A last-ditch push to pass President Donald Trump’s flagship tax and spending package before Memorial Day is faltering in the House of Representatives, with a Congressional Budget Office (CBO) report showing the bill would balloon the deficit by US$3.8tn over the next decade and cut household resources for the poorest Americans by up to 4%.
Speaker Mike Johnson had hoped for a Wednesday floor vote on the “One Big Beautiful Bill Act”, a 1,000-page overhaul of tax and welfare policy. Instead, House Republicans descended into internal deadlock after a marathon 1 a.m. Rules Committee session exposed widening fractures between hardline conservatives and moderates. The bill remains in limbo, with holdouts summoned to the White House for eleventh-hour talks.
“We’re still a long ways away,” said Rep. Andy Harris, chair of the House Freedom Caucus, whose bloc of fiscal hawks is demanding steeper and faster cuts to offset the bill’s tax breaks. Another conservative, Rep. Chip Roy, warned “there’s a long way to go” and suggested the Memorial Day deadline was increasingly unlikely.
The CBO’s preliminary analysis, released Tuesday, intensified market jitters, with the 30-year Treasury yield spiking to 5.08% — its highest level since October 2023. The 10-year yield rose to 4.59%. A lacklustre 20-year bond auction and fears over swelling debt supply also contributed to the surge, rekindling concerns about borrowing costs, inflation, and economic stability.
What’s in the bill?
The legislation would make Trump’s 2017 tax cuts permanent and introduce new provisions including:
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Elimination of federal income tax on tips, overtime pay, and some Social Security benefits
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A higher standard deduction (US$32,000 for joint filers)
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A boosted child tax credit (US$2,500)
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A new US$4,000 deduction for certain older adults
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Temporary car loan interest deductions for US-made vehicles
To offset lost revenue, the bill slashes spending on safety net programs, imposes work requirements on Medicaid and SNAP recipients, and rolls back green energy tax credits. It also includes US$350bn in new spending — US$150bn for defence and a new “Golden Dome” missile shield, and the remainder for immigration enforcement and border security.
The fiscal impact
According to the CBO, the tax components alone would reduce federal revenue by US$3.8tn. Cuts to Medicaid, food stamps, and other services would recoup only US$1tn. Including smaller offsets, the net impact would increase the deficit by over US$2.7tn.
More than 8.6 million Americans would lose health coverage under the bill, and around 3 million would lose access to food stamps. Additional automatic cuts to Medicare — triggered under statutory PAYGO rules — could amount to nearly US$500bn if Congress doesn’t intervene.
Economists warn this debt trajectory could erode investor confidence and trigger higher borrowing costs. Bridgewater founder Ray Dalio cautioned the downgrade risk extended beyond credit ratings: “They don’t include the greater risk that countries in debt will print money to pay their debts,” he said.
Who gains — and who loses?
The CBO’s distributional analysis shows a sharp tilt in benefits toward higher-income households:
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Top decile (top 10%): Household resources rise by 4% in 2027 and 2% in 2033, mainly due to tax cuts.
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Bottom decile: Resources fall by 2% in 2027 and 4% by 2033, driven by cuts to Medicaid and SNAP.
While Republicans argue the bill protects working families and promotes growth, Democrats say it amounts to upward redistribution.
“This is what Republicans are fighting for — lining the pockets of their billionaire donors while children go hungry,” said Rep. Brendan Boyle, the ranking Democrat on the Budget Committee.
House leaders have branded the bill a non-negotiable priority. Trump, speaking at the White House Wednesday, said he felt “very well” about its chances and warned Republicans not to “f— around with Medicaid.”
Path ahead
Even if the bill clears the House, Senate passage is far from certain. Several GOP senators have expressed discomfort with the size and scope of the legislation, raising the possibility that it may need to be broken up or significantly amended.
The Committee for a Responsible Federal Budget estimates the bill would add at least US$3.3tn to the debt, not including secondary effects. The IMF has also urged the US to curb its “ever-increasing” debt burden, warning that current proposals risk further erosion of fiscal credibility.
