The White House claims that “big beautiful bills” do not cause deficits
White House spokesman Karoline Leavitt said the “big beautiful bill” would not cause a deficit, but non-partisan analysts said it wasn’t.
The US House of Representatives has released a legislative package called “One Big and Beautiful Bill,” the phrase President Donald Trump has now said several times in front of his various social media accounts or media. The bill seeks to clearly place some priorities on Trump’s legislative agenda and tax cuts.
However, the bill also proposes other initiatives aimed at reducing border security, energy and spending. If passed, the bill could go down as one of Trump’s groundbreaking laws, but it must pass the US Senate. Treasury Secretary Scott Bessent says he would like to see the bill be passed to the law by July 4th. Here are five things investors should know:
1. A tax cut of $5 trillion
Trump and Republicans have been talking about tax cuts since Trump won the election in November, and now they have arrived. The first project of the bill is to provide a 10-year tax cut that Trump passed in his first term through the 2017 Tax Exemption Act. Some of the bill’s more notable items include a reduction in individual tax rates from 1% to 4%, a single corporate tax rate of 21%, and an increase in standard deductions.
Other new tax cuts proposed in the bill include temporary cancellations of federal taxes on tipping and overtime wages. The bill also proposes increasing the deduction for small businesses by 3% to 23%. Increases real estate tax exemptions from $1.4 million to $15 million. We will incorporate temporary boosts into the standard deduction. We will temporarily increase the child tax credit from $500 to $2,500. Make changes to state and local tax credit caps.
Early estimates from the Tax Commission (JCT) suggest that Trump’s plans could cost more than $5 trillion over the next decade. Trump said he plans to fund the bill through tariffs that remain in the constant flow of negotiations.
2. Republicans ruled out billionaires taxes
The idea, which likely came as a surprise to Democrats and Republicans, has raised the idea of increasing taxes on wealthy Americans through social media, suggesting in the true social post that tax cuts from the 2017 bill could expire between $2.5 million and $5 million. Republicans have vowed to cut spending and lower budget deficits, but passing bills that cost trillions of dollars would not be easy. But after coming up with an idea, Trump later wrote about the society of truth. The rise in taxes on the rich may not be a very good political move and does not seem to attract much attention from House Republicans.
3. Elimination of electric vehicle tax credits
The legislative package also eliminates a series of tax credits that encourage the purchase of new and used electric vehicles (EVs). Currently, EV buyers are eligible for a $7,500 tax credit. According to the bill, this will continue until 2026, but from next year, the credit will only apply to businesses that have sold less than 200,000 electric vehicles.
The bill will also remove the $4,000 tax credit for spent EVs at the end of 2025. The final EV Credit Bill goal is $7,500 for commercial businesses. The Wall Street Journal estimates that this could have the biggest impact as EV companies used this credit to reduce the cost of leasing EVs. The journal estimates that customers will pocket hundreds more dollars a month in their hundreds of dollars more when they lease EVs for this credit.
4. Funds for border security
Trump’s immigration policy appears to have so far gained support from the majority of people based on the vote. Republicans plan to continue these efforts in their legislative packages by allocating more than $69 billion to the Department of Homeland Security for various border security initiatives.
Most of the approximately $46 billion funding will update efforts to build the Trump wall on the US-Mexico border. This is a fierce issue during Trump’s first term, with the proposed funds aimed to build a 700-mile “first-order” wall and an additional 900-mile river barrier, according to the Associated Press. Another $4 billion will be allocated to employment of 3,000 new Border Patrol agents.
Elsewhere, the Judiciary Committee, which supports immigration law, is seeking $110 billion from the package to expel one million migrants a year and accommodate 100,000 people in detention centers. This fund will be used to hire an additional 10,000 officers for immigration and customs enforcement (ICE). The Judiciary Committee is also considering charging immigration fees for certain immigration-related activities, such as seeking asylum or sponsoring children coming to the country. Prices range from $1,000 to $3,500.
5. Reducing spending, including potential Medicaid cuts
Needless to say, Republicans need to find a way to pay for the bill. Especially when tariff rates ultimately drop. Earlier this year, the House appointed the Energy and Commerce Committee, which oversees Medicaid, to cut costs by $880 billion over the next decade to help fund the legislative package. They reportedly did just that, according to the Congressional Budget Office (CBO).
This was considered highly controversial as many speculated that the Energy and Commerce Commission’s only way to come up with these cuts would be to cut hundreds of millions from Medicaid, the federal health insurance program for low-income Americans. According to Hill, Democrats have obtained several analyses from the Congressional Budget Office (CBO). This showed that savings come primarily from health clauses, leaving 8.6 million Americans uninsured.
Additionally, the legislative package calls for more reforms in Medicaid, including more stringent income verification and potential work or volunteer requirements for program participants.
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