The House early Thursday passed President Trump’s “big, beautiful bill” containing sweeping tax and spending cuts, funding for border security and the national defense and policy changes designed to spur American energy production.
The measure now heads to the Senate, where Republicans are eyeing changes to the legislation and hoping to pass it by July 4. The GOP is using the filibuster-proof budget reconciliation process to avoid having to compromise with Democrats.
“We’re delivering, and we’re doing it in a big way,” House Speaker Mike Johnson, Louisiana Republican, said. “To our friends in the Senate I would just say the president is waiting with his pen. The American people are waiting for this relief.”
Mr. Trump urged the Senate to get the bill to his desk “AS SOON AS POSSIBLE!”
“This is arguably the most significant piece of Legislation that will ever be signed in the History of our Country!” he posted on social media.
The 215-214 House vote capped a week of uncertainty as more than a dozen Republicans threatened to oppose the bill over various concerns when GOP leaders could afford to lose no more than three.
In the end, only two Republicans voted against the bill — Reps. Warren Davidson of Ohio and Thomas Massie of Kentucky — and one, Rep. Andy Harris of Maryland, voted “present.” All three were concerned about the measure’s impact on the deficit, with Mr. Massie panning it as a “debt bomb ticking.”
The Congressional Budget Office estimates the bill would add $3.8 trillion to the deficit over 10 years, which most Republicans argue significantly undercounts the economic growth it will spur from tax cuts and regulatory rollbacks.
The White House Council of Economic Advisors is projecting the bill will generate 3% economic growth, which would lead to $4 trillion in additional revenue that would ultimately pay for the deficit spending.
Mr. Johnson said the vote tally should have been 217 because two Republicans who supported the bill missed the vote. Rep. Andrew Garbarino of New York fell asleep and Rep. David Schweikert of Arizona arrived just after the vote closed, the speaker said.
Democrats were united in opposition to the measure, arguing it would cut critical benefits like Medicaid and the Supplemental Nutrition Assistance Program (SNAP) to finance tax cuts for the wealthy.
“This is one big, ugly bill,” Minority Leader Hakeem Jeffries, New York Democrat, said. “The GOP tax scam represents an assault on the economy, an assault on health care, an assault on nutritional assistance, an assault on tax fairness and an assault on fiscal responsibility.”
Republicans counter that the bill only targets waste, fraud and abuse in the social safety net and cuts taxes for people of all income levels.
House Majority Leader Steve Scalise, Louisiana Republican, accused Democrats of engaging in “class warfare, dividing Americans” to try to get more power in Washington.
“How about we give people in America more power, take it away from Washington, empower the people in this country who have been struggling for too long?” he said.
While House Republicans ultimately unified around the bill, the months-long process was full of intraparty fights, mainly over how far to go in cutting spending on Medicaid and other programs.
Mr. Johnson had remained confident throughout the process that he would secure the needed votes to meet his self-imposed deadline of passing the bill by Memorial Day.
He received an assist from President Trump during a meeting at the White House on Wednesday with a group of holdouts from the House Freedom Caucus.
The Freedom Caucus members had threatened to block the bill unless provisions were added to further reduce federal spending on Medicaid coverage for able-bodied adults and to accelerate the repeal of clean energy tax credits.
The meeting ended with no additional concessions in the bill, although Mr. Johnson said there would be attempts to address the conservatives’ concerns through executive actions and future legislation.
The bill is built around a permanent renewal of Mr. Trump’s first-term tax cuts for individuals, families and small businesses that are set to expire at the end of the year.
It also expands upon those policies with new tax breaks the president campaigned on, like no tax on tips and overtime pay and deductions for seniors on Social Security and interest on auto loans.
“The one big, beautiful bill gives America a big, beautiful raise with the average American household seeing real take-home pay go up by as much as $13,300,” House Ways and Means Chairman Jason Smith, Missouri Republican, said. “We will save or create 7.4 million jobs and 1 million new small business jobs annually.”
To win over a contingent of blue-state Republicans from New York, New Jersey and California, the bill quadruples the $10,000 cap on the federal deduction on state and local taxes, known as SALT.
The SALT deduction is prized by residents in high-tax states because they can recoup some of their money from the federal government. The deduction was created in 1913 when the federal income tax was established. The idea was to prevent double taxation.
As part of the 2017 Trump tax cuts, Republicans capped the SALT deduction at $10,000 to help pay for the broader tax breaks.
After weeks of negotiations with pro-SALT Republicans, GOP leaders agreed to lift the cap to $40,000 for most taxpayers, with a $500,000 income limit before the amount is reduced.
The cap and income limit will each rise 1% annually over 10 years, a cost-controlled effort to guard against inflation.
The package also contains sweeping changes to social safety net programs, including implementing work requirements for able-bodied adults on Medicaid and strengthening existing work requirements for SNAP, formerly known as food stamps.
The bill would ban illegal immigrants from accessing Medicaid, SNAP and a host of other government benefits.
Republicans included a new cost-sharing arrangement for SNAP in which states would have to fund 5% of benefits, beginning in fiscal 2028. States that have high rates of overpayments and underpayments will have to contribute more.
Conservatives pushed for a major overhaul to the federal-state cost sharing arrangement for Medicaid, but moderates balked and the final bill leaves that formula largely untouched while finding savings from the government health care program in other ways.
Medicaid was created in 1965 under President Lyndon B. Johnson to provide health insurance for low-income people, but it was limited to mothers and children, pregnant women and people with disabilities.
The program expanded under Obamacare to include low-income, able-bodied adults without dependents earning up to 138% of the poverty level. The law directed every state to expand the program, but the Supreme Court in 2012 ruled it optional. Currently, 40 states and the District of Columbia have adopted the expansions.
In addition to Medicaid work requirements, the measure would require states to conduct eligibility checks for the expansion population every six months, instead of the current one-year requirement.
It would also ban Medicaid funds from being spent on gender transition procedures and Planned Parenthood and crack down on fraud.
Another significant chunk of savings in the bill come from overhauling student loan programs.
Collectively, the spending cuts in the bill exceeded the House’s $1.5 trillion floor for savings. But the cost of the tax cuts, coupled with new spending far exceeds that amount, resulting in higher deficits, especially in the first few years.
The measure includes a $4 trillion increase in the statutory debt limit, which needs raised by August to ensure the government does not default on its borrowing obligations.
Among the new spending is $150 billion for defense priorities, including $34 billion for shipbuilding and other maritime infrastructure, $25 billion for a “Golden Dome” missile defense system and $21 billion to restock America’s munitions arsenal.
The legislation includes $46.5 billion to complete Mr. Trump’s border wall and erect other barriers along the southern border with Mexico, along with technological enhancements to support real-time monitoring and response.
The Customs and Border Patrol agency would see a funding boost, including $5 billion to improve facilities, $4.1 billion to hire more than 8,000 new employees and $2 billion for retention and signing bonuses.
Other immigration enforcement funding in the bill includes $45 billion to expand detention capacity, $14.4 billion for transportation and removal operations, $8 billion to hire Immigration and Customs Enforcement agents and personnel and $1.25 billion to hire immigration judges and support staff.
And a last-minute add would provide $12 billion for the Homeland Security Department to give grants to states for costs associated with enforcing federal immigration laws and supporting “federal border security missions” since the beginning of the Biden administration.
Texas has requested the federal government reimburse the state for $11 billion in costs spent on Operation Lone Star, which Gov. Greg Abbott launched because, he said, the Biden administration wasn’t taking enough action to secure the border.
Energy provisions in the bill would reinstate quarterly onshore oil and gas lease sales; expedite permitting for natural gas exploration and carbon dioxide, oil, or hydrogen pipeline projects; and establish a process for project sponsors to pay a fee to ensure delivery of environmental reviews in under a year.
Various energy and immigration fees in the bill raise new revenue, as would provisions requiring federal employees to contribute more to their retirement.
Republicans are ending electric vehicle mandates and implementing new annual registration fees for electric and hybrid vehicles of $250 and $100, respectively. The fees are meant to ensure drivers of battery-powered cars have to pay into the Highway Trust Fund, which is primarily funded through the gas tax.
