“The Big Beautiful Bill?”: A Summary

We hope everyone has a nice Memorial Day weekend! In this week’s Weekly Pulse, we have published a summary of the “Big Beautiful Bill” recently passed by the House of Representatives for your review. We feel it is valuable to see a summary “without spin”, which we suspect may be harder to come by.

While we are not endorsing the “Bill”, as we have stated so many times in the Pulse, we are emphatic that the US Congress needs to get focused on taking action to improve our country’s finances.

We do not believe that simple cost cutting is the solution, and that passing legislation to assist in accelerating the growth of our economy needs to be part of the solution. Any credible step toward resolving our issues will need to cut expenses substantively, but cutting without growth could leave us in worse shape as a country going forward.

Hopefully this Bill continues a lively and hopefully constructive debate about things that the US Government needs to do regarding both costs and growth to bring our fiscal house back into order in a sustainable fashion. Additionally, we hope it serves to make citizens more aware of the tight financial situation we have created for ourselves over the past 4 decades. And one must realize this Bill is just part of a much broader effort by the current Administration to manage costs while instilling growth.

As Americans, we should all want this process to lead to a successful conclusion.  So do the “bond vigilantes”, who are keeping a diligent eye on our actions, and are ready to pounce at a moment’s notice.  It is with this independent market oversight as the ultimate disciplinarian that we need to keep in mind that no one will end up with everything they desire in the final result.

The Bill’s Key Provisions

The “One Big Beautiful Bill Act,” often referred to by President Trump as his “big, beautiful bill,” is a sweeping legislative package passed by the House of Representatives this week. It combines major tax reforms, spending cuts, and significant policy changes across multiple sectors, reflecting many of Trump’s core campaign promises. The bill now awaits consideration in the Senate, where further modifications are possible.

Tax Cuts and Reforms

  • Permanently extends the tax reductions first enacted in 2017.
  • Increases the standard deduction by $1,000, bringing it to $16,000 for individual filers.
  • Abolishes federal taxes on tips and overtime pay, fulfilling campaign pledges to benefit service and hourly workers.
  • Increases the child tax credit by $500 (to $2,500 until 2028), though eligibility is tightened by requiring both parents to have Social Security numbers.
  • Allows temporary deductions for interest on car loans for American-made vehicles.
  • Raises taxes on some university endowments (up to 21%) and eliminates green energy tax incentives.
  • Delivers historic tax relief to Social Security recipients by reducing taxes on their benefits.

Spending Cuts and Changes

  • Implements stricter work requirements for Medicaid, which could result in millions of low-income Americans losing coverage.
  • Repeals Biden-era regulations that made it easier for student loan borrowers to have debts canceled if their schools defrauded them or closed.
  • Overhauls student loan repayment plans, consolidating them into two options and making the terms less generous for some borrowers.
  • Cuts funding for government healthcare programs, including Medicaid.

Border Security and Immigration

  • Provides $46.5 billion to resume construction of the U.S.-Mexico border wall and expand border security infrastructure.
  • Funds the hiring of 3,000 new Border Patrol agents, 5,000 new customs officers, and 10,000 new ICE personnel.
  • Imposes a $1,000 fee on migrants seeking asylum and aims to remove 1 million immigrants annually, with expanded capacity for detention centers.
  • Removes at least 1.4 million undocumented immigrants from Medicaid rolls.

Defense and National Security

  • Allocates nearly $150 billion in new funding for the Department of Defense and national security.
  • Includes $25 billion for the “Golden Dome for America,” a missile defense shield, and significant funds for expanding the naval fleet and restocking ammunition.
  • Provides $9 billion for servicemember housing, healthcare, and special pay.

Energy and Environment

  • Expands leasing of public lands for drilling, mining, and logging, while cutting royalty rates for fossil fuel extraction, reversing previous climate-focused policies.

Other Notable Provisions

  • Modernizes air traffic control systems.
  • Raises the debt ceiling by $4 trillion.
  • Establishes “MAGA” savings accounts for parents of children under 8, with $1,000 contributions per child.

Winners and Losers

Beneficiaries

  • High-income households: The majority of tax cuts go to those earning $217,000 or more.
  • Families with children: Increased child tax credit and new savings accounts, though some lose eligibility.
  • Overtime workers and tipped employees: No federal taxes on overtime and tips.
  • Car buyers: Temporary deduction for interest on American-made car loans.
  • Defense contractors and border security personnel: Significant funding increases.

Those Adversely Affected

  • Low-income Americans: Stricter Medicaid work requirements and healthcare cuts could result in loss of coverage.
  • Universities with large endowments: Subject to higher taxes.
  • Environmental advocates: Rollback of green energy incentives and expanded fossil fuel extraction.

Fiscal Impact

The Congressional Budget Office estimates the bill would increase the national debt by about $2.3 trillion over the next decade, despite aims to reduce the budget deficit.

Political Context

The bill passed the House by a narrow 215-214 margin, with opposition from all Democrats and a handful of Republicans. Critics argue it disproportionately benefits the wealthy and cuts essential services for vulnerable populations, while supporters hail it as transformative and aligned with the “America First” agenda.

Have a great week!

 

What We’re Reading

 

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All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Past performance is no guarantee of future returns.

 

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