TL/DR –
The House Republicans have narrowly passed the One Big Beautiful Bill Act, a budget reconciliation bill projected to add $2.4 trillion to the federal deficit over a decade. The bill extends many provisions of the 2017 Tax Cuts and Jobs Act, including individual tax cuts, larger standard deductions, and the alternative minimum tax threshold. It also includes significant reforms, such as cutting Medicaid spending by $700 billion over the next decade, insisting on an 80-hour-per-month work requirement for certain Medicaid recipients, and cutting green energy tax credits by half.
House Republicans Pass Budget Reconciliation Bill Amid Controversy
The House Republicans have closely passed a budget reconciliation bill that is projected by the Congressional Budget Office (CBO) to add $2.4 trillion to the federal deficit over 10 years. The One Big Beautiful Bill Act also saw political alliance fractures between President Trump and Elon Musk who criticised the bill vehemently.
A Closer Look to The One Big Beautiful Bill Act
An analysis done by the Tax Foundation, an esteemed independent tax policy nonprofit, suggests the bill incorporates clever tax cuts and revenue increases aligning with their principle of stability. The Act extends many provisions of the 2017 Tax Cuts and Jobs Act (TCJA), including the individual tax cuts and brackets, and the larger standard deduction.
Key Features of The Act
The Act also extends the alternative minimum tax threshold and the larger standard deduction, simplifying tax codes for millions of taxpayers. The estate and gift tax sees a permanent exemption level of $15 million beginning in 2026. The Inflation Reduction Act’s (IRA) green energy tax credits also witness a reform, raising about $500 billion over 10 years.
Problematic Policies in The Act
The Act also introduces policies that favour Trump’s pet tax cuts, which critics argue do not boost growth while increasing the deficit. These include tax cuts on tips, overtime, a special deduction for seniors, and car loan interest. Removal of these could help reduce the addition to the deficit.
Proposed Medicaid Reforms
The One Big Beautiful Bill Act also proposes reforms to Medicaid, aiming to cut spending by $700 billion over the next decade. House Republicans have introduced an 80-hour-per-month work requirement for benefits for able-bodied adults. This is expected to impact about 13% of Nevada’s Medicaid population.
Consequences of Not Passing The Bill
If the budget reconciliation bill fails, taxes are projected to rise by $4.5 trillion next year, putting pressure on the Congressional Republicans to ensure its passage.
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