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Your Guide to What Trump’s Second Season Means Washington, Business and World
Donald Trump is on the verge of ensuring his flagship tax passes and spending laws in the lower chambers of the US Congress.
The vast bill that cuts US taxes and increases federal debt is at the heart of the president’s second term agenda and has become a topic of fierce battle among Republicans in the House of Representatives.
Lawmakers are divided into spending on health and social care programs and fears about debts that pose a bulging nation. The president repeatedly stepped in last week to put pressure on him to pass the bill. caveat That is, “the Republican Party doesn’t need ancestors.”
What are the bills?
More than a thousand pages of laws, dubbed Trump’s “One Big Beautiful Bill Act,” extends many of the 2017 tax cuts passed during his first period. These include individual income tax cuts and increased child tax credits, as well as tips to pledge the Central Campaign pledge during last year’s elections and elimination of taxes on overtime payments.
Other measures include over $50 billion more than $500 billion to promote border security, including increased real estate and gift tax exemptions, as well as a wide range of business tax credits, and further construction of walls along the border with Mexico that Trump has vowed to complete.
Republicans have cut the bill’s price tag by significantly reducing nearly $800 million from Medicaid – the US health system for the poor – and And hundreds of billions more From the Food Stamp Program and Clean Energy Tax Credit. And, according to the joint tax committee, taxes on investment income from universities and private foundations will increase, raising more than $220 billion.
What happens after it passes in Congress?
Once the law is passed in the House, it will advance to the Republican-controlled Senate. There are 100 members in the upper chamber of Congress, and at least 50 of the 53 Republican senators must support a bill to sign it into law.
If the Senate makes changes to legislation, they will have to return to the House for another vote. With Democrats expected to be overwhelmingly opposed to the bill, the fate in the Senate will depend on whether Republican majority leader John Tune can make compromises between moderate lawmakers such as Susan Collins of Maine and anti-government spending hardliners such as Mike Lee of Atta and Rand Paul of Kentucky.
But as in the House, his party will be underwhelming pressure from Trump to support legislation.
How will that affect the US finances?
Analysis by independent bodies such as the Nonpartisan Committee for the Responsibility Budget and the Wharton School at the University of Pennsylvania found that the bill would add 3.3 tons to US debt over the next decade.
This means that GDP levels jump from the world’s largest economy’s debt to 98% to 125% by the end of the period. This is a level well above the previous highs reached in the aftermath of World War II.
Trump’s team says the law, along with growth-enhancing policies such as lowering taxes and deregulation, will help halve the US yawning budget deficit, which was 6.4% in 2024.
The President’s Council of Economic Advisors argues that the bill will increase true economic growth by up to 5.2% over the next four years, create or save up to 7.4 million jobs, and increase investments by up to 14.5% over the next four years.
But others have warned that the effects of tax cuts and other measures will undermine the US economy. They “may have an impact on boosting growth, but certainly not enough to offset the impact of the settlement bill on the US debt-to-GDP ratio,” said Maury Obstfeld, former chief economist at the IMF, currently at a think tank at the Peterson Institute.
He added that the bill “can put the US Treasury on the path to Triple B status just days after the US lost its Triple A credit rating.
What does it mean to Trump?
The passing of legislation is important to the president’s second term agenda, and he will argue it as a major political victory. He also hopes it improves his approval rating. RealClearPolitics Polling average.
If lawmakers fail to approve the bill, tax rates will rise completely next year, providing a financial hit for households and businesses in the midterm election year.
But the law could backfire for Trump. The Democratic attack on the original tax cuts in 2017 helped regain control of the house in the middle of 2018.
