Donald Trump just achieved his first big legislative win of his second presidency. He delivered on this promise only after passing a long-term comprehensive budget bill. This historic legislation will fundamentally change every corner of the U.S. economy. It features the mother of all tax-cut extensions and a huge military spending boost. Even with its passage, complaints about the fiscal impact of the bill have fueled fiery exchanges among legislators.
At the same time, the budget bill rejoices over tax-cut extensions totaling an estimated $4.5 trillion through the next decade. Among the largest allocations, Trump has designated $150 billion for military spending and $129 billion for border security programs. Additionally, the bill permanently codifies many of the same tax cuts that were made temporary when originally passed during Trump’s first term in office.
The implications of the bill go beyond its historic spending levels. Indeed, outside forecasters project this legislation will increase U.S. debt by more than $3 trillion. This massive increase would be extremely damaging to the economy. To critics, such as Republican Senator Rand Paul, they represent harm to the long-term fiscal health of the federal government.
Along with many other anti-infrastructure initiatives, Trump’s budget plan raises the federal government’s borrowing limit. As negotiated, it paves the way for $5+ trillion in new debt. This dramatic shift surely makes fiscal conservatives sit up and pay attention – concerned about what is sustainable public policy. In the bill’s 335 pages, it cuts Medicaid funding by nearly $1 trillion. Meanwhile, it gets $930 billion in Medicaid spending, $488 billion in green energy investments, and $287 billion in food assistance.
One of the most important aspects of the bill is its $150-billion commitment to new border security spending. Most of this funding—$2.78 billion—will go towards supporting detention centers and immigration enforcement officers. This allocation is in keeping with Trump’s first-term mission to bolster national security and rein in immigration.
Though many skeptics had doubts that House Republicans would ever coalesce around big legislation, the bill passed. Yet legislators remained jittery over the long-term effects on healthcare. They are deeply concerned about the ways that these issues might undermine our nation’s long-term economic security.
“Republicans are about to make a mistake on healthcare and betray a promise” – Thom Tillis
On July 4, American Independence Day, Trump is preparing for a ceremonial signing of the bill. He is looking forward to celebrating what he’s declared a historic achievement—successfully remaking the entire country’s fiscal policy. The changes would remove taxes on tips and some overtime wages. These amendments sunset in 2028, leaving their long-term prospects in doubt.