Senate Approves Single Large Magnificent Legislation, Bearing Hefty yet Unattractive Financial Burden
The Senate has narrowly passed the One Big Beautiful Bill Act (H.R. 1) on July 1, 2025, with a 50-50 vote, Vice President J.D. Vance casting the tie-breaking vote to advance the legislation. This version of the bill includes significant tax cuts, increased spending on border security and defence, extensions of Trump-era tax cuts, expanded fossil fuel production, and large spending cuts, notably to Medicaid, resulting in nearly $1 trillion in cuts—among the largest ever proposed.
The bill now returns to the House of Representatives for consideration, where the House Rules Committee is preparing it for floor debate. Congress is under pressure to meet President Trump’s July 4 deadline for passing the bill. However, key policy disputes and political hurdles remain, especially concerning the debt ceiling increase and Medicaid cuts. The House must decide whether to accept the Senate’s version as is, amend it, or reconcile differences. If approved by the House, the bill will proceed to President Trump for signature into law.
Reactions to the bill are mixed. Industry groups such as Airlines for America and America’s Credit Unions have praised the bill for including important funding and tax provisions beneficial to their sectors, urging swift House approval. On the other hand, healthcare organizations, including the American Hospital Association, express deep concern about the substantial Medicaid cuts, warning they would cause coverage losses for nearly 12 million Americans and harm hospitals' ability to provide care, particularly in vulnerable communities.
Some senators and Democrats criticize the bill for disproportionately benefiting the wealthiest Americans while making poorer Americans worse off, highlighting contentious partisan divides. According to the Penn Wharton Budget Model (PWB Model), making those tax cuts permanent would increase the deficit by $4.3 trillion over 10 years.
The bill includes changes to health programs, including Medicaid, and would cut Medicaid spending by imposing work requirements, restricting state-level taxes on healthcare providers, increasing eligibility checks, changing eligibility requirements based on immigration status, and phasing down state-directed payments to providers. The bill also reduces spending on the Supplemental Nutrition Assistance Program (SNAP) by $186 billion over ten years and creates additional work documentation requirements for SNAP.
The bill also tightens the eligibility requirements for Pell Grants and imposes new limits on student borrowing. The Health, Education, Labor, and Pensions Committee eliminates subsidized and income-driven loan repayment plans. The bill shifts administrative costs for SNAP to the states and makes other changes to reduce federal SNAP costs, with the cost of SNAP reductions shifting to the states with a new cost-sharing formula.
The PWB Model analysis predicts that the bill would increase debt by 7.6% over 10 years and decrease gross domestic product (GDP) by 0.3% over the same period. The bill would reduce spending by $350 billion over the budget window, but these changes would be partly offset by spending cuts of $1.460 trillion, for a total conventional cost of $3.104 trillion.
The Senate Republicans had requested that the Joint Committee on Taxation rescore the bill using a new approach called a current policy baseline, but the Parliamentarian ruled that this breaks the rules. The PWB Model analysis scored the legislation against a current law baseline, as did the Joint Committee on Taxation originally.
As the House considers the bill, negotiations will be crucial to address the concerns of various stakeholders and ensure a balanced approach to tax and spending policy. The bill faces critical scrutiny and negotiation in the House as Congress races against the July 4 deadline to finalize this sweeping tax and spending legislation.
- The cost of the One Big Beautiful Bill Act, as passed by the Senate, is predicted to increase the deficit by $4.3 trillion over ten years, according to the Penn Wharton Budget Model.
- The Senate version of the One Big Beautiful Bill Act includes significant tax cuts, with critics contending that these disproportionately benefit the wealthiest Americans.
- Businesses and industries such as Airlines for America and America’s Credit Unions have welcomed the funding and tax provisions beneficial to their sectors in the One Big Beautiful Bill Act, urging for swift House approval.
