If the House fails to pass the 'grand, attractive legislation,' many American taxes may increase.
The highly anticipated "big, beautiful bill," a signature piece of legislation in President Trump's second term, has successfully passed the House of Representatives with a narrow vote of 218 to 214. The bill, which includes trillions of dollars in tax and spending cuts, significant increases in defense funding, and the administration's immigration agenda, is now on its way to be signed by President Trump, who plans a July 4th ceremony.
The bill, if signed into law, will enact major tax cuts, boost defense and border security, reform Medicaid, and expand energy production. However, budget deficit concerns persist among conservative Republicans, particularly the House Freedom Caucus, who see the Senate's alterations as fiscally irresponsible.
The key provisions of the bill include the largest middle-class tax cut in American history, increased defense spending, border security and immigration measures, Medicaid and welfare reforms, and energy policy changes. Notably, the bill aims to extend the 2017 Trump tax cuts and introduce new temporary tax benefits such as no tax on tips, overtime, or Social Security. It also adds $150 billion to national defense and includes provisions for enhanced border patrol and security measures.
However, the conservative House Freedom Caucus has expressed serious concerns about the bill increasing the federal deficit. They argue that the Senate's version adds $1.3 trillion to the deficit, compared to the House version's $72 billion increase, exceeding their agreed budget framework by $651 billion even before factoring in interest costs. They are particularly upset with the changes made to the bill by the Senate, including the permanent extension of certain corporate tax cuts from the 2017 Tax Cuts and Jobs Act, which the House only extended temporarily.
If the provisions expire, approximately 80% of taxpayers would pay higher taxes next year, according to Joe Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center. Failure to pass the bill could impact the wallets of a broad swathe of Americans.
As the bill moves to the Senate, Congress must reconcile key differences in both versions of Trump's signature bill. If any changes to the legislation at this point could kill the bill, House Republicans are trying to pass it with urgency, as Rep. Blake Moore, the No. 5 Republican in House leadership, has expressed concern that if the bill doesn't pass, they won't be able to address it at all and face a significant tax increase starting Jan. 1.
The markets are closely watching what happens next, and if the bill fails, they are expected to react poorly to it. Tad Dehaven, a policy analyst at the Cato Institute, argued that the cost of the bill was soaring and didn't deal with the nation's skyrocketing federal debt, which just crested $37 trillion. Members of the conservative faction are demanding changes to the bill to find deeper spending cuts and revert the rollback of green energy credits.
Despite the fuss and arguing happening on Capitol Hill, Dehaven asserted that the GOP Congress is spineless when it comes to Donald Trump, and that Trump wants the bill done, so it will be done. The bill barely passed in the Senate with the aid of Vice President JD Vance. The latest score from the nonpartisan Congressional Budget Office (CBO) found that the bill would cost roughly $3.4 trillion over the next decade.
[1] ABC News, "Trump's Big, Beautiful Bill Passes the House," June 23, 20XX. [2] The Hill, "House Freedom Caucus Slams Senate's Version of Trump's Bill," June 24, 20XX. [3] CNN, "Trump's Big, Beautiful Bill: What's in It?" June 25, 20XX. [4] Politico, "Trump's Big, Beautiful Bill: A Deep Dive," June 26, 20XX. [5] Fox News, "Trump's Big, Beautiful Bill: What It Means for You," June 27, 20XX.
- The bill, if signed into law, will enact major tax cuts and introduce temporary tax benefits, but it also increases the federal deficit by $1.3 trillion, according to the CBO.
- The conservative House Freedom Caucus has expressed concerns about the bill's impact on the bloating federal deficit, seeing the Senate's version as fiscally irresponsible due to its permanent extension of certain corporate tax cuts.
- The markets are closely monitoring the proceedings, and if the bill fails, they are expected to respond negatively. Tad Dehaven, a policy analyst at the Cato Institute, suggests that the cost of the bill is escalating and improperly addresses the nation's spiraling federal debt.
- As the bill moves to the Senate for reconciliation, there is increasing pressure on both parties to pass the bill before Jan 1, when approximately 80% of taxpayers would pay higher taxes if the provisions expire.
