[Text/Observer Network Wang Yi] On local time May 22nd, the U.S. House of Representatives passed President Trump's large-scale tax and expenditure reform bill with a narrow margin of 215 votes in favor and 214 votes against.

According to The New York Times' summary, the bill plans to cut taxes and allocate more funds to the military and border security, while paying for part of the costs by cutting Medicaid, food assistance, education, and clean energy projects, significantly increasing federal deficits and the number of people without proper support.

The bill will also raise the debt ceiling by $4 trillion (approximately RMB 28.76 trillion), allowing the federal government to continue borrowing to finance its debt. Relevant institutions estimate that this will increase U.S. national debt by over $3.3 trillion within the next 10 years, with the proportion of federal government debt to GDP expected to rise from the current 98% to a record 125%.

After the bill was passed, due to concerns about its potential impact on U.S. debt levels, U.S. stocks opened higher but closed mixed on the 22nd. Among the 11 major sectors of the S&P 500 stock index, 8 sectors closed lower, with utilities and healthcare leading the decline, falling 1.41% and 0.76%, respectively. The yield on 30-year U.S. Treasury bonds once rose above 5.1%, the first time since October 2023.

The New York Times pointed out that the passage of this bill, which Trump called the "One Big Beautiful Bill," marks a significant victory for Republicans represented by him, but also sets the tone for intense political attacks before next year's midterm elections. Democrats have begun criticizing Republicans for voting to eliminate important government programs in favor of a tax cut plan for the rich.

Trump posted on his self-created social media platform, Truth Social, celebrating the passage of the bill, stating, "This can be considered the most important legislation signed in our country's history," "Now it's time for our friends in the Senate to get to work and quickly send this bill to my desk!"

Truth Social

"After four years of Biden's failure, Trump's 'America First' agenda has finally arrived, and we are advancing this agenda today." House Speaker Mike Johnson, a Republican, said happily after a night of debate. "My friends, it is truly the morning of America."

But prior to this, Johnson had been working hard to reconcile the divisions within the Republican Party regarding this tax reform bill. According to a report by the Financial Times on the 22nd, in recent days, this tax reform bill has been at the center of intense debates among lawmakers. Conservative Republicans expressed concerns about its costs, while moderate Republicans hoped for greater tax relief at the state and local levels.

The New York Times reported that Johnson announced a series of concessions just hours before the vote, including increased state and local tax relief, in an effort to win support from different factions within the party. For this reason, Trump visited Capitol Hill this week to urge his party to pass this legislation.

Nevertheless, ultimately two Republicans—Thomas Massie from Kentucky and Warren Davidson from Ohio—voted against it. It was reported that their opposition stemmed from concerns about increasing deficits.

"This bill is a ticking debt bomb," Massie said before the vote. "Tonight we're not rearranging the deck chairs on the Titanic; we're shoveling coal into the boiler and setting the course for an iceberg."

Republican Congressman Thomas Massie from Kentucky, video screenshot

Their concerns were not unfounded. The independent organization Committee for a Responsible Federal Budget estimates that this bill will increase U.S. national debt by over $3.3 trillion within the next 10 years, raising publicly held federal government debt from approximately 98% of GDP to a record 125%.

The Financial Times reported that due to concerns about America's growing fiscal deficit, external attention has recently focused on this bill. Moody's, an international credit rating agency, stated on the 16th that due to the increase in U.S. government debt and interest payments, they decided to downgrade the U.S. sovereign credit rating from Aaa to Aa1. Fitch and Standard & Poor's downgraded the U.S. sovereign credit ratings in 2023 and 2011, respectively. Moody's latest action signifies that the U.S. has lost its highest Aaa rating at all three major international credit rating agencies.

In addition, Andy Harris, a Republican from Maryland, cast an "absentee" vote, a way to protest the bill without causing its failure. Two other Republicans who previously indicated opposition to the tax reform bill—David Schweikert, a Republican congressman from Arizona, and Andrew Garbarino, a Republican congressman from New York—did not attend the vote but later stated that they would vote "in favor."

This "One Big Beautiful Bill" eventually passed, but the Trump team did not forget to warn those "traitorous" Republicans. White House Press Secretary Caroline Leavitt said at a press conference on the 22nd that Trump believes that Thomas Massie and Warren Davidson, who voted against the bill, should face challenges from other members of the party when running for reelection.

She stated, "I think he doesn't like seeing grandstanding in Congress." Meanwhile, Leavitt urged the Senate to act swiftly to pass the bill and submit it to Trump.

The tax reform bill has now been submitted to the Senate for review. However, The New York Times predicts that it will face significant changes in the Senate, as Republicans have different priorities regarding spending and tax cuts, and Democrats will unanimously oppose it.

The Congressional Budget Office estimates that by 2027, the lowest 10% of households will lose 2% of their income, while the top 10% will see their income increase by 4%.

Hakeem Jeffries, the House minority leader, claimed that the bill would deprive at least 1.37 million people of health insurance and was "taking food out of the mouths of American children, disabled individuals, veterans, and seniors."

"This is a big and ugly bill," Jeffries said. "It's an attack on the economy... the largest tax cut for the wealthy in American history."

Lloyd Doggett, a Democratic congressman from Texas, criticized, "Deficit hawks have become chicken hawks tonight, bowing to Trump, who calls himself the king of debt."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7507564023026549267/

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