House Republican leaders plan to submit the bill for a full vote in the House before Memorial Day, followed by consideration in the Senate, with Trump hoping to sign it into law before July 4. It is estimated that this bill will bring a $3.7 trillion deficit to the USA Treasury over the next ten years, specifically including the extension of the 2017 tax cut policy, a significant increase in border security spending, and cuts to various social welfare programs, but there are still disagreements among Republican lawmakers on the details.
Trump's ambitious tax reform and immigration legislation has debuted in Congress, and if passed, it will reshape the functions of the federal government and the economic landscape in the USA, but currently, there are intense divisions within the Republican Party, making the bill's future uncertain.
House Republican leaders recently published the text of a new tax cut and spending reduction bill, aiming to submit it for a full vote in the House before Memorial Day. Subsequently, the bill will be submitted for consideration in the Senate. Trump welcomed the bill on Monday, calling it a 'grand and beautiful bill,' and hopes to sign it into law before July 4.
This massive tax and immigration package will extend the 2017 tax cut policy, significantly increase border security spending, cut several social welfare programs, restrict climate change investments, and introduce various innovative tax credits.
Republicans can use a procedure called 'budget reconciliation' to bypass the lengthy 60-vote threshold for debate in the Senate, allowing them to pass Trump's agenda without Democratic assistance. However, there are still disagreements among Republican lawmakers on the details.
Fiscal conservatives criticize the plan for failing to effectively rein in the continuously expanding federal deficit. According to the latest assessment by the Joint Committee on Taxation (JCT), the tax bill being advanced by Republicans will create a $3.7 trillion deficit in the USA's finances over the next ten years. Although this figure falls within the $4.5 trillion budget outline approved by Congress earlier this year, it has already sparked dissatisfaction among budget hawks within the party.
Some Republicans are also worried that energy projects in their districts will be hindered, and lawmakers opposed to changing the cap on state and local tax deductions have expressed dissatisfaction as well. Additionally, aspects of the plan related to cutting Medicaid have also triggered protests.
However, Republicans hold a narrow majority in the House with only 220 to 213, meaning they can only afford a few defections. Additionally, the Senate's majority of 53-47 is also not sufficient to guarantee smooth passage of the bill.
The following are the core contents of the bill:
Extension of Trump’s tax cut policy, with limited loosening of the SALT cap.
The bill will continue one of the most representative legislative achievements of Trump’s presidency—the personal tax cut provisions in the 2017 Tax Cuts and Jobs Act—and fulfill some (but not all) of the President's campaign promises. Additionally, the bill plans to establish new savings accounts for newborns.
The 2017 tax cut law benefited nearly all income levels, but the main beneficiaries were high-income groups and corporations. Corporate tax reductions are permanent, while the individual portion will expire at the end of this year. The new law not only extends the low personal tax rates but also plans to gradually increase the state and local tax (SALT) deduction limit over the next four years: the limit for joint filers will rise to $32,000, and for individual filers to $16,000.
Immigration policy tightened significantly.
The bill allocates over $140 billion for border security and immigration enforcement. Of this, more than $50 billion will be used to expand the U.S.-Mexico border wall and other defensive facilities; approximately $45 billion will be invested in the construction and operation of detention centers; and an additional $14 billion is dedicated to deportation efforts. This budget allocation highlights the new government's hardline stance on immigration and may bring new business opportunities to related construction, security, and contracting firms.
Social welfare reform: reductions in medical and food assistance.
One of the most controversial parts of the bill is the significant cuts to Medicaid—expected to reduce expenditures by $625 billion over ten years, potentially causing 8.7 million people to lose health insurance, and adding 7.6 million uninsured individuals.
The bill introduces multiple new requirements: implementing a co-payment mechanism for individuals with incomes exceeding 100% of the federal poverty line; establishing a work threshold for most healthy, childless adults.
On Tuesday, as the House Energy and Commerce Committee prepared to review this section of the bill, dozens of protesters (many in wheelchairs) gathered in the hallway to protest. A California nursing assistant, Josephine Rios, pleaded at the entrance for lawmakers, saying, "Where is your conscience? Please vote against it."
Additionally, the bill shifts more management costs of SNAP (Supplemental Nutrition Assistance Program, formerly food stamps) to state governments. The 28 states with high ‘improper payment rates’ will need to bear 25% of the benefit distribution costs and 75% of the administrative expenses. This will force local governments to make difficult choices between cutting benefits and raising taxes.
Targeted tax reduction measures.
The bill also includes several structural tax reduction measures, primarily targeting specific groups, including:
An additional standard deduction of $4,000 for taxpayers aged 65 and over.
Tax reductions on tip income in the service industry.
Introducing a new deduction mechanism to exempt overtime pay from tax burdens.
Consumers allowed to purchase American-made Autos can deduct up to $10,000 in loan interest over four years.
The tax credit limit for each child is raised from $2,000 to $2,500.
It is worth noting that most tax incentive programs require taxpayers to have a Social Security number, which effectively limits the eligibility of non-citizens to enjoy these benefits.
Education policy reshaping: incentives for private schools, pressure on Universities.
The bill makes significant adjustments to the education finance structure: it significantly increases the taxation of Universities' endowment fund earnings and establishes a tiered tax rate system based on the per-student donation size.
At the same time, a four-year tax credit program with a total scale of $20 billion (5 billion dollars per year) is established to encourage families to pay for private school or home education-related expenses.
Another transformative measure is the establishment of the "Growth and Progress Fund Account (MAGA Account)": newborns will receive an initial deposit of $1,000, and parents or guardians can contribute up to $5,000 tax-free each year until the beneficiary turns 31.
Energy policy shift: support for fossil energy and reduction of green incentives.
The bill will eliminate the federal tax credit of up to $7,500 for consumers purchasing electric vehicles and plans to gradually withdraw financial incentives for clean energies like Wind Energy and CECEP Solar Energy.
In contrast, fossil fuel policies are fully reviving. According to the Natural Resources Council assessment, the bill will fund approximately $20 billion through mandatory leasing auctions for Petrochemicals in the Gulf of Mexico and Alaskan reserves.
The defense budget surges: funding secured for the "Golden Dome" system.
The bill allocates about $150 billion to the Department of Defense, covering multiple priority areas:
$34 billion for ammunition and supply chain strengthening.
$33.6 billion invested in shipbuilding projects.
$20 billion for Missile defense and space forces, including support for the "Golden Dome" Intercontinental Missile Defense System, which is one of the strategic military projects strongly advocated by Trump.
Raising the debt ceiling.
Currently, the USA government is theoretically expected to reach its debt ceiling by the end of 2024, and the Treasury Department is taking "extraordinary measures" to delay the risk of default. The Treasury Department stated that these measures will be exhausted by August at the latest. According to the bill, the debt ceiling will be raised by 4 trillion dollars to allow for future budget execution.
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Editor/lambor