The Republican-controlled US House of Representatives has passed the โBig, Beautiful Billโ, the sweeping tax and spending bill by a single vote.
The legislation, which would enact much of President Donald Trumpโs policy agenda, passed early Thursday morning after an overnight session.
The bill, which is now headed to the Senate, will cut taxes, but also saddle the country with trillions of dollars more in debt.
The bill would fulfil many of Trumpโs populist campaign pledges, delivering new tax breaks on tips and car loans and boosting spending on the military and border enforcement. It will add about $3.8 trillion to the federal governmentโs $36.2 trillion in debt over the next decade, according to the nonpartisan Congressional Budget Office.
โThis is arguably the most significant piece of Legislation that will ever be signed in the History of our Country!โ Trump wrote on social media.
The package passed in a 215-214 vote after a marathon push that kept lawmakers debating the bill through two successive nights.
All of the chamberโs Democrats and two Republicans voted against it, while a third Republican voted โpresentโ, neither for nor against the bill. Another Republican missed the vote because he was asleep.
With a narrow 220-212 majority, House Speaker Mike Johnson could not afford to lose more than a handful of votes from his side, and he made several last-minute changes to satisfy various Republican factions.
โThe House has passed generational, truly nation-shaping legislation,โ Johnson said.
The bill is now headed to the Republican-controlled Senate, where it will likely be changed further during weeks of debate.
The 1,100-page bill would extend corporate and individual tax cuts passed in 2017 during Trumpโs first term in office, cancel many green-energy incentives passed by Democratic former President Joe Biden and tighten eligibility for health and food programmes for the poor.
It also would fund Trumpโs crackdown on immigration, adding tens of thousands of border guards and creating the capacity to deport up to one million people each year. Regulations on firearm silencers would be loosened.
The bill passed despite growing concerns about the US debt, which has reached 124 percent of gross domestic product (GDP), prompting a downgrade of the countryโs top-notch credit rating by Moodyโs last week. The US government has recorded budget deficits every year of this century, as Republican and Democratic administrations alike have failed to bring spending into alignment with revenue.
Interest payments accounted for one out of every eight dollars spent by the US government last year, more than the amount spent on the military, according to the CBO. That share is due to grow to one out of every six dollars over the next 10 years as an ageing population pushes up the governmentโs health and pension costs, even if Trumpโs budget bill is not taken into account.
A mixed response
โWeโre not rearranging deck chairs on the Titanic tonight. Weโre putting coal in the boiler and setting a course for the iceberg,โ said Representative Thomas Massie of Kentucky, one of the two Republicans to vote against the bill.
The growing debt has paradoxically given urgency for Republicans to pass the bill, as it would raise the federal governmentโs debt ceiling by $4 trillion. That would avert the prospect of a default, which officials have warned could otherwise come sometime in the middle of this year.
Republicans have also argued that failure to pass the bill would mean an effective tax hike for many Americans, as Trumpโs 2017 tax cuts are due to expire at the end of the year.
Hardliners on the partyโs right flank had pushed for deeper spending cuts to lessen the budget impact, but they met resistance from centrists who worried that would fall too heavily on the 71 million low-income Americans enrolled in the Medicaid health programme. Johnson made changes to address conservativesโ concerns, pulling forward new work requirements for Medicaid recipients to take effect at the end of 2026, two years earlier than before. That would kick several million people off the programme, according to the CBO. The bill also would penalise states that expand Medicaid in the future.
Johnson also expanded a deduction for state and local tax payments from $30,000 to $40,000, which was a priority for a handful of centrist Republicans who represent high-tax states like New York and California. Democrats blasted the bill as disproportionately benefitting the wealthy while cutting benefits for working Americans. The CBO found it would reduce income for the poorest 10 percent of US households and boost income for the top 10 percent.
โThis bill is a scam, a tax scam designed to steal from you, the American people, and give to Trumpโs millionaire and billionaire friends,โ Democratic Representative Jim McGovern said.
Investors, unnerved by the fiscal position of the US and Trumpโs erratic tariff moves, are increasingly selling the dollar and other US assets that make up the bedrock of the global financial system. The three major indices the Dow, Nasdaq and S&P 500 are trending upwards slightly after its worst day in a month following a bond market sell-off yesterday.
JPMorgan Chase Chief Executive Jamie Dimon gave a mixed response to the billโs passage.
โI think they should do the tax bill. I do think itโll stabilise things a little bit, but itโll probably add to the deficit,โ Dimon said at JPMorganโs Global China Summit in Shanghai.
