The US House of Representatives recently passed President Donald Trump’s One Big Beautiful Bill Act by a narrow margin of 215-214 votes. The legislation, aimed at making permanent the tax cuts introduced in 2017, will now move to the Senate for further deliberation.
The comprehensive bill contains several key provisions, including exemptions for tips, overtime pay, and car loan interests. It also raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for incomes under $500,000. Additionally, the child tax credit will increase to $2,500 through 2028 before reverting to $2,000, and $1,000 savings accounts will be established for children born during Trump’s second term. The bill also includes a 5% tax on remittances.
In terms of defense and border security, the legislation allocates approximately $150 billion to defense, with $20 billion designated for a missile defense system. A significant portion of the funding will go towards border security, including $50 billion for completing the southern border wall.
Social program cuts and education reforms are also part of the bill, such as the implementation of work requirements for Medicaid and SNAP beneficiaries. Federal direct subsidized loans for undergraduates will be discontinued, and stricter eligibility criteria will be introduced for Pell Grants. Additionally, there will be a reduction in green energy tax credits from the Biden-era Inflation Reduction Act.
The Congressional Budget Office (CBO) estimates that the bill will add around $3.8 trillion to the national debt over the next decade, bringing it to 125% of GDP. The proposed changes are expected to result in 8.6 million fewer individuals having healthcare coverage and 3 million fewer people receiving SNAP food stamp benefits each month.
Unsurprisingly, the bill faced strong opposition from Democrats, with unanimous Democratic opposition and some Republican members also voting against it. Democrats criticize the bill for favoring the wealthy and cutting essential services for vulnerable populations.
The Senate will now review the bill, with debates likely to focus on its fiscal implications and social program reforms. Any amendments made will need to be reconciled with the House version before the bill can be enacted into law.
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