Republican leaders scored a win Thursday morning with the passage of the multi-trillion budget reconciliation package, moving forward President Donald Trump’s permanent tax cuts, border security funding, and energy initiatives.
But the One Big Beautiful Bill Act still has a long way to go before it becomes law.
The bill, compiled from eleven House committees, fulfills the Republican budget resolution’s spending and saving instructions, will add at least $3.3 trillion to the national debt and increase the primary deficit by $3.2 trillion over the next decade.
It also includes a $4 trillion debt ceiling hike and major spending reductions to Medicaid, SNAP, and renewable energy grants.
All Democrats voted against the bill Thursday morning, with Rep. Jim McGovern, D-Mass., dubbing it “a rotten, ugly, bad bill” and Ranking Member of the House Budget Committee Brendan Boyle, D-Penn., calling it “a betrayal of the middle class.”
Due to two Republican “no” votes, the bill barely passed the House after a 19-hour House Rules Committee hearing, where lawmakers adopted multiple compromise amendments to placate key GOP holdouts.
Fiscal hawks had demanded more Medicaid spending reductions and sooner expiration dates for renewable energy subsidies, while New York Republicans opposed what they viewed as inadequate state and local tax (SALT) deduction cap provisions.
During the hearing, lawmakers adopted an amendment boosting the proposed SALT deduction cap from $30,000 — up from $10,000 — to $40,000 for taxpayers making up to $500,000.
They also moved forward some of the phaseout deadlines for multiple energy and climate subsidies in the Inflation Reduction Act, requiring corporations to build and make serviceable any qualifying energy projects by 2028, rather than 2032, to collect the clean electricity production and investment credits. Nuclear energy projects received an exemption, giving developers until 2031 to finish their projects.
Another change amended the bill’s Medicaid provisions, which had included reverting Medicaid eligibility requirements back to pre-COVID-19 standards, closing financing loopholes exploited by states, and imposing work requirements on most able-bodied adult recipients without dependents by 2029.
To gain the support of fiscal hardliners, the amendment accelerates the work requirement deadline to take effect in 2026 and also prevents states from implementing new taxes on providers, which Democrats called “cruel.”
But House Budget Committee Chairman Jodey Arrington, R-Texas, accused Democrats of “scaring” Americans with “fallacious statements” about what the cost-cutting reforms would do.
Total savings included in the bill now amount to over $1.5 trillion, only partially covering the most important provision of the bill: permanently extending the 2017 Tax Cuts and Jobs Act.
That includes the $15,000 standard deduction, 20% Qualified Business Income (QBI) deduction, and $2,000 child tax credit — although both parents would now need a social security number to claim it.
The legislation also includes some short-term tax provisions lasting four years, including boosting the standard deduction for single filers by $1,000 and joint filers by $2,000. The maximum child tax credit would see a $500 increase and the QBI deduction would rise to 23%.
Other temporary changes lasting until 2028 include nixing taxes on tips and overtime, making the Adoption Tax Credit partially refundable, ending interest on loans for American cars, and increasing tax deductions for eligible seniors by $4,000.
The bill’s advancement marks yet another odds-defying victory for House Speaker Mike Johnson, R-La., who spent weeks negotiating with House Republican holdouts. But his work is far from over, as Senate Republicans will include changes of their own to Medicaid and IRA subsidy cuts.
The Senate’s spending plans will likely also skyrocket the cost of the already expensive bill, due to the budget resolution allowing Senate committees an extra $1.5 trillion spending ceiling and an only $4 billion savings floor.
While House committees operated under the current law baseline, which assumes that extending the tax cuts would result in trillions of lost federal revenue — hence their work to find $1.5 trillion in cuts, assuming economic growth would offset the rest of the package — the Senate has decided to adopt a current policy baseline when calculating their costs.
The controversial accounting tactic, which critics call a “gimmick,” treats the tax cut extension as a continuation of current law rather than new policy, theoretically zeroing out the cost of permanently codifying the TCJA.
The Committee for a Responsible Federal Budget has condemned Republicans’ usage of two different baselines to score different parts of the same bill.
“It appears then that lawmakers in the Senate intend to use a ‘current policy’ baseline to score the extension of parts of the TCJA – which implies that permanently extending a temporary policy has no fiscal impact – while simultaneously using a current law baseline to score their new tax cuts – which implies savings from making them temporary,” the organization lamented in April.
The Congressional Budget Office has estimated the final budget package could add at least $37 trillion to the national debt over the next 30 years, a more than 100% increase from the current amount.
