The Republican-led US Senate has approved President Donald Trump’s tax and spending legislation, endorsing a substantial package that will enshrine many of his key priorities into law while increasing the national debt by $3.3 trillion (€2.8 trillion).
The bill is now set to return to the House of Representatives for final endorsement.
Mr. Trump has urged legislators to expedite its passage to his desk before the 4 July Independence Day holiday.
Republicans have had to carefully navigate a tight situation while guiding the 940-page bill through a Congress they control by a narrow margin.
US Vice President JD Vance arriving at the US Capitol
Nevertheless, they have largely remained united thus far.
Only three of the Senate’s 53 Republicans voted with the Democrats against the package, which was approved 51 – 50 after US Vice President JD Vance cast the deciding vote.
The upcoming vote in the House, where Republicans hold a 220 – 212 majority, is expected to be similarly close.
An earlier version passed with just two votes to spare in May, and several Republicans in that chamber have expressed opposition to the Senate’s version, which the nonpartisan Congressional Budget Office predicts will increase the national debt by an additional $800 billion compared to the House’s version.
The House Freedom Caucus, comprising hardline conservatives who have consistently threatened to withhold backing for the tax bill, is advocating for greater spending cuts than those proposed by the Senate.
“The Senate’s version adds $651 billion to the deficit – and that’s before interest costs, which nearly double the total,” the caucus stated online yesterday.
“That’s not fiscal responsibility. It’s not what we agreed to,” it added.
A faction of moderate House Republicans, particularly those representing low-income areas, have raised concerns about the deeper Medicaid cuts included in the Senate’s plan.
“I will not support a final bill that eliminates vital funding streams our hospitals rely on,” Representative David Valadao, a California Republican, remarked during the weekend debate.
The bill will repeal many of former president Joe Biden’s green energy incentives
Nonetheless, House Republicans are likely to encounter significant pressure from Mr. Trump in the coming days.
The “One Big Beautiful Bill Act” aims to make permanent Mr. Trump’s 2017 business and personal income tax cuts, which are set to expire at the end of this year, and introduce new tax breaks for tipped income, overtime, and seniors that he promised during the 2024 campaign.
It allocates tens of billions of dollars for the president’s immigration enforcement and would abolish numerous green energy incentives from former Democratic president Joe Biden.
The bill would also tighten eligibility for food and health safety net programs, which nonpartisan analysts indicate would effectively diminish income for poorer Americans who would have to cover more of these expenses.
The Congressional Budget Office (CBO) estimates the latest version of the bill would add $3.3 trillion to the existing $36.2 trillion debt.
This additional debt effectively serves as a wealth transfer from younger to older Americans, nonpartisan analysts argue, as it will impede economic growth, elevate borrowing costs, and limit other government spending in the future.
The bill would also increase the nation’s borrowing limit by $5 trillion, delaying the possibility of a debt default this summer that could disrupt global markets.
Republicans have dismissed the cost estimate generated by the CBO’s established methodology.
However, foreign bond investors are looking to diversify away from US Treasuries as deficits increase.
Republicans assert that the bill will aid families and small businesses and establish a more sustainable path for benefit programs like Medicaid, and they have generally agreed on its main elements.
Yet, the party has encountered difficulties reaching consensus on the funding mechanism for Medicaid, and a tax break for state and local tax payments that is crucial for several House Republicans from high-tax states, including New York, New Jersey, and California.
Others express concern that stricter funding mechanisms for the Medicaid health program could result in service reductions in rural areas.
Some conservatives have pushed for deeper Medicare cuts to alleviate the budgetary impact.
Mr. Trump has publicly singled out those Republican dissenters on his Truth Social platform and excluded them from White House events, with few daring to oppose him since his return to office in January.
Senator Thom Tillis of North Carolina, one Republican who voted against the bill, announced on Sunday that he would not seek re-election next year.
