Sweeping tax cuts, safety net overhauls and rising debt define landmark legislation
In a dramatic overnight session, the U.S. House of Representatives passed President Donald Trump’s sweeping legislative package — dubbed the “One Big Beautiful Bill” — by a razor-thin margin of 215 to 214. The 1,000-page-plus bill delivers on key Trump campaign promises, including the permanent extension of the 2017 tax cuts, new incentives for overtime and tipped income, and significant increases in border and defence spending. But it also imposes deep cuts to Medicaid and food assistance programs, adding an estimated US$3.8tn to the federal deficit over the next decade.
A legislative balancing act
House Speaker Mike Johnson (R-La.) secured the win after weeks of tense negotiations, intense lobbying from Trump, and a flurry of last-minute amendments aimed at appeasing both hardline conservatives and moderates. Two Republicans — Thomas Massie (Ky.) and Warren Davidson (Ohio) — voted against the bill, while Andy Harris (Md.), chair of the House Freedom Caucus, voted present.
To bring fiscal conservatives on board, Johnson agreed to accelerate Medicaid work requirements to begin in December 2026 (rather than 2029), slash Biden-era green energy tax credits, and include a rollback of the Supplemental Nutrition Assistance Program (SNAP), which could push millions off food aid. Simultaneously, moderates from high-tax states won a major concession: the SALT deduction cap will quadruple from US$10,000 to US$40,000 for households earning up to US$500,000, indexed annually at 1%.
Key provisions in the bill include:
- Permanent extension of the 2017 Trump tax cuts
- Temporary tax exemptions for tips, overtime, and car loan interest (until 2028)
- Enhanced deductions for seniors and families with children
- US$50bn for new border wall construction and mass deportation infrastructure
- Elimination of tax credits for electric vehicles and renewable energy projects from 2029
- New “Trump accounts” — renamed from “MAGA accounts” — granting US$1,000 to newborns
- Work requirements for Medicaid and SNAP recipients aged up to 64
- Creation of a US$12bn fund for states aiding deportation efforts
- Deregulation of gun silencers
Debt, deficit and dissent
Despite Republican enthusiasm, the Congressional Budget Office (CBO) estimates the legislation will worsen the national debt, increasing it by US$3.8tn over a decade, while disproportionately benefiting wealthy households. Analysts warn the poorest Americans will see household resources drop by up to 4%, while high-income households will gain up to 4%.
Deficit hawks expressed alarm. “This bill is a debt bomb ticking,” said Rep. Massie, who was unmoved by Trump’s personal appeals. Critics, including Minority Leader Hakeem Jeffries, lambasted the process as rushed and opaque, with Democrats united in opposition. “This is one big, ugly bill,” Jeffries said, warning it would devastate hospitals, nursing homes, and low-income families.
Former President Barack Obama also weighed in, calling the cuts “reckless” and urging senators to reject the measure.
Next stop: Senate battle
The bill now moves to the Senate, where Majority Leader John Thune (R-S.D.) has committed to a July 4 deadline for passage. But significant revisions are expected, with Republicans divided over the bill’s fiscal impact, Medicaid restrictions, and energy rollbacks. Sen. Ron Johnson (R-Wis.) called for up to US$6.5tn in cuts, while Sen. Rand Paul (R-Ky.) signalled he would oppose any increase to the debt ceiling.
Democrats, lacking the numbers to block the bill outright under reconciliation rules, are focusing on public messaging. Senate Minority Leader Chuck Schumer warned that the bill would “strip healthcare from millions and funnel wealth to billionaires.”
Trump urges speed, markets jittery
President Trump celebrated the House vote as “historic,” urging the Senate to act “as soon as possible.” Yet the financial markets responded warily: Treasury yields surged, with the 30-year bond topping 5.09%, amid fears of expanding deficits and renewed credit rating pressure following last week’s downgrade by Moody’s.
As the Senate takes up the measure, both the substance of the bill and the political stakes will face even sharper scrutiny. With midterms looming, Democrats aim to weaponise the GOP’s “big, beautiful bill” — while Republicans gamble it will become a defining legislative victory for Trump’s second term.
