Key Points:
- Congress narrowly passed President Trump’s $4.5 trillion tax and spending bill, delivering a cornerstone victory for his second-term agenda.
- The bill makes Trump’s 2017 tax cuts permanent, introduces new tax breaks for tips, overtime, and seniors, and raises the child tax credit.
- Major cuts about $1.2 trillion target Medicaid and food assistance, with the Congressional Budget Office warning nearly 12 million could lose health coverage by 2034.
- Roughly $350 billion is allocated to border security and immigration enforcement, including funds for the border wall, mass deportations, and expanded ICE staffing.
- The bill passed the House 218-214 and the Senate 51-50, with Vice President JD Vance casting the tie-breaking vote.
- Democrats unanimously opposed the bill, calling it a “tax giveaway to the rich” paid for by cuts to the social safety net.
- The measure also raises the federal debt ceiling by $5 trillion, with the CBO projecting a $3.3 trillion increase in deficits over the next decade.
- President Trump is expected to sign the bill into law on July 4.
Washington D.C.: In a dramatic and deeply partisan showdown, Congress has passed President Donald Trump’s signature $4.5 trillion tax and spending package, cementing the core of his second-term domestic agenda and delivering sweeping changes to the U.S. tax code, social programs, and immigration enforcement.
Permanent Tax Cuts and New Breaks
- Makes permanent the 2017 Trump tax cuts for individuals and estates, which were set to expire at the end of 2025.
- Expands tax benefits: Workers can now deduct tips and overtime pay, and seniors earning under $75,000 receive a $6,000 deduction.
- Child tax credit rises from $2,000 to $2,200, though millions of low-income families will not receive the full benefit.
- Quadruples the SALT (state and local tax) deduction cap to $40,000 for five years, a key win for high-tax states.
- Business tax cuts allow 100% immediate expensing of equipment and research, aiming to spur investment.
Deep Cuts to Social Programs
- Medicaid and SNAP (food stamps) face $1.2 trillion in cuts, mainly through stricter work requirements and eligibility rules.
- CBO estimates up to 11.8 million Americans could lose health coverage by 2034 as a result.
- Reductions in clean energy funding and other government aid included.
Immigration and Border Security: Historic Funding
- $350 billion for Trump’s border and national security agenda.
- $46 billion for further construction of the U.S.-Mexico border wall.
- $45 billion for 100,000 new beds in migrant detention centers.
- Billions to hire 10,000 additional ICE agents, supporting Trump’s pledge for the largest mass deportation effort in U.S. history.
- Military spending increases, including $25 billion for the “Golden Dome” missile defense system.
Political Drama and Narrow Passage
- Senate passed the bill 51-50 after a marathon session, with Vice President JD Vance breaking the tie; three Republicans joined all Democrats in opposition.
- House passed the bill 218-214, with two Republicans Thomas Massie and Brian Fitzpatrick joining all Democrats against.
- House Minority Leader Hakeem Jeffries delivered a record-breaking 8.5 hour speech denouncing the bill’s impact on the working class and vulnerable Americans.
- Republican leaders, including Speaker Mike Johnson, overcame internal resistance and brokered last-minute deals to secure passage.
- Trump personally lobbied lawmakers and insisted on passage before the July 4 holiday.
Fiscal Impact and Criticism
- Raises the federal debt ceiling by $5 trillion, averting a near-term default but worsening long-term fiscal projections.
- CBO projects the bill will add $3.3 trillion to the deficit over the next decade.
- Democrats and critics argue the bill is a “tax giveaway to the rich,” paid for by slashing the social safety net and increasing inequality.
- Republican leaders claim the bill will “make America stronger, safer, and more prosperous,” touting it as a new “golden age” for the nation.
What Happens Next
- President Trump is expected to sign the bill into law on July 4, marking the most consequential legislative win of his second term.
- The law will reshape federal taxes, social spending, and immigration policy for years to come, with immediate impacts on millions of Americans’ finances and access to benefits.
This sweeping legislation, passed by the narrowest of margins after intense negotiations and partisan clashes, sets the stage for a new era in American fiscal and social policy with consequences that will reverberate through the 2026 midterms and beyond.
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