House Advances Controversial $4.5 Trillion Tax and Spending Bill

On July 3, 2025, the U.S. House of Representatives advanced President Donald Trump's "One Big Beautiful Bill" (OBBB), a comprehensive $4.5 trillion tax and spending package that has ignited intense debate over its potential economic and social impacts.

The OBBB aims to extend the 2017 tax cuts, introduce new deductions—including those for tips and overtime pay—and allocate $350 billion toward national security and immigration enforcement. To offset these expenditures, it proposes $1.2 trillion in cuts to Medicaid, food assistance programs, and green energy investments. The Congressional Budget Office (CBO) estimates that the legislation will add $3.3 trillion to the national debt over the next decade and result in 11.8 million more uninsured individuals.

House Minority Leader Hakeem Jeffries and other Democrats have strongly opposed the bill, arguing that it disproportionately benefits the wealthy while harming vulnerable populations. Despite internal GOP divisions and Democratic resistance, the bill has progressed toward a final vote, with President Trump and House Speaker Mike Johnson actively working to secure its passage.

Background on the One Big Beautiful Bill Act (OBBBA):

The OBBBA, also referred to as the "Big Beautiful Bill," is a proposed budget reconciliation bill in the 119th United States Congress. It passed the House of Representatives on May 22, 2025, by a narrow margin of 215–214–1 and the Senate on July 1, 2025, with a 51–50 vote, where Vice President JD Vance cast the tie-breaking vote.

Key Provisions of the OBBBA:

• Tax Extensions and Deductions: The bill seeks to extend major provisions of the 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025. It introduces new deductions for tips and overtime pay and raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers earning less than $500,000.

• Defense and Immigration Enforcement Funding: An additional $150 billion is allocated for defense spending, focusing on uncrewed drones and other military technologies. The bill also proposes increasing funding for Immigration and Customs Enforcement (ICE) from $10 billion to over $100 billion by 2029.

• Cuts to Social Programs: To offset expenditures, the OBBBA proposes $1.2 trillion in cuts to Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and green energy investments. These cuts include stricter eligibility requirements for Medicaid and SNAP, resulting in an overall reduction in spending on these programs.

Economic and Social Implications:

• Impact on the National Debt: The CBO estimates that the OBBBA would add $2.4 trillion to the national debt by 2034. This figure was later revised to $2.8 trillion.

• Health Insurance Coverage: The CBO projects that the bill would result in 10.9 million more uninsured Americans, with 7.8 million losing coverage due to Medicaid changes and 3.1 million due to changes in the Affordable Care Act (ACA) Marketplaces. When combined with the expiration of enhanced premium tax credits, the number of uninsured could increase by 16 million by 2034.

• Economic Disparities: Analyses indicate that the bill's tax cuts would disproportionately benefit high-income households. The bottom 10% of earners are projected to see a decrease in income, while the top 10% would experience income gains.

Political Reactions:

• Democratic Opposition: House Minority Leader Hakeem Jeffries and other Democrats have strongly opposed the bill, arguing that it disproportionately benefits the wealthy while harming vulnerable populations.

• Republican Support and Divisions: Despite internal GOP divisions, with some members expressing concerns over the bill's impact on the deficit and social programs, House Speaker Mike Johnson and President Trump have been actively working to secure its passage.

Implications:

• Healthcare Access: The projected increase in uninsured individuals could strain the healthcare system, particularly hospitals serving low-income populations.

• Economic Inequality: The bill's provisions may exacerbate income disparities, with tax cuts favoring higher-income households and cuts to social programs affecting lower-income individuals.

• Environmental Policy: The rollback of green energy investments could impact climate change initiatives and the renewable energy sector.

As the OBBBA progresses toward a final vote, it remains a focal point of national debate, with proponents emphasizing economic growth and national security, while opponents highlight concerns over increased debt, healthcare coverage losses, and widening economic inequality.