Trump's big bill achieved what conservatives have been trying to do for decades
The massive legislation that Trump plans to sign Friday will make his campaign promises a reality by extending tax cuts enacted during his first term, and creating new deductions aimed at the working-class voters who backed his re-election.
But it will also fundamentally reorder two major social safety net programs, slashing funding and imposing new work requirements that nonpartisan estimates say will cost millions of people their benefits. The ripple effects, experts say, will be felt across the country, and not just by the poor.
'Sometimes people like to feel like this is an us versus them [issue], but this is really all of us. It is the people that your kids are going to school with it, is your neighbor, the people that you play soccer with,' said Lelaine Bigelow, executive director of the Georgetown Center on Poverty and Inequality 'This is going to have a massive effect on a lot of people around this country.'
The 'one big, beautiful bill', as Trump calls it, won final approval by the House of Representatives on Thursday, in time for his signature on 4 July, the US Independence Day holiday. In addition to the tax cuts, it will also channel tens of billions in dollars towards immigration enforcement and building a wall along the Mexican border.
To cut costs, Republicans included provisions to end green energy incentives created under Joe Biden, but the bulk of the savings will come from changes to two programs: Medicaid, which provides healthcare to low-income and disabled Americans, and the Supplemental Nutrition Assistance Program (Snap), which helps low-income Americans afford food.
Both programs will face new and stricter work requirements, and states will be forced to share part of the cost of Snap for the first time ever. The nonpartisan Congressional Budget Office (CBO) estimates the bill's Medicaid changes could cost as many as 11.8 million people their healthcare, and the left-leaning Center on Budget and Policy Priorities forecasts about 8 million people, or one in five recipients, may lose their Snap benefits.
The GOP argues that the bill will not cut Medicaid or Snap, but weed out 'waste, fraud and abuse' thereby making the programs more efficient. At one point, House speaker Mike Johnson circulated research from the conservative American Enterprise Institute finding that, after sleeping, playing video games was how Medicaid recipients who do not work spend most of their time.
If they did not act, Republicans warned, the 2017 tax cuts would expire this year, many Americans would be forced to pay more, and economic growth would suffer. However, analyses of the law found that it was the highest earners who felt most of the benefit from the tax regimen.
Bigelow warns that the benefit cuts will be the most widespread effect of the bill. Her center's research found that 34% of the country's population will be negatively affected by the bill, mostly through the Snap and Medicaid cuts, while just under 2% of taxpayers are in the income bracket that will get most of the tax relief.
And though the bill cuts taxes on tips, overtime and car loan interest, they only to last through 2028.
Even Americans who do not interact with federal safety programs could feel the economic effects of its retrenchment. Fewer Snap enrollees could mean less business for grocery stores, while rural hospitals could be hard hit by the Medicaid cuts, even with a $50bn fund included in the bill to help those in poor financial shape.
Robert Manduca, a University of Michigan sociology professor, forecast a $120bn per year hit to local economies from the benefit cuts. Employees and business owners, he warned, 'might see their job become less secure because the demand in their local economy is getting reduced'.
Paradoxically, the bill is still hugely expensive. The CBO forecasts it will add $3.3tn to the deficit through 2034, mostly due to the tax cuts. For fiscal hawks concerned about the sustainability of the country's budget deficit, which has yawned higher in recent years as Washington DC battled the Covid-19 pandemic with massive fiscal stimulus, there's little beauty in Trump's bill.
'Yes, the economy may well enjoy a sugar-high the next couple of years, as borrowing stimulates near-term consumption,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for lowering the deficit.
'But a sugar-high won't be sustained, it will do real damage, and often what comes next is the crash. The longer-term health of our economy, American families, and our children will be worse off due to this debt-financed bill.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
44 minutes ago
- The Independent
Republicans celebrate as Trump's ‘Big, Beautiful Bill' passes in House
Donald Trump's "Big, Beautiful Bill" was passed by the House of Representatives on Thursday, 3 July 2025, with a vote of 218 in favour to 214 against. The legislation features sweeping cuts to Medicaid and nutrition assistance programmes. It also extends the 2017 tax cuts and includes funding for 10,000 new Immigration and Customs Enforcement (ICE) agents and 3,000 Border Patrol agents. Mr Trump has set a loose deadline of 4 July to sign the bill into law. Watch the video in full above
Reuters
an hour ago
- Reuters
For retailers, US-Vietnam trade deal leaves questions
LONDON, July 3 (Reuters) - A trade deal announced by the U.S. and Vietnam creates new question marks for sportswear and clothing retailers like Nike and Adidas that source shoes and clothes from factories in the Southeast Asian country, industry experts said on Thursday. The U.S. will impose a 20% tariff on many imports from Vietnam, while "transshipping" from third countries through Vietnam will face a 40% levy, President Donald Trump said on Wednesday. Garment and shoe factories in Vietnam rely heavily on yarns, polyester fabrics, and trims like buttons and zippers imported from neighbouring China. It was not immediately clear whether such products assembled in Vietnam from Chinese inputs would be vulnerable to the transshipment tariff. Typically, transshipment would designate a product mostly made in China, shipped to Vietnam and then relabelled and exported as made in Vietnam. U.S. customs already watches for that practice, but the Trump administration has hardened its stance on it, with U.S. Treasury Secretary Scott Bessent saying that "a huge amount" of trade from Vietnam is transshipment from China, in a CNBC interview Thursday. Many questions remain over the trade agreement, said Sheng Lu, professor of fashion and apparel studies at the University of Delaware. "Strictly speaking, transshipment is illegal, whereas using foreign components in compliance with rules of origin requirements is common practice," said Lu. "Confusing these two distinct practices will only create greater uncertainty and risk further supply chain disruption." Vietnam has been a top destination for retailers and brands looking to reduce their reliance on factories in China, but has also become a target of Trump's aggressive trade policy. Vietnam is a key producer of sports shoes for Nike, accounting for 50% of Nike branded shoes overall in the company's fiscal year 2024, and is also Adidas' biggest supplier country, producing 27% of the German brand's products. A Nike spokesperson said the company is still looking into the details of the deal. Adidas declined to comment. "With this new change and with the potential for this transshipment tariff, I think it's going to cause a lot of importers to really question, is Vietnam really a good other option?" said Lila Landis, a customs compliance consultant based in Fort Worth, Texas. While details are still not confirmed, the 40% tariff could possibly be stacked atop the correct China duty for any given product, making it highly punitive, Landis added. Overall, the U.S. imported 274 million pairs of shoes from Vietnam last year, according to industry group Footwear Distributors and Retailers of America (FDRA), which on Wednesday called the tariffs unnecessary and said they would hit American consumers. "There's disappointment in the 20% on the Vietnam side," said Joe Jurken, managing director at supply chain management company The ABC Group. The announced tariff on Vietnam narrows the gap with China, which the U.S. has hit with a 55% tariff, and may even tempt some brands to stick with China, Jurken said, instead of switching suppliers which is lengthy and costly. "There's a lack of capacity in Vietnam because there's not enough factories, and there's an overabundance of capacity in China... so the Chinese factories, in our opinion, will benefit from this over the short term," Jurken said. Still, the 20% tariff rate is better than the 25-30% rate the market feared, according to analysts at Raymond James. And the deal announcement goes some way to end uncertainty, and could encourage some retailers that were considering Vietnam to go ahead and place orders, said Jim Kennemer, managing director at Cosmo Sourcing. "It's going to be nearly impossible to get a 100% not-China supply chain," he said.
The Guardian
an hour ago
- The Guardian
Japan walks line between recession and submission as it seeks to overcome Trump tariffs
It all seemed to be going so well. In April, Japan's chief trade negotiator, Ryosei Akazawa, sat opposite Donald Trump in the Oval Office after 'positive and constructive' talks, sporting a Maga baseball cap and giving a thumbs up for the cameras. Japan's economic revitalisation minister drew criticism back home for the gesture, forcing him to insist there was 'no political significance' behind it. But the backdrop to the offending photo was far more significant than the uncomfortable optics. Akazawa's trade delegation was in Washington to begin tariff negotiations with its American counterparts that officials in Tokyo were initially optimistic would end with Japan's exemption from Trump's most egregious protectionist instincts. 'A Great Honor to have just met with the Japanese Delegation on Trade,' Trump wrote on Truth Social after meeting Akazawa. 'Big Progress!' Eleven weeks and seven rounds of talks later, Japan and the US have reached an impasse, with Trump unleashing on his country's most important ally in the Asia-Pacific the kind of invective he once reserved for China and the European Union: 'They won't take our RICE, and yet they have a massive rice shortage,' he wrote online, adding it showed 'how spoiled countries have become'. The friction is beginning to seep into other parts of the bilateral relationship, with Tokyo and Washington at odds, to varying degrees, on the cost of hosting American troops in Japan and recent attacks by the US and Israel on Iran. To add insult to injury, the chasm that has opened up between Tokyo and Washington on trade came as the US agreed to slash reciprocal tariffs on Vietnamese imports from 46% to 20%. Japan now has just days before the end of Trump's 90-day pause on the imposition of punishing tariffs to pull off a breakthrough. Much will depend on Akazawa's ability to convince American negotiators to withdraw or reduce a 25% levy on Japanese cars imposed in April. That is on top of a possible rise in reciprocal duties on other Japanese goods to 24% from the current baseline of 10%. But if anything, the mood music from Washington indicates that Trump is even less inclined to make concessions ahead of the president's second tariff 'liberation day', despite constant reminders from senior politicians in Tokyo of the value Japan brings to the US economy. They include the prime minister, Shigeru Ishiba, who noted this week that Japan is the largest foreign investor in the US and its biggest contributor in terms of job creation. 'Our hope is that this will be taken into consideration,' he said. Just days earlier, Trump had framed Japan in terms that prompted as much consternation as anger on this side of the Pacific. Speaking to reporters on Air Force One, he floated the idea of raising tariffs on imports from Japan to 30% or 35%, and bemoaned its consumers' lack of enthusiasm for American cars and rice. 'I'm not sure we're going to make a deal. I doubt it,' Trump said, labelling Japan 'very tough' and 'very spoiled'. Japan has much to lose if it fails to secure an extension to the deadline on reciprocal tariffs or convince the US to lower duties. The US is Japan's second-biggest trading partner after China, with exports to the US totalling $148.2bn last year. Trade between the two countries was worth an estimated $227.9bn last year, while the autos sector is already suffering from existing tariffs, with exports to the US dropping 25% in May compared to a year ago. That will not put the brakes on Trump's mission to hack away at Japan's $68bn trade surplus with the US – hence his recent demands that it increase imports of US oil and other goods. The trade row has landed Ishiba and his government in a predicament every bit as sticky as the early-summer heat and humidity blanketing Japan. Battered by funding scandals, soaring rice prices and a cost-of-living crisis, Ishiba's administration is limping into the campaign for upper house elections on 20 July, nine months after his Liberal Democratic party (LDP) and its junior coalition partner lost their majority in the lower house. Any inkling that Tokyo is prepared to bend to Trump's demands will not go down well with voters, while analysts warn that the economic impact of accepting higher tariffs could push the Japanese economy – the world's fifth biggest – into recession. Japan's rice crisis has also become a point of contention, as the government attempts to bring down prices with the release of almost all of its 1m tonnes of stockpiled grain, along with a rise in cheaper imports. Japan has imported historically high volumes of US rice in recent months, and yet despite Trump's threats, is reluctant to agree to anything that would ignite anger among rice farmers – a politically influential group in the LDP. Washington is also pressuring Japan to boost imports of other US farm products, as well as cars and oil, to help reduce the trade deficit. Japan has declined to comment on Trump's threat to impose even higher tariffs, saying it would pursue 'sincere' bilateral talks. 'We are aware of what President Trump said, but we don't comment on every remark made by US government officials,' the deputy chief cabinet secretary, Kazuhiko Aoki, said this week 'We intend to advance bilateral talks in a sincere and faithful manner toward reaching an agreement that will benefit both Japan and the United States.' Tariffs, though, are putting strain on what the former US ambassador to Tokyo, Mike Mansfield, once described as the 'most important bilateral relationship in the world, bar none'. After failing to make progress with Trump during a meeting at the G7 in Canada last month, Ishiba abruptly cancelled plans to attend the Nato summit in The Hague – a move analysts attributed to ongoing friction over trade. Japan also declined to offer full-throated support for the US attacks on Iran, saying only that it 'understood' Washington's determination to halt Tehran's nuclear weapons programme. This week, the US secretary of state, Marco Rubio, called off his first visit to Japan and South Korea, saying he was needed in Washington for talks with the Israeli prime minister, Benjamin Netanyahu. Amid rumours that he is preparing to make yet another trip to Washington this weekend, Akazawa has limited room for manoeuvre – and precious little time, according to analysts. 'Practical and electoral constraints will prevent Japan from offering major concessions on autos, rice, and oil, with negotiators set to continue their slow-and-steady approach,' said James Brady, vice-president of the political risk advisory firm Teneo. 'The probability of a deal being reached before next week's [tariff] deadline appears increasingly low.'
