This week, Republicans in the House of Representatives will attempt to pass what President Donald Trump has deemed the “one big, beautiful bill.” It is the centerpiece — really, the only major piece — of Trump’s legislative agenda. He’s trying to stuff everything he wants into this, in hopes of ramming it through both the House and Senate on a party line vote.
Trump wants four main things from the bill:
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Preventing the “Trump tax cuts” he passed back in 2017 from expiring at the end of this year.
- Passing, in some form, a bunch of new tax breaks he promised during the campaign, such as “No tax on tips.”
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Spending a bunch more money on immigration enforcement and the military.
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Increasing the debt ceiling, or the limit on new debt the government can issue, which Congress periodically has to agree to raise. Its inclusion adds another element of urgency to try to force squabbling Republicans to unite: Treasury Secretary Scott Bessent has said the debt ceiling must be raised by mid-July.
All this is quite expensive: Just extending the old Trump tax cuts would cost about $4 trillion, while his new tax breaks (for four years) and his military and border spending would cost another $1 trillion — so the cost of the bill is about $5 trillion.
How will Republicans pay for it? Mostly, they won’t: The vast majority of it will be unpaid for and just increase the debt, while other costs will be hidden with gimmicks. But the House GOP has proposed paying for some with deep cuts to Medicaid, clean energy, student loans, and food stamps, among other areas.
The problem is that Republicans have narrow majorities in both chambers and deep disagreements on policy. Fiscal hawks are demanding deeper spending cuts. Some Republicans have complained about the Medicaid cuts, which according to Congressional Budget Office estimates would make more than 7 million people uninsured; others dislike the clean energy cuts. One key group is demanding the rollback of a Trump tax hike that mostly hit affluent blue-staters back in 2017 — an expensive change that would blow up the bill’s budget math.
So right now, the big beautiful bill is a big ugly mess. And even if Republicans resolve their differences and pass something, it may not get much prettier. Many of these cuts are controversial, even among some Republicans, and it’s unclear which will make it into the final version of the bill. But currently, House GOP fiscal hawks are saying all this isn’t enough, and they’re demanding even steeper cuts — saying it would be completely irresponsible to add so much to the deficit otherwise.
While many of the cuts they’re proposing would target the most vulnerable, they have a point about the deficit. Trump and GOP leaders are proceeding as if conditions are similar to 2017 — a time when interest rates were low, inflation was low, and Trump could pass a big deficit-increasing tax cut bill with few negative economic consequences. And indeed, both parties have tuned out warnings about the deficit and debt for years.
But conditions have changed. The US just went through a period of its highest inflation in decades. Interest rates remain high, in an attempt to prevent such inflation from roaring back. US Treasury bond rates are also high, which many interpret as signaling investors are concerned about the budget deficit. Years of big spending are adding up, and interest payments on the debt are rising.
All that is to say a big budget-busting bill could be much more damaging to the economy than it was in 2017. And yet Republicans appear to be going full steam ahead anyway. It remains to be seen whether they can actually come to an agreement and pass a bill — but even if they do pull it off, they should be wary of getting what they wish for.
