000 to $40,000 for taxpayers earning under $500,000. This was necessary to placate blue state Congressmen. There are blue state Republican Congressmen, but there are no blue state Republican Senators. So, Senate Majority Leader Thune has signaled the Senate is likely to scale back the House's SALT provision. The sense is that the final SALT limit will likely be lower than the House's $40,000 cap but higher than the current $10,000 level, requiring careful calibration to balance regional interests with fiscal concerns.

Clean energy tax credits. The House already passed a very watered down version of the IRA's green energy tax credits, with a very slow phaseout that looked designed to never happen. Well, a significant number of Senate Republicans think even that is too much. The IRA tax credits created many jobs in red states. A number of Senators are playing with some sort of even more gradual phase-out (how?) or perhaps a redefinition of the credits as domestic manufacturing credits (interesting).

The fiscal picture. The Senate has to come up with a bill that makes an at least vaguely facially plausible claim of fiscal responsibility, without hammering economic growth or popular programs or tax cuts. Most of the attention is on Medicaid and SNAP, but many Trump voters are on Medicaid and that's a small slice of the Federal budget.

Policy News You Need To Know

#AI — The Senate is considering a moratorium on state AI regulations. This is a very good idea, and R Street has produced a very good explainer/FAQ on this important issue.

#Healthcare — Rural maternity care in the US is highly problemtic. "Last week, the Center for Healthcare Quality & Payment Reform (CHQPR) released an alarming rural maternity care report. It found that over the last five years, 100 rural labor and delivery departments closed throughout the United States. Laboring moms who live in rural areas travel at least 30 minutes, and often close to an hour, to deliver a baby," writes McKenzie Richards at the Cicero Institute. A big culprit is hospital consolidation and dreaded "certificate of need" regulations. Here's more.

#Life — The Washington Examiner has a good report on how the Trump Administration's contemplated push to promote IVF is alienating key religious groups in the coalition.

#FinReg — A very exciting area of financial innovation is prediction markets. However, the regulation of those is murky and much too cumbersome. Which is why it's good that CEI wrote a letter to the CFTC urging some common-sense reforms.

#Budget — President Trump has requested to Congress rescissions to the foreign aid budget. EPIC has a good explainer on this topic.

#Energy #Permitting — Philip Rossetti asks a very good question: "is lighting-fast permitting possible?" New EOs and regulations have tried to speed up the permitting process, aiming to "enable a major project to receive a permit in as little as 28 days instead of the usual two to four years." Sounds amazing. "But is this actually possible?," asks Rossetti. Good question indeed.

#HigherEd — Are we seeing a "north-to-south" brain drain, asks Ilya Shapiro at City Journal? Students are abandoning the elite universities of the Northeast for their freer cousins in the South.

#Trade — Senator Rand Paul has just published an anti-tariff op-ed.

#Energy — R Street has published a useful scorecard ranking states by the competitiveness of their energy markets. Relevant also for Federal policy.