【By Observer News, Wang Kaiwen】
After multiple rounds of intense battles, the "One Big Beautiful Bill Act" pushed by Trump was passed by the U.S. House of Representatives on July 3 local time with a vote of 218 to 214.
As expected, Trump will sign the bill on July 4 local time, making it a "gift" for the American Independence Day.
The 887-page bill is the largest and most ambitious tax and spending bill in recent years in the United States. Its content is a continuation of the 2017 Tax Cuts and Jobs Act, while significantly increasing the U.S. government's debt ceiling and increasing spending on border security, defense, and energy production.
Looking at the scope and strength of the bill, it certainly deserves to be called "big," but is it really "beautiful"?
The holes created by large-scale tax cuts and new expenditures will be partially filled by cutting social welfare, which is also one of the most controversial aspects of this bill. Critics point out that American businesses and the wealthy class will benefit from this bill, while low-income groups become the biggest losers.
On the other hand, the ever-growing U.S. debt "snowball" has also raised concerns about the sustainability of the U.S. fiscal situation.
"Now is the time when Americans should be most worried," said Liang Xiang, an expert on U.S. issues, to Observer News. He said that from the domestic perspective, the 'Big and Beautiful Bill' will worsen the economic environment in the United States and increase the uncertainty of the U.S. economic outlook. From a global perspective, the layout of the bill in areas such as defense and energy will intensify international geopolitical struggles.
Local time on July 3, Republican lawmakers celebrate the passage of the "Big and Beautiful Bill" China Visual
Rich get richer, poor stay poor?
According to the nonpartisan Congressional Budget Office (CBO), the "Big and Beautiful Bill" will reduce U.S. tax revenue by approximately $4.5 trillion over the next decade.
Specifically, most of the tax cuts introduced by Trump in the 2017 Tax Cuts and Jobs Act will be "permanently" implemented, and corporate tax incentives will be expanded, including permanently reducing the corporate tax rate from 35% before the 2017 tax cut to 21%. The bill will extend or increase other tax incentives for business investments, such as tax incentives for new machinery, equipment, and research and development.
The bill will also significantly increase the state and local tax deduction (SALT), raising its cap from the current $10,000 to $40,000. According to analysis by the bipartisan public policy organization, the Committee for a Responsible Federal Budget, this reform will mainly benefit families with annual incomes between $200,000 and $500,000 and homeowners. Families in high-tax states like New York, New Jersey, and California will also benefit.
In terms of inheritance tax, according to the bill, heirs with inheritances worth less than $15 million do not need to pay inheritance tax. This cap was originally planned to drop to $7 million in 2026.
The "Big and Beautiful Bill" also includes tax reduction measures proposed by Trump during his campaign. These include tax exemption for tip income and overtime wages; partial deduction of car loan interest; and a $6,000 special deduction for seniors with annual incomes not exceeding $75,000.
The bill will also increase the child tax credit from $2,000 per child to $2,200, but millions of low-income American families will not be eligible for the full credit.
From the outside perspective, the tax cuts of the "Big and Beautiful Bill" seem to cover all levels of American society, but the main beneficiaries are middle- and high-income households and corporations in the United States.
According to the Congressional Budget Office's analysis of the House version of the "Big and Beautiful Bill," the wealthiest American families will gain about $12,000 annually from this bill, while middle-income families will see an increase of $500 to $1,000 annually, and the poorest families will lose $1,600 annually.
At the same time, the "Big and Beautiful Bill" is expected to cut $1.5 trillion in spending over the next decade, with spending that benefits low-income Americans being reduced.
Local time April 23, 2025, New York, USA, people take food outside a church in the Bronx. China Visual
The Congressional Budget Office pointed out that the Senate version of the "Big and Beautiful Bill" will cut about $1 trillion in Medicaid funding, which would cause nearly 12 million low-income Americans to lose health insurance over the next decade. The impact is particularly significant for residents in rural areas of the United States who rely more on the Medicaid program.
Furthermore, the reduction in Medicaid funding and insured individuals means that healthcare workers supporting these services will also decrease. Analysis by George Washington University and the American Federation of State, County and Municipal Employees shows that this could lead to the loss of nearly 500,000 jobs in the U.S. healthcare industry over the next decade.
Additionally, the bill tightens eligibility requirements for the Supplemental Nutrition Assistance Program (SNAP), also known as the food stamp program, which may reduce this expenditure by $300 billion.
Liang Xiang pointed out that the "Big and Beautiful Bill" continues Trump's tax-cut plan from his first term, which unquestionably benefits the wealthy, and the higher the income, the more they benefit.
"The rich have never had to worry about medical expenses, but for ordinary working-class people, losing health insurance is a huge blow," Liang Xiang said. He added that although the bill aims to "permanently" implement Trump's tax-cut plan, if the U.S. government changes, the policies may still change.
Before the House vote on July 3, Democratic members of Congress strongly criticized the bill, which sacrifices the interests of American workers and the most vulnerable groups to provide tax breaks to the wealthy.
"I never thought I would stand on the floor of the House and say this is a crime scene," said Hakeem Jeffries, the leader of the House Democrats, on July 3. "This is a crime scene, threatening the health, safety, and well-being of the American people," he said. He added that the Democrats did not want to be involved.
Jeffries' record-breaking speech lasting 8 hours and 44 minutes failed to stop the "Big and Beautiful Bill." On the evening of July 3, the House passed the bill with a vote of 218 to 214, with all Democratic members and two Republican members voting against it.
The debt "snowball" keeps growing
Over the years, the U.S. fiscal deficit has repeatedly set new records, and the government's debt has accumulated. The "Big and Beautiful Bill" may exacerbate this situation. The Congressional Budget Office estimates that the bill will increase federal deficits by nearly $3.3 trillion over the next decade.
The Financial Times pointed out that this will make the U.S. annual fiscal deficit rate reach 7%. This number is slightly higher than the current U.S. level (over 6%), but far higher than the 3% envisioned by U.S. Treasury Secretary Brian Deese.
The New York Times believes that the "Big and Beautiful Bill" will force the federal government to increase borrowing, falling into a vicious fiscal cycle.
On January 2, 2025, the U.S. debt ceiling was adjusted to $36.1 trillion. However, according to data from the U.S. Treasury, the total size of the U.S. federal government debt has already exceeded $36.2 trillion. The U.S. Treasury is taking "unconventional measures" to supplement cash balances and maintain government operations.
According to the bill, the U.S. debt ceiling will be increased by $5 trillion. The Congressional Budget Office estimates that by 2034, U.S. national debt will amount to 124% of GDP, which will be the largest debt scale in U.S. history.
Local time July 3, 2025, Des Moines, Iowa, USA, Trump dances at an Independence Day celebration event. China Visual
The New York Times recently warned that even now, the interest payments on the federal debt alone have already exceeded the government's military spending, making it the second-largest government expenditure after Social Security.
Over the years, the U.S. Congress has been constantly bickering over the debt ceiling negotiations. Liang Xiang said that from Trump's perspective, he does not want to spend time and effort increasing the debt ceiling every time, but rather "do it all at once," and the $5 trillion increase gives him a lot of room for maneuver.
"Power in the United States often manifests in money. For Trump, he wants to have more money to exercise his power. But for the U.S. finances, this is like drinking poison to quench thirst," Liang Xiang said.
He said that Republicans claim to be fiscal conservatives, but the U.S. debt problem started to deteriorate from the Bush administration. During his eight-year tenure, the national debt almost doubled. During the Obama administration, the debt doubled again to deal with the financial crisis.
"Bush's government could use war as an excuse for borrowing, and Obama's government could use the financial crisis as an excuse. However, the current Trump administration hardly needs any reason, purely for power. For Americans, this is the moment they should be most worried about. The continued deterioration of the U.S. debt problem could eventually lead to the bankruptcy of the national finances," Liang Xiang said.
He pointed out that the U.S. government debt is backed by a massive increase in the money supply, which will inevitably lead to inflation on the social level. In addition, Trump's tariff policies and the disruption of the global supply chain will combine to create a very dangerous situation for the U.S. economy.
Increasing defense spending, "heavy hammer" on clean energy industry
The "Big and Beautiful Bill" will also expand investment in U.S. defense and so-called national security, including an additional $150 billion in defense spending for the construction of the "Golden Dome" missile defense system and other military priorities.
The media "Breaking Defense" said that although the spending stipulated in the bill can be spread over several years, the Pentagon hopes to use $11.3 billion in 2026 fiscal year to pay for major weapons projects, including building 16 naval vessels and a $2.5 billion down payment for the first phase of the "Golden Dome" missile defense system.
Additionally, according to the bill, about $17.5 billion will be used for immigration and border law enforcement, with about $4.65 billion for the construction of border walls and related expenses, and $4.5 billion for expanding the capacity of immigrant detention facilities.
Liang Xiang pointed out that defense and broad security areas are the most important part of the "Big and Beautiful Bill" planning, and also the largest increment in U.S. government spending.
Liang Xiang estimated that the U.S. defense budget for the next fiscal year may increase by more than 15%, the largest increase since the 2003 Iraq War, and this is an increase even without the background of additional military threats and overseas military operations. "This is clearly an important gesture by the United States in the context of great power competition, especially in relation to strategic competition with China," he said.
On the other hand, the bill largely terminates the clean energy incentive policies introduced by the Biden administration's Inflation Reduction Act, including eliminating the electric vehicle tax credit. At the same time, it greatly increases support for the traditional energy industry.
Liang Xiang pointed out that the Trump administration is seeking new growth points, one of which is to strengthen the U.S. domestic fossil fuel production capacity and its dominant position in the global energy market. This is a policy that Trump pursued in his first term but was unable to fully implement.
The consequences of the shift in U.S. energy policy will be significant. Liang Xiang said that the Trump administration will turn it into a global geopolitical competition, especially against Russia and Iran, the two largest competitors in the energy field.
"The more strictly we restrict the oil exports of Russia and Iran, the more it fits the U.S. energy policy. At the same time, in relations with allies, the U.S. will adopt more exploitative policies, forcing them to use more American fossil fuels. It is believed that countries such as Europe and Japan, America's traditional allies, will face increasing pressure," Liang Xiang said.
Why did Musk "attack"?
Notably, regarding the "Big and Beautiful Bill," Elon Musk, the "architect" of Trump's presidential election, has become the most determined opponent. He criticized the bill for "pouring blood into outdated industries while severely undermining future industries," and also criticized the practice of increasing the debt ceiling.
After Trump's victory last year, he met foreign leaders multiple times with Musk. Social Media
Regarding this bill, the two have increasingly intensified their conflicts, with Trump hinting at the possibility of expelling Musk, while Musk threatened to establish a new political party.
In Liang Xiang's view, Musk and Trump are a typical example of an "opportunistic alliance."
"Musk knows that Trump's administration will be detrimental to his industry, and he hopes to protect his industry by establishing a special relationship with the president. However, in the end, he found that he couldn't protect it. Trump can symbolically support Musk's electric vehicles, but he will not support the entire clean energy industry," Liang Xiang said.
He believes that Musk misunderstood Trump on the issue of government spending, thinking that the latter was a small-government advocate.
"When Trump first took office, Musk led the U.S. government efficiency department to drastically cut government spending. Of course, the cuts to some departments were in line with Trump's vision. However, when Musk wanted to target the U.S. Department of Defense, the two took different paths. Trump definitely doesn't want to see the defense budget being cut," he said.
Liang Xiang said that although Musk and Trump are currently quarreling fiercely, they are not yet at the point of "fighting to the death," because it would be bad for both sides.
In Liang Xiang's view, if Musk can establish a new political party, it could become his "killer move." "This party does not need to win many votes. Even winning 1% or 2% of the votes would be enough to shake the current significant advantage of the Republicans, especially in swing states. This will have a big impact on the mid-term elections next year and the 2028 U.S. presidential election," he said.
Original article: https://www.toutiao.com/article/7523207515421573678/
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