Senate republicans passed their reconciliation budget bill by one vote with the VP casting the tie-breaking vote. It’s nearly 1000 pages of cruelty. It passed with near unanimous republican support in the House and was signed into law on July 4. It has been called the largest transfer of wealth in our history from low-middle income Americans to the wealthy. It provides the largest increase in defense and border police funding and the largest reduction in health care dollars in history.
It raises the debt ceiling by $5 trillion.
This bill represents the largest transfer of wealth from the poor to the rich in U.S. history.
The Congressional Budget Office projects that
- The bill would increase federal deficits by nearly $3.3 trillion.
- The bill will reduce federal Medicaid spending by around $1 trillion while reducing taxes for the top 1 percent of taxpayers by more than $1 trillion over the next decade. Of that total, nearly half—$500 billion—will accrue to the top 0.1 percent of earners, a group of roughly 200,000 households with annual incomes exceeding $2 million.
- The bottom 10% of households would lose $1,600 a year (about 3.9% of income) between 2026 and 2034, on average.
- The top 10% would gain $12,000, or 2.3% of income, on average; the top .1% would gain $100,000 annually.
Taxes
- The legislation contains about $4.5 trillion in tax cuts.
- The top 1% of income earners (those making over $700,000 annually) are projected to receive an average tax cut of around $12,000, with those in the top 0.1% (making over $3.3 million) potentially gaining over $100,000 annually.
- Middle-income taxpayers would see a tax break of $500 to $1,500, the CBO said.
- It would cost the poorest people $1,600 a year, according to , the CBO
- Raises taxes on the poorest Americans (those making under $15,000 per year) even before accounting for losses from the bill’s Medicaid and SNAP cuts.
- The existing tax rates and brackets would become permanent under the bill.
- It temporarily would add new tax breaks that Trump campaigned on:
- no taxes on tips and overtime pay,
- the ability to deduct interest payments for some automotive loans,
- A $6,000 deduction for older adults who earn no more than $75,000 a year.
- The poorest seniors (those who don’t pay taxes on social security) along with those earning 175,000 ($250,000 for couples) receive no tax break.
- It would boost the $2,000 child tax credit to $2,200. Millions of families at lower income levels would not get the full credit.
- There are also numerous business-related tax cuts, such as immediate expensing of equipment and research, which are expected to disproportionately benefit wealthy business owners, according to the Center on Budget and Policy Priorities.
- Trump’s new legislation makes permanent the 2017 tax cuts while increasing these tax breaks:
- Standard deduction: Up from $15,000 to $15,750 (single) and $30,000 to $31,500 (married filing jointly) in 2025. Indexed for inflation.
- Estate and gift tax exemption: Up from $13.99 to $15 million (single) and $27.98 to $30 million (married filing jointly) in 2026. Indexed for inflation.
- Child tax credit: Up from $2,000 to $2,200 per child and $1,700 is refundable in 2025 (more below). Indexed for inflation.
- State and local tax deduction (SALT) limit: Up from $10,000 to $40,000 in 2025, with 1% increases through 2029. Reverts to $10,000 in 2030 (more below).
Border and National Security (The goal is deport at least one million people per year.)
- The bill would provide some $350 billion for Trump’s border and national security agenda,
- $46 billion for the U.S.-Mexico border wall
- $45 billion for 100,000 migrant detention facility beds
- Money would go for hiring 10,000 new Immigration and Customs Enforcement officers, with $10,000 signing bonuses and a surge of Border Patrol officers, as well.
- The homeland security secretary would have a new $10 billion fund for grants for states that help with federal immigration enforcement and deportation actions.
- Immigrants would face various new fees, including when seeking asylum protections.
- For the Pentagon, the bill would provide billions for ship building, munitions systems, and quality of life measures for servicemen and women, as well as
- $25 billion for the development of the Golden Dome missile defense system.
- The Defense Department would have $1 billion for border security.
Medicaid and food assistance for the poor
The Congressional Budget Office estimates that 11.8 million more Americans would become uninsured by 2034 and more than 3 million would not qualify for food stamps, also known as SNAP benefits.
- The package includes new 80-hour-a-month work requirements for many adults receiving Medicaid and food stamps, including
- Older people up to age 65.
- Parents of children 14 and older would have to meet the program’s work requirements.
- No exceptions for adults caring for those over 14 who have disabilities.
- Parents of children 14 and older would have to meet the program’s work requirements to qualify for Medicaid. Parents of children age 6 and older would have to meet work requirements to qualify for SNAP.
- States will have to pick up some of the cost for SNAP benefits. Currently, the federal government funds all benefit costs. Under the bill, states beginning in 2028 will be required to contribute a set percentage of those costs if their payment error rate exceeds 6%. Payment errors include both underpayments and overpayments.
- States that have expanded Medicaid must charge enrollees up to $35 for some services if their incomes are between the federal poverty level (this year, $15,650 for an individual) and 138% of that amount ($21,597)
- Prohibits Medicaid funds to be paid to providers that are nonprofit organizations, essential community providers primarily engaged in family planning services or reproductive services, provide for abortions outside of the Hyde exceptions and received $1,000,000 or more in payments from Medicaid in 2024; this would affect Planned Parenthood and other Medicaid essential community providers.
- The GOP’s plan curtails a practice, known as provider taxes, that nearly every state has used for decades to increase Medicaid payments to hospitals, nursing homes, and other providers and to private managed-care companies.
- States often use the federal money generated through the taxes to pay the institutions more than Medicaid would otherwise pay. Medicaid generally pays lower fees for care than Medicare, the program for people over 65 and some with disabilities, and private insurance.
- Thanks to provider taxes, some hospitals are paid more under Medicaid than Medicare, according to the Commonwealth Fund, a health research nonprofit.
- Hospitals and nursing homes say they use these extra Medicaid dollars to expand or add new services and improve care for all patients.
Affordable Care Act (Obamacare)
- For those with Obamacare (Affordable Care Act) plans, the new legislation will make it harder to enroll and to retain their coverage.
- ACA marketplace policyholders will be required to update their income, immigration status, and other information each year, rather than be allowed to automatically reenroll — something more than 10 million people did this year. They’ll also have less time to enroll; the bill shortens the annual open enrollment period by about a month.
- People applying for coverage outside that period — for instance because they lose a job or other insurance or need to add a newborn or spouse to an existing policy — will have to wait for all their documents to be processed before receiving government subsidies to help pay their monthly premiums. Today, they get up to 90 days of premium help during the application process, which can take weeks.
Education
- The bill creates the first national school voucher plan, which will help all but the wealthiest families pay for private school and other educational expenses.
- Families who earn up to 300 percent of their area’s median income, equivalent to more than $300,000 in some parts of the country, will be eligible, including those who already send their children to private schools.
- Congressional estimates suggest the program, which is structured as a tax credit, could result in as much as $4 billion in lost revenue a year.
- But there is no cap, and costs to taxpayers could be over $50 billion/year. That is nearly double what the federal government spends on helping poor kids and kids with disabilities
- It relies on U.S. taxpayers to make donations to nonprofits, in exchange for a dollar for dollar credit on their federal tax bills. In turn, the nonprofits grant scholarships to students.
- In states that already have such programs, the federal scholarship could be stacked on top of state dollars, which often do not cover the full cost of private school.
- The bill imposes significant changes to the federal student loan program, including new caps on student loans and restricting new borrowers to only two options for paying off their loans, either through a standard repayment plan (paying the same amount every month) or a new plan based on annual income.
- Establishes a new excise tax on investment income from endowments for colleges with more than 3,000 students: 8% for the wealthiest colleges and 4% and 1.4% for colleges with smaller endowments.
Energy
The bill decimates the promising clean energy gains enacted in the Inflation Reduction Act. It will strip tax benefits from consumers and companies who buy or build or produce clean energy and in some cases tax those projects. The bill eliminates or substantially limits several tax credits designed to encourage investment and production of clean energy, alternative fuels, and electric vehicles. A number of these credits created or expanded under the Inflation Reduction Act of 2021. They include credits for individuals (such as clean vehicle and residential efficiency credits) and businesses (such as energy production and manufacturing credits).
The results will be higher energy costs for consumers, loss of hundreds of thousands of clean energy jobs, a poorer economy, more pollution, a worsening of the climate crisis, and a ceding of technological advancement to other countries, mainly China.
- For years now, clean power has been the largest source of new electricity in the US.
- Solar, batteries, and wind are on track to make up more than 90 percent of new electricity capacity on the US power grid this year.
- Wind and solar now produce more electricity on the US power grid than coal.
- Almost twice as many Americans work in clean energy compared to fossil fuels, and the sector is still growing.
The bill rolls back many of the investments from the 2022 Inflation Reduction Act, the single-largest US investment to address climate change by giving the energy transition a boost.
- It calls for more rapid phaseouts of tax credits for wind and solar power
- It eliminates a $7,500 tax credit for the purchase of a new electric vehicle.
- It even creates a new tax credit for coal.
- It creates new tax breaks for oil and gas companies.
- It requires the federal government to provide opportunities for oil and gas drilling on public lands and waters.
- This includes requiring 30 auctions for the rights to drill in the Gulf of Mexico over the next 15 years and six chances to drill off the coast of Alaska by mid-March 2032.
- The legislation also requires four oil and gas lease sales in the Arctic National Wildlife Refuge, which is controversial because of local wildlife and tribal practices. It also requires six similar lease sales in the National Petroleum Reserve in Alaska.
- It reduces fees that energy companies have to pay the government to use its lands and waters, decreasing royalty fees for offshore drilling to 12.5 percent from 16.67 percent and coal mining royalty fees to 7 percent down from 12.5 percent.
- Eliminates tax credits to consumers who upgrade to clean energy in their homes.
- These tax credits were expected to help the country significantly reduce its planet-warming emissions.
- It rescinds funds from a $3 billion block grant program that funds antipollution programs in underserved communities.
- It repeals funding for other similar programs, including those that seek to reduce diesel emissions and cut air pollution at schools.
The energy needs in this country are mounting .
- The US is facing significant load growth on the power grid for the first time in decades as the tech industry scrounges for electrons to power its electricity-devouring data centers.
- While renewables are cut, the alternatives are not likely to make up the gap in time.
- The US is currently the largest oil and gas producer in the world, but it can take years to site, permit, and acquire the materials to build power plants that burn these fuels.
- Oil and natural gas prices are low and falling; no business model, even with incentives, will advocate building new facilities.
The net result is a policy suite that will not only hamper clean electricity, but energy overall, making it more expensive for everyone across the country.
And more
- The House and Senate both have a new children’s savings program, called Trump Accounts, with a potential $1,000 deposit from the Treasury.
- The Senate provided $40 million to establish Trump’s long-sought “National Garden of American Heroes.”
- There’s a new excise tax on university endowments.
- A $200 tax on gun silencers and short-barreled rifles and shotguns was eliminated.
- One provision bars money to family planning providers, namely Planned Parenthood,
- $88 million is earmarked for a pandemic response accountability committee.
- Expands the Radiation Exposure Compensation Act, a hard-fought provision from GOP Sen. Josh Hawley of Missouri, for those impacted by nuclear development and testing.
- Billions would go for the Artemis moon mission and for the exploration of Mars.
Additionally
- The Senate voted to eliminate a proposal meant to deter states from regulating artificial intelligence.
- A provision was thrown in at the final hours that will provide $10 billion annually to rural hospitals for five years, or $50 billion in total. The Senate bill had originally provided $25 billion for the program, but that number was upped to win over holdout GOP senators and a coalition of House Republicans warning that reduced Medicaid provider taxes would hurt rural hospitals.
- The amended bill also stripped out a new tax on wind and solar projects that use a certain percentage of components from China.
Hoosiers will pay a terrible price: in total, 232,000 Hoosiers will lose their health insurance. 151,000 Hoosiers will lose food stamps. 24,958 clean energy jobs will be eliminated. (MadVoters)
In Indiana District 1 alone, 27,000 would lose their health insurance; 26,000 could lose SNAP benefits and nearly 500 clean energy jobs could be lost. See the breakdown for other districts in Indiana and across the country at Center for American Progress.
Sources: AP News, NYT, CNBC, Penn Wharton University of Pennsylvania, Vox, KFF, Center for American Progress, Axios, NYT, NBC, Forbes, USA Facts, NPR, ABC, The Hill
Many of the worst healthcare provisions will be implemented after the midterms, others, including the cutting of clean energy credits and Obamacare subsidies will be more immediate. Some, like the extension of the 2017 tax cuts are permanent; others like no tax on tips and increased deductions for some seniors, is temporary. See the timeline for implementation here: https://indivisiblenwi.org/2025/07/budget-bill-implementation/
Medicaid is called something else in many states. As a result, many people don’t even know they are on Medicaid and so don’t know their healthcare is in jeopardy because of this bill. In Indiana alone there are 30 different programs that are Medicaid. Read more here: https://indivisiblenwi.org/2025/07/medicaid-in-indiana/
