The Republican-led U.S. Senate approved President Donald Trump's mammoth domestic policy bill Tuesday by the narrowest of margins.DREW ANGERER/AFP/Getty Images
The One Big, Beautiful Bill Act squeaked through the U.S. Senate by a single vote Tuesday – requiring Vice-President JD Vance to break the tie – bringing the central legislation of President Donald Trump’s agenda one step closer to meeting his self-imposed July 4 deadline for passage.
The bill would fund mass deportations and tax cuts by taking away health coverage and food stamps from millions of low-income Americans, ending programs to fight climate change, and racking up debt.
The Senate version of the prospective law made some changes compared to the earlier legislation passed by the House of Representatives, which means the two chambers must hash out their differences before sending a final version to the White House.
With all Democrats vehemently opposed and the Republicans holding only narrow majorities in both houses, the next two days are almost certain to see some down-to-the-wire legislative manoeuvring.
Here is what is in the bill.
Deportations, the wall and the military
The bill would pay for the centrepiece of Mr. Trump’s political program by allocating nearly US$30-billion to his effort to round up and deport immigrants and US$46.5-billion to continue construction of the wall on the U.S. border with Mexico.
The President is aiming to deport all 11 million people who are in the country without legal status as well as millions more who came legally under immigration programs that he is cancelling.
The White House has ordered Immigration and Customs Enforcement to step up deportations with the goal of arresting 3,000 people per day. This has led agents to raid farms, restaurants, factories, warehouses and other workplaces.
The bill would also add US$153-billion in military spending, including US$25-billion to start Mr. Trump’s promised “Golden Dome” missile defence system, which Canada is negotiating to join.
The spend on taxes
The legislation contains a long list of tax changes. At the centre are measures that would make permanent a series of temporary tax cuts Congress passed during Mr. Trump’s first term. These include cuts to corporate tax rates, personal income tax rates, a larger standard deduction and a cut to taxes on pass-through entities such as limited liability companies.
In addition, the bill would add a new tax deduction of up to US$25,000 for tips and US$12,500 for overtime pay until 2028, increase the child tax credit from US$2,000 to $2,200, with later adjustments for inflation, and raise the cap on the deduction for state and local taxes to US$40,000 from US$10,000.
According to modelling by the University of Pennsylvania’s Wharton School, Mr. Trump’s alma mater, 70 per cent of the benefits of the tax cuts would flow to the top 10 per cent of income earners.
Cutting Medicaid, Obamacare and food stamps
To partially offset the cost of the tax cuts, the bill would cut over US$1.3-trillion in spending from the country’s social safety net, the largest such reduction in more than a generation.
To save US$930-billion, for instance, it envisions adding additional red tape for people applying for Medicaid, a government program that pays for health care for the poorest Americans.
In theory, the new rules are designed to press people on Medicaid who are not currently working to find a job or go back to school. In practice, they will likely take away health care from a range of low-income Americans who do not comply with the new paperwork requirements.
The bill would also make cuts to Medicare – the program that provides health care to senior citizens and younger people with certain disabilities – and not renew some subsidies for people buying private insurance through the Obamacare system.
According to an estimate by the non-partisan Congressional Budget Office, these measures combined would take health insurance away from nearly 12 million Americans.
Meanwhile, 4.7 million people would lose access to Supplemental Nutrition Assistance (SNAP), colloquially known as food stamps, because of a US$285-billion cut, according to the CBO.
Ending climate policy
In a partial rollback of former president Joe Biden’s signature climate policies, the legislation ends US$488-billion in tax credits for electric vehicles and subsidies for new wind and solar projects that come online after 2027. On the flip side, it offers a subsidy for some coal production.
What happens now
Even with all of these cuts, the bill would still require a US$3.3-trillion increase in government borrowing and therefore also raises the country’s debt ceiling by US$5-trillion.
And this is why, despite its centrality to Mr. Trump’s agenda, the legislation remains so contentious within his own party. On one side, moderates are balking at the cuts to social spending. On the other, deficit hawks argue the plan is far too expensive.
Republican North Carolina Senator Thom Tillis voted against the bill over its Medicaid cuts, as did moderate Mainer Susan Collins. Libertarian Kentuckian Rand Paul opposed it for raising the debt ceiling.
Alaska Senator Lisa Murkowski, the final, key vote for the bill, came around after party leaders added money to a rural hospital fund and softened the SNAP cuts for her state.
Now, a joint legislative committee will try to merge the Senate and House versions of the bill in a way that the slim majorities in both houses can live with.
The Senate, for instance, rewrote a Medicaid tax provision in a way that could put more of the burden of paying for the program onto state governments, something House moderates are likely to be unhappy with. The upper chamber also passed a higher debt-ceiling increase, however, risking the support of the few remaining fiscal conservatives in Congress.
Still, Mr. Trump holds an iron grip over his party. He is certain to be squeezing as hard as possible to fulfill his goal of signing the bill by Independence Day on Friday.