|
Merin Treesa Alex
6 July 2025 |
The following note was earlier published in The World This Week #318 Vol 7, No 27, 6 July 2025
One Big Beautiful Bill Act:
One bill, several issues at stake
Merin Treesa Alex
What happened?
On 1 July, the Senate passed H.R. 1/One Big Beautiful Bill Act, by a narrow 51–50 vote. Vice President J.D. Vance casted the tiebreaking vote after over 24 hours of amendment debates. On the same day, Elon Musk criticised the bill, calling it a “disgusting abomination,” and called for the formation of a new political party
On 3 July, the House of Representatives passed the bill 218–214, with nearly all 212 Democrats opposing it. The bill increases military spending and funds major migrant deportation programs.
On 4 July, President Trump signed the bill into law, calling it a “birthday present for America.”. Several provisions initially included in the bill were ultimately removed.
On 28 June, Trump warned Senate Republicans that failing to pass the bill would be an “ultimate betrayal.” The White House stated that the bill's passing would lead to economic growth nationwide
The Big Beautiful Bill is a domestic policy bill focused on tax cuts and a budget reconciliation package for fiscal year 2025. It was introduced as H.R. 1 and spans over 900 pages. It extends and makes the Tax Cuts and Jobs Act (TCJA) of 2017 permanent, as it is set to expire in 2025. The bill also imposes a one per cent tax on migrant remittances sent to families, which applies only to cash transfers; bank and card transfers are exempt.
What is the background?
First, a brief note on the Tax Cuts and Jobs Act (TCJA). TCJA was signed into law in December 2017 during President Trump’s first term, which lowered individual tax rates and decreased the top marginal rate from 39.6 per cent to 37 per cent. Further, it doubled the standard deduction to USD 12,400 (single filers) and USD 24,800 (married filers), eliminated personal exemptions, and revoked the Affordable Care Act’s mandate penalty. The state and local tax (SALT) deduction was capped at USD 10,000, and the Child Tax Credit was doubled to USD 2,000. Additionally, the TCJA reduced the corporate tax rate from 35 per cent to 21 per cent. Also it allowed 100 per cent bonus depreciation for certain capital investments and limited the interest expense deductions.
Second, a brief note on Trump’s aversion to social welfare programs. During his first term, Trump, proposed budget cuts for safety net programs, including USD 800 billion from Medicaid, which provides health coverage to low-income families, seniors, and people with disabilities, and reduced the funding for Supplemental Nutrition Assistance Program (SNAP, food stamps), which helps meet basic food needs. These proposals faced strong opposition from Democrats in Congress.
Third, a brief note on Trump’s push for a conventional source of energy. In the first term, Trump withdrew from the Paris climate agreement in 2017, which portrayed his priority towards conventional energy in contrast to global climate commitments. He emphasised the “America First Energy Plan,” which focused on expanding fossil fuels and deregulating environmental rules such as the Clean Power Plan proposed by the Obama administration. He also approved pipelines to increase energy infrastructure, supporting domestic production. Trump’s energy policy was explicitly rooted in fossil fuels. In 2024, Trump, during his election campaigning, stated that solar and wind energy projects were too expensive and had limited outputs. He strongly opposed Biden’s EV subsidies and vehicle efficiency rule, stating that they are a danger to the automobile industry and claimed that all are manufactured in China.
Fourth, a brief note on Trump's focus on military and immigration enforcement. During his first term, defence budgets increased from USD 619 billion to USD 740 billion (2021), funding nuclear upgrades, F-35 jets, naval ships, the Space Force, military pay raises, and veteran healthcare. Immigration policies included building 452 miles of border wall and implementing the “Remain in Mexico” policy, which affected more than 71,000 asylum seekers. During, President Trump’s second term, the administration promised to reinstate this policy and end the catch-and-release policy introduced by the Biden administration.
What does it mean?
First, the bill would widen the wealth gap, with TCJA becoming permanent, saving wealthy households USD 12,000 annually and increasing the SALT cap to USD 40,000 from USD 10,000, benefiting high earners and corporations. The new tax provisions, like the no tax on tips and overtime, could provide a short-term relief, as they would expire after 2028
Second, low-income and disabled Americans are likely to face heightened vulnerability. The budget for Medicaid would face cuts of 18 per cent, and the renewed work requirements for parents with children over 14 limit access to food and healthcare for millions and would increase the costs for low-income households by USD 1,600 yearly.
Third, the impact of bill’s termination of Inflation Reduction Act clean energy credits on EV manufacturers. This proposition of the bill would adversely impact EV manufacturers like Tesla and Rivian. This move signals a shift away from sustainability toward conventional energy like fossil fuels.
About the Author
Merin Treesa Alex is a postgraduate student at the Department of International Studies, Stella Maris College, Chennai.
