The Senate has narrowly approved massive tax and immigration legislation that Republicans hope will become the centrepiece of President Donald Trump’s second term, dramatically reorienting the role of the federal Government and unwinding many of the Biden administration’s accomplishments.
Vice-President JD Vance cast the tie-breaking vote for the measure, which extends trillions of dollars in tax cuts from Trump’s first term and implements new campaign promises – such as eliminating income taxes on tips and overtime wages – while spending hundreds of billions of dollars on immigration enforcement and defence.
To offset the cost, the legislation would cut about US$1 trillion ($1.6t) from Medicaid, the federal health insurance programme for low-income individuals and people with disabilities, and other healthcare programmes. It would also cut SNAP, the anti-hunger Supplemental Nutrition Assistance Program, formerly known as food stamps. Nearly 12 million people will lose healthcare coverage if the bill becomes law, according to the nonpartisan Congressional Budget Office.
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The bruising battle to pass the bill split Senate Republicans, as some pressed for deeper spending reduction and others baulked at the bill’s cuts to Medicaid and other programmes. Three Republicans voted against the measure: Senators Rand Paul (Kentucky), Thom Tillis (North Carolina) and Susan Collins (Maine). Vance arrived just after 6.30am (local time) and cast the deciding vote roughly six hours later.
To reach the Oval Office, the bill must clear one more hurdle: the House, where many members have baulked at the Senate’s changes to the measure. Trump has ordered lawmakers to have the bill on his desk by a self-imposed Independence Day deadline.
“Obviously, the probability of passage in the House is not an irrelevant consideration for the Senate,” Senator Kevin Cramer (R-North Dakota) said. “On the other hand, if we’re just going to do whatever the House wanted to, then we wouldn’t need two chambers.
“I think we’re going to find a sweet spot, remembering that by the time it goes over there, their tolerance for changes has clearly got to broaden, because it’s a binary choice at that point. And they either go the route of Thom Tillis, or they vote yes.”
Tillis abruptly announced on Sunday that he would not seek another term next year after voting to block beginning debate on the measure – and drawing Trump’s ire online. His decision will force Republicans to defend an open seat in a swing state that Democrats are determined to pick up in the midterms.
Collins, a moderate up for reelection next year in a blue state, joined Tillis in opposing the bill, citing her concerns about Medicaid cuts. Paul, a deficit hawk, opposed it on different grounds – that it didn’t cut spending enough.
Senator Lisa Murkowski (R-Alaska), who expressed concerns about its Medicaid cuts, ultimately voted for it. The bill was loaded up with benefits for Alaska, including a special tax break for whaling captains.
Republicans declared their legislation would help the working-class voters who swept Trump to the White House and the GOP to unified control of Congress in November’s elections.
The bill increases the child tax credit and adds a bonus to the standard deduction for seniors, a provision inspired by Trump’s campaign pledge to stop taxing Social Security benefits. It would also create savings accounts for newborns seeded with $1000 of taxpayer money, and it would allow buyers of American-made cars to deduct up to $10,000 in car loan interest.
“This is delivering on President Trump’s promises. That’s the key,” said Senator Eric Schmitt (R-Missouri).
But beyond those populist flourishes, the measure is starkly regressive. The 10% of households with the lowest incomes would stand to be worse off by $1600 on average because of benefits cuts, according to the Congressional Budget Office’s analysis of the House version of the bill. The 10% of households with the highest incomes would be better off by $12,000 on average.
The legislation would make permanent a trio of corporate tax deductions that would make it easier for companies to invest in research and purchase new equipment.
Combined with the impact of Trump’s tariffs – which the White House has argued will help pay for the bill’s tax cuts and new spending – the bottom 80% of households would see their take-home incomes fall, according to the Yale Budget Lab.
“The right way to understand this bill is it is the largest wealth transfer from the poorest Americans to the richest Americans in modern history,” said Natasha Sarin, the Budget Lab’s president.
The nearly $170 billion in the bill to fund the Trump administration’s border and immigration crackdown would be one of the largest sums ever spent on homeland security, and another roughly $160 billion would flow to the Defence Department, partially for Trump’s proposed “Golden Dome” continental missile defence system.
The new spending and lost tax revenue would force the federal government to borrow nearly $4 trillion more over the next decade, according to the congressional bookkeepers. To shove the measure through the cumbersome budget reconciliation process, the GOP weakened the Senate’s filibuster in a way that will make controlling the nation’s poor financial health more difficult.
Republicans began their tax-writing process shortly after November electoral victories with pledges to dramatically reduce government spending and annual deficits, wary of adding to a national debt that already totals more than US$36 trillion.
Budget reconciliation, the process Republicans used to bypass a Democratic Senate filibuster, requires both chambers to approve a budget resolution with broad policy outlines for the Bill, then to pass the legislation itself.
Would-be GOP rebels voiced debt concerns when the House took up a budget resolution in February, then again in April on an amended budget and finally in May on the tax legislation itself. Each time, they ultimately voted for the measure.
The bill also raises the debt ceiling – a cap on how much the country can borrow to pay for spending already required by law – by $5 trillion, which Republicans hope will be enough to keep the limit from becoming an issue Trump has to deal with again during his presidency.
“If the economy continues to climb the way it is and our deficit reduction continues to go into effect, it could get there, but the math is going to be tough. There’s a lot of factors,” said Senator Markwayne Mullin (R-Oklahoma), a key interlocutor between Senate leadership and House sceptics.
Paul vowed to vote against the bill because it included such a large debt limit increase, arguing that Congress should raise it in smaller increments to keep up the pressure to cut spending.
Senate Majority Leader John Thune (R-South Dakota) insisted his conference had a larger appetite for deficit reduction than his House colleagues.
Senator Ron Johnson (R-Wisconsin) repeatedly vowed the bill would not pass without deeper spending cuts. Instead, the Senate Finance Committee wrote a bill hundreds of billions of dollars more expensive than the House’s, and simultaneously more punitive toward Medicaid.
That sent Tillis to the floor outraged with his party over what he described as a “betrayal” of constituents on the federal health insurance programme.
“The effect of this bill is to break a promise,” Tillis bellowed on Sunday on the Senate floor.
“What do I tell 663,000 people in two years or three years,” he added, “when President Trump breaks his promise by pushing them off of Medicaid because the funding’s not there anymore?”
Jacob Bogage covers economic policy in Congress for The Washington Post, while Theodoric Meyer covers the Senate and Liz Goodwin covers Congress.
The plane crashed at Cross Keys Airport around 5.30pm local time.