The Republican-led US Senate on Tuesday barely passed President Donald Trump’s sweeping tax-and-spending bill, a massive legislative win that cements key domestic priorities while adding $3.3 trillion to the national debt.
The package includes deep tax cuts, infrastructure funding, and expanded defence spending, marking one of the largest increases in federal outlays in decades.
The bill now heads back to the House of Representatives for final approval, where pockets of Republican resistance to Senate changes could make passage difficult. Trump wants to sign it into law by the July 4 Independence Day holiday on Friday, and House Speaker Mike Johnson said in a statement that he aimed to meet that deadline.
The measure would extend Trump’s 2017 tax cuts, give new tax breaks for income from tips and overtime pay and boost spending on the military and immigration enforcement. It would also cut spending on the Medicaid health program and food aid for low-income Americans.
The legislation has exposed Republican divides over the nation’s fast-growing $36.2 trillion debt, and would raise the federal government’s self-imposed debt ceiling by $5 billion. Congress must raise the cap sometime in the coming months or risk a devastating default.
Senate Majority Leader John Thune celebrated Republicans’ legislative victory, saying the bill “will permanently extend tax relief for hard-working Americans…that will spur economic growth and more jobs and opportunities for American workers.”
The Senate passed the measure in a 51-50 vote with Vice President JD Vance breaking a tie after three Republicans – Thom Tillis of North Carolina, Susan Collins of Maine and Rand Paul of Kentucky – joined all 47 Democrats in voting against the bill.
The vote came after an all-night debate in which Republicans grappled with the bill’s price tag and its impact on the US healthcare system. It was not immediately clear what last-minute changes had been made to resolve those concerns.
Much of the late horse-trading was aimed at winning over Republican Senator Lisa Murkowski of Alaska, who had signalled she would vote against the bill without significant alterations.
The final Senate bill included two provisions that helped secure her vote: one that sends more food-aid funding to Alaska and several other states, and another providing $50 billion to help rural hospitals cope with the sweeping cuts to Medicaid.
Not fiscal responsibility
The vote in the House, where Republicans hold a 220-212 majority, is likely to be close.
“It’s a great bill. There is something for everyone,” Trump said at an event in Florida on Tuesday. “And I think it’s going to go very nicely in the House.”
An initial version passed with only two votes to spare in May, and several House Republicans have said they do not support the Senate version, which the nonpartisan Congressional Budget Office estimates will add $800 billion more to the national debt than the House version.
Republicans have struggled to balance hardline conservatives’ demands for deeper spending cuts to reduce the impact on the deficit with moderate lawmakers’ concerns that the Medicaid cuts could hurt their constituents, including service cutbacks in rural areas.
The House Freedom Caucus, a group of hardline conservatives who repeatedly threatened to withhold their support for the tax bill, has criticised the Senate version’s price tag.
“That’s not fiscal responsibility. It’s not what we agreed to,” the group said on Monday.
A group of more moderate House Republicans, especially those who represent lower-income areas, have objected to the steeper Medicaid cuts in the Senate’s plan.
Republicans have also struggled to appease a handful of House Republicans from high-tax states, including New York, New Jersey and California, who have demanded a larger tax break for state and local tax payments.
Still, House Republicans are likely to face enormous pressure to fall in line with Trump in the days to come.
Tax breaks, immigration crackdown, tighter benefits
The bill would repeal many of Democratic President Joe Biden’s green-energy incentives.
It would also tighten eligibility for food and health safety net programs. Nonpartisan analysts have said this would effectively reduce poor Americans’ incomes and increase their costs for food and healthcare.
The bill’s increase in the national debt effectively serves as a wealth transfer from younger to older Americans, nonpartisan analysts have said, because the impact will be slower economic growth, higher borrowing costs and decreased government funding in the decades to come.
Senate Democratic Leader Chuck Schumer said the vote “covered this chamber in shame,” adding that the bill would be “ripping health care away from millions of Americans, taking the food out of the mouths of hungry kids.”
Republicans rejected the cost estimate generated by the CBO’s longstanding methodology. Nonetheless, foreign bond investors see incentives to diversify out of US Treasuries as deficits deepen.
Trump has singled out Republican dissenters for criticism on his Truth Social network and excluded them from White House events, and few have been willing to defy him since he returned to office in January. Tillis, who voted against the bill, said on Sunday he would not run for re-election next year after Trump savaged him on social media.
