This year the fourth of July marked more than the celebration of America’s Independence Day: it was the day Donald Trump signed his One Big Beautiful Bill Act (now referred to as OBBBA) into law. “This is a triumph of democracy on the birthday of democracy,” he proclaimed.
Depending on your political point of view, this 900-page legislative package — with its US$4.5 trillion in tax cuts and new spending adding more than US$4 trillion to the national debt — represents either the beginning of a new golden age that “unleashes economic prosperity and empowers every American while strengthening our nation’s defences and boldly looking to the future” (to quote the White House) or a dark day for the nation’s fiscal future and the upending of healthcare for patients, doctors and hospitals.
In so many ways, this is the archetypal Trump bill. It has all the superlatives he loves. It starts with the boastful name that reflects its size — it is the biggest reconciliation bill ever in terms of pagination and of spending and healthcare cuts. It also exemplifies all of Trump’s shortcomings — it ignores the impact on the federal budget and the national debt, egregiously benefits the rich over the poor, and breaks his commitments to never cut Medicare and Medicaid.
What originally started out as a fiscal bill covering one of Trump’s key domestic commitments — making permanent his 2017 tax cuts for the wealthy and corporations — quickly ballooned into the biggest and most expensive draw on the national debt ever seen, with impacts likely to be felt for decades. On its passage through the House and the Senate, Republicans couldn’t resist adding a welter of measures culled from the MAGA and Project 2025 agendas. Among them were $170.7 billion for immigration enforcement (making Immigration and Customs Enforcement the largest federal law enforcement agency in the nation’s history); cuts to clean energy spending predicted to result in decreased electrical capacity, increased power prices and an assault on efforts to tackle climate change; measures that will make it harder for Americans to finance their higher education; and provision for some individuals to deduct a certain amount of tip wages and overtime from their taxes (a Trump campaign commitment).
Perhaps the bill’s huge cost to the budget meant Republicans felt they had no choice but to make severe compensatory cuts in health and social services, but it’s just as likely that the $1.2 trillion cuts to Medicaid (the health insurance program for the poor) and the supplemental nutrition assistance scheme (or SNAP, known colloquially as food stamps) are an expression of their long-held attitudes to welfare. These cuts ignore the fact that Republican states (and the people who live in them) are disproportionately dependent on federal aid. And they ignore the fact that, while their severity will devastate millions of people, the savings will go nowhere near offsetting the cost of the high-income tax cuts.
Trump is claiming victory, although he had little to do with the shape of the final bill. He sat on the sidelines, he and his staff relatively disengaged from the policies and processes that go into pulling together a bill of this size (and one that is subject to the rules of reconciliation). His engagement came only when it looked like the votes were lacking and his 4 July deadline would not be met, when he resorted to arm twisting (or what sometimes looked more like political blackmail).
It’s clear that neither Trump nor the vast majority of Republicans who voted for the bill are aware of all its provisions and their implications. They have resorted to ideological slogans and made claims that will be hard to justify. “We really have independence now over the over-taxation, where we were being taxed out of our lives, independence from over-regulation, we have independence now from radical-left bureaucrats and independence from the largest alien invasion that I think any country has ever seen,” declared Trump after final passage.
The president now owns this bill and everything that is in it — the good and the bad and the ugly. And for a piece of legislation that contains so many provisions (some of which will take quite some time in implementation) affecting so many Americans, it has had a very poor start. Although Trump claimed the new law is the “most popular bill ever signed” it is historic in a way Trump will not admit to: it is the most unpopular piece of lawmaking since the 1990s. On average across pollsters, just 31 per cent of Americans support OBBBA, with 54 per cent opposing it. So it’s no surprise that it has done nothing to help Trump’s approval ratings, which, at 38 per cent, are lower than for any other modern president at the same time in their administration.
An examination of the main OBBBA provisions shows that many Americans face tough times — and given that the adverse impacts will fall hardest on people in Republican states who are (or have been) Trump supporters, tough times also loom for congressional Republicans who must face the voters in the midterms in November next year.
Republicans have embraced tax cuts since the Reagan era, claiming they spark economic growth. Trump is all in on this: “After this [OBBBA] kicks in, our country is going to be a rocket ship economically.” But there’s little evidence for this optimism and considerable evidence that past tax cuts, rather than supercharging growth, have driven budget deficits and increases in the national debt, as the independent Congressional Budget Office predicts in this case. The CBO says the federal debt will increase by US$3.3 trillion over the next decade; this does not include US$690 billion in additional interest.
The tax provisions in OBBBA generally benefit everybody, at least a little, but the wealthy will gain the most. People with incomes above US$1 million will save around US$60,000 compared with their tax bill if the current rates expired; those with incomes below US$30,000 (around the federal poverty level) will benefit by less than US$200. The poorest 20 per cent of Americans will receive just 1 per cent of the bill’s tax cuts next year, while the highest-earning five per cent will receive 44 per cent. “The bill stands alone historically for its unique upside-down mix of large tax cuts for the top, deep cuts that affect low- and middle-income people, and massive increases in deficits and debt,” said the president of the bipartisan Center for Budget and Policy Priorities.
The very people who gain least from the tax cuts will be hardest hit by the cuts to healthcare and food stamps. The new legislation will reduce federal spending on Medicaid by US930 billion and on food stamps by US$186 billion over the next decade. Most of these cuts are achieved by implementing work reporting requirements (despite the lack of evidence for their effectiveness) and setting up paperwork and procedural barriers (which hit hard at people with lower health literacy, lack of internet access and who live in isolated and under-served areas).
Other provisions undermine the Obamacare’s incentives for states to expand access to Medicaid and its subsidies to purchase insurance. Larry Levitt, the executive vice-president for health policy at the independent research centre KFF, says this bill will “cripple Obamacare” — effectively achieving what the president and Republicans failed to do in Trump’s first term.
Trump and the Republicans have engaged in the worst sort of gaslighting, claiming they are not cutting programs, merely cutting fraud, waste and abuse, and that no one will lose coverage as a result of this bill. They are playing a nasty game, insinuating that millions of the people who receive Medicaid and food stamp benefits are healthy and able-bodied and simply gaming the system. But their numbers don’t add up; experts say the majority of Medicaid beneficiaries currently already meet the work requirements or are in one of the exception categories; Medicaid is the primary provider of coverage for 63 per cent of nursing home residents; and research and real-world experience both show that work requirements don’t help people find or maintain work and are almost impossible to implement. As he signed the bill into law Trump acknowledged it included deep spending cuts but suggested that people “won’t even notice it.” “The people are happy, they’re happy,” added the president whose disapproval figures are plumbing new depths.
Experts estimate that between eleven million and seventeen million Americans will lose health insurance, which could lead to more than fifty thousand new preventable deaths each year. The loss of health insurance also means hundreds of rural hospitals will lose payments for the care they deliver and are at increased risk of closing. The majority of rural areas most affected are in red states.
The cuts to food stamps will affect more than forty million people (many of them the same people who will lose health insurance). This includes some sixteen million children, eight million seniors, and four million non-elderly adults with disabilities. As just one example of the pettiness embodied in OBBBA, people applying for food stamps are no longer able to deduct their internet costs when calculating their household’s net income, which is then used to determine how much households are entitled to receive in benefits.
Along with the major provisions in this package, a growing number of surprise smaller provisions are emerging. These include measures to strip Medicaid from Planned Parenthood for a year; eliminate the tax on gun silencers and short-barrel rifles; tax some of the remittances immigrants send home to their families; spend $40 million on Trump’s pet project, the Garden of Heroes; create Trump-branded savings accounts for children born in the next few years; subsidise Alaskan whaling and rum distilleries in Puerto Rico and the US Virgin Islands; refurbish the plane Qatar gave Trump; and enable private jet owners to write off the full cost of their aircraft in the first year of purchase.
And then there are the implementation details Trump and Republicans are not so keen to talk about. A statutory requirement to automatically impose budget cuts when legislation increases the deficit means there must now be automatic sequestration cuts across all government programs, including Medicare. The Congressional Budget Office calculates these cuts to Medicare will amount to US$490 billion over the next ten years, starting in the fiscal year that begins in October. Republicans’ recognition of the political risks inherent in the package are reflected in the timing of its most generous tax breaks, which come early, and the delaying of most of its painful benefit cuts until after the 2026 midterm elections.
Getting OBBBA through Congress was a struggle for Republicans. There were major disagreements within the party and the bill passed both chambers only by the narrowest of margins. It will undoubtedly provide great campaign material for the Democrats in next year’s midterm elections, and already some Republicans, including senator Josh Hawley of Missouri, are indicating they are open to efforts to undo some of the most punitive provisions.
Emboldened by their victory, seemingly unhindered by public opinion, and perhaps cognisant that they might have only one more legislative shot in the barrel, Trump and the Republican leadership are now attempting to implement further spending cuts identified by the “Department of Government Efficiency.”
This week the Senate will take up a $9.4 billion package — already passed by the House — that includes more spending cuts, more tax cuts, and some of the provisions ruled ineligible under the reconciliation rules and excluded from OBBBA. Most of the funds targeted in this rescission package were enacted in March legislation passed by Congress, including on a bipartisan basis in the Senate, which Trump signed into law to fund the government for the rest of fiscal year 2025. Now the administration is setting about revoking them.
The spending cuts include the withdrawal of funding from global health programs, international peacekeeping and economic development efforts, and domestic community TV and radio stations supported by the Public Broadcasting Service and National Public Radio. Nothing has changed since the funding was approved: these are simply programs (described by the Heritage Foundation as “woke and weaponised government funding”) that Trump has long opposed. The Senate must act (and gain House approval of their package) by 18 July to effect this proposal. Trump is threatening to withhold endorsements from Republican senators who don’t support his administration’s effort to claw back these congressionally approved funds.
House Speaker Mike Johnson has indicated he expects the White House to send multiple rescission packages to the Congress for action in “a multifront war against the deficit.” It looks like a concerted Republican attempt to wreak as much damage as possible on programs it dislikes in as short a time as possible, despite the evidence that these very actions could deprive them of their congressional majorities in the midterm elections in November next year. •
