The Big Beautiful Bill, Explained

Written By Leeja Miller

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Transcript:

Yesterday, after a record-breaking 26 hours of debate on the Senate floor, the One Big Beautiful Bill, and yes that’s its actual legal name, made it one step closer to passage when JD cast the tie-breaking vote, advancing the Senate-amended bill back to the House of Representatives. Trump and speaker of the house Mike Johnson have both set the self-imposed deadline of July 4th, very symbolic, to officially pass the bill and get it on Trump’s desk for signature. With that tight timeline, Johnson and house republicans have their work cut out for them today, Wednesday July 2nd. Given how fucking awful this bill is, to the point that even some Republicans are willing to point it out, including Marjorie Taylor Greene the MAGA wench herself, it’s unclear if this thing will pass by the given deadline. But Trump’s schedule is clear today so he’ll be actively making phone calls and twisting arms, likely yelling angrily at hold outs over the phone, as he is known to do, to force this thing through. Because ultimately he doesn’t give two shits what’s in this thing as long as he can say it got done. Today we’re gonna break down what’s in this nearly 1000-page bill now that both chambers have had the opportunity to make their amendments, what to keep an eye on as the House hashes this out, and how it’s going to impact you.

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There are quite a few Republicans in the house that are putting up a stink, especially over the amount of the deficit increases under the Senate bill, which is larger than the House bill. So it’s unclear whether they’ll meet their deadline. But the major implications of the bill will likely remain the same, with some minor tweaks as they iron out the details. So I decided to go ahead and make the episode about the One Big Beautiful Bill today, even though we don’t have the final version, because very few people know what’s in this thing. There is still time to annoy the shit out of your Republican representatives. The Democrats are all standing opposed to the bill, and are finally throwing up the procedural hurdles we’ve been begging them for for MONTHS. They won’t do anything, but they at least delay the process and make it a headache. Where relevant, I’ll highlight the parts that are different in the house and senate versions of the bill. I think a major project for Democrats, after they’re done doing too little too late in the process of passing this bill, is to get way fucking better at hammering home how awful this is for average Americans. That work has largely been left up to the Congressional Budget Office, non-profit advocacy groups, and the few Democrats in Congress who actually have a social media presence.

Because the fact of the matter is that the Trump regime understands advertising and it understands messaging and digital media better than Democrats full stop.

The White House has its own big beautiful bill website: it highlights key economic factors that Americans will care about (no taxes on tips) in an easy to understand way, makes it interactive, and makes it seem legit. To be clear, the numbers on their site are not accurate. They are based on a report by the President’s Council of Economic advisors and presents financial outcomes from this bill that are DRAMATICALLY, like EYE POPPINGLY different than every other think tank or non-profits predictions about the economic outcomes of this bill. Their methodology is opaque at best, and they make very generous assumptions about financial outcomes that aren’t backed by history or economics or reality. But it makes it look REALLY good on this website. I didn’t find anything similar on the Democrats side. Like do they not have access to web developers, what is going on. It’s just Chuck Schumer yelling “it’s bad! Trump is bad!” over and over and Corey Booker making powerpoint slides. Like what are we doing.

Okay so this bill is nearly 1000 pages long but for ease of understanding there are just a few broad strokes categories of changes: taxes (in the form of credits and deductions); medicaid, SNAP or food stamp benefits, federal student loans, and immigration.

Let’s start with changes to the tax code, that is the bulk of this bill. You will notice a theme that these changes tend to mainly benefit middle and higher income earners. According to analysis by the Tax Foundation, “The bills spend far too much money on political gimmicks and carveouts. … The bills further complicate the tax code in several ways, sending taxpayers through a maze of new rules and compliance costs that in many cases likely outweigh potential tax benefits.”

First and foremost, the bill makes permanent the cuts of the Tax Cuts and Jobs Act from 2017, passed during Trump’s first term. So those tax brackets would remain in place and change for inflation moving forward. The Tax Cuts and Jobs Act lowered the tax rate for all Americans except the lowest wage earners.

Okay, and then they made a bunch of changes to tax credits and deductions. The senate bill would permanently raise the child tax credit to $2200. The house bill would raise it to $2500 but require at least one parent to have a social security number. That sounds nice but the problem is that you don’t just get that amount if you have a kid. That’s the cap. The actual amount you get is calculated based on 15% of adjusted gross income. Additionally, it is only partially refundable. So if you owe a bunch in taxes and make enough money, then you would get that full $2200 as a deduction to the amount of taxes you owe, so you’re paying back $2200 less than you would. But if your income is lower, then you typically get a return on your taxes. The refundable portion is only worth $1700. We already have this tax credit, it’s currently capped at $2000 under Trump’s original tax cuts and job act, and according to CNBC 17 million children do not receive the full 2000 credit because their families don’t earn enough or owe enough taxes. So the increase benefits middle and higher income earners the most.

The bill includes an increase of the SALT deduction, which stands for State and local tax deduction, that would increase to $40,000. The house made it permanent, but the Senate bill would revert the SALT deduction back to $10k in 2030. The benefit phases out for those who have more than $500,000 in income. What that means is that it allows taxpayers who itemize their deductions–meaning instead of taking the standard deduction they itemize them–to deduct the state and local income and property taxes they pay. So if I pay $10,000 in state taxes, I can include that as an expense in my federal tax deductions, effectively lowering my taxable income. As you can imagine, this deduction mainly helps upper middle-income households. Lower earners generally don’t itemize their tax deductions because they earn regular W2 income through a paycheck and don’t have enough deductions to warrant doing an itemized deduction.

Next, the incredibly hyped-up No tax on tips or overtime. That’s a little misleading, you’ll still pay SOME taxes on your tips and overtime, depending on how much you earn. You can avoid paying taxes on up to $25,000 of tip income and up to $12,500 in overtime income, if you earn less than $150,000 as an individual per year. The income limits are key to at least trying to help curb against the wealthy abusing this rule which was a concern, that high income industries would start re-classifying some of their income as tips to creatively avoid paying taxes. This is one of the only provisions I saw that genuinely benefits tip-industry workers, who tend to be on the lower end of the income spectrum. And because of this the Trump regime is REALLY playing it up, including that interactive calculator on the big beautiful bill website. But as we’ll discuss, when all is said and done the other cuts in this bill mostly cancel out the lowered taxes on tips and overtime for the lowest wage earners.

The bill creates a new type of savings account: it expands 529 college savings accounts (which low income Americans generally don’t use) and creates “Trump Accounts”--the government will deposit $1000 dollars into your Trump account as an incentive for having a baby, and then taxpayers can add up to $5,000 per year that will grow tax-free until the beneficiary, the baby, withdraws the money at 18 or older. According to the Tax Foundation, “The major effect is to introduce a new baby bonus entitlement that requires taxpayers to track yet another small dollar account for 18+ years. This is a missed opportunity to simplify saving and improve financial security for all Americans.”

The bill creates a senior “bonus” deduction. The house proposed $4000, the Senate raised it to $6,000. It’s called a “bonus” but it isn’t a bonus, it’s a tax deduction, for individuals over 65 with up to $75,000 in adjusted gross income. This will be helpful for middle-income seniors, but will not benefit low income seniors because they don’t make enough to pay taxes and therefore won’t benefit from a tax deduction.

The bill includes a car loan interest deduction where individuals with less than $ 100,000 in annual income could deduct up to $10,000 of annual interest on new auto loans. Jonathan Smoke, chief economist at Cox Automotive told CNBC that in practice would amount to about $500 in tax deductions for the average new loan borrower. And the car must be assembled in the US, so only limited cars qualify.

The bill guts Biden-era Inflation Reduction Act’s green energy tax credits especially for individuals, such as those that you get when you buy an electric car or solar panels for your house. It introduces “foreign entity of concern” or FEOC restrictions–so energy projects that would qualify for a credit but included involvement of China or Chinese-made parts, for example, wouldn’t be eligible. One of the only tax credits it leaves intact from the Inflation Reduction Act is the clean fuel production tax credit–a credit for businesses that create “clean fuel.” One of my best friends actually works in sustainable fuels and was able to give me some tea on this one, thank’s Megh! She explained that to qualify for the credit, the fuels have to reduce emissions by a certain amount, but the change in the big beautiful bill allows for certain emissions to no longer be counted, and the kind you don’t have to count anymore are the ones that use more corn and soy. So it looks like it’s an environmental credit but it instead just further subsidizes big ag corn and soy producers, who are major contributors to climate change. This work around was actually first introduced by my Democrat Senator Amy Klobuchar in the Farmer First Fuel Incentives Act, and it served big business interests so well that, even though it didn’t pass, the Republicans were like “hell yeah looks good” and shoved it into this bill.

Okay, so moving to healthcare. One additional change to the tax code is that the bill removes premium tax credits–tax credits low income Americans can use to help offset the cost of health insurance premiums. The senate version of the bill also cuts $1 trillion from Medicaid. The house version made $800 billion in cuts. This includes cuts to states and to providers, which would force states to make up the difference either by increasing state taxes, tightening qualification requirements, or eliminating certain benefits. And providers will have to close their doors or operate while understaffed without the funding, which will impact everyone trying to access the healthcare system, regardless of whether or not they get medicaid benefits. There are new work rules that would require Medicaid beneficiaries who are 19-64 years old to work at least 80 hours per month unless they qualify for an exemption. That means that they would need to send proof to the government that they are working or exempt from work requirements regularly. Eligibility redeterminations would be required to happen every 6 months, instead of every 12 months like they are now. Every new check-in presents a new opportunity for people to fall through the cracks either from bureaucratic mishandling or just living in poverty and having to also remember to file shit with the federal government. I already made a whole episode about why work requirements don’t work. The senate version of the bill has stricter requirements for parents–they can only claim work exemptions if they have a dependent 14 or under. I guess the idea being your kid is 15 now, get back to work and send that child into the mines while you’re at it, she yearns for them anyway. There would also be a new $35 co-payment charge to patients using Medicaid services. The Congressional Budget Office estimates that 12 million Americans would lose insurance by 2034 under the big beautiful bill.

Another major change is that Food Stamp or SNAP benefits will be reduced: The Congressional Budget Office estimates around 40 MILLION people may have their SNAP benefits affected by these cuts, including 16 million children. The bill requires states to make up the difference in the budget cuts–typically SNAP is 100% federally funded. There would also be new work requirements for SNAP–SNAP already has some work requirements, but it would require recipients aged 55 to 64 to be working in order to receive benefits as well as requiring parents with children 14 and over to work. According to the Center on Budget and Policy Priorities, about 600,000 low income households would see their SNAP benefits cut by an average of $100 per month. The average household receives about $320 per month currently, so that’s a reduction in their food budget by, on average, about a third at the same time that prices everywhere are skyrocketing.

And in the area of education: Student loans will be affected: The bill creates caps on how much money students can borrow. It puts a lifetime borrowing limit of about $250,000. It caps parent borrowing through Parent PLUS loans at $20,000 per year and 65,000 lifetime. It eliminates grad PLUS loans, caps unsubsidized loans for grad students at $20,500 per year and $100,000 lifetime, though professional degrees like medical and legal degrees get up to $50,000 per year and $200,000 lifetime. For context, a law degree costs at least $150,000 for the three years you’re in school. You also cannot work during your first year and should not work during the second and third years if you can help it. I got a full ride scholarship for my law school and still went $60,000 into debt to cover the cost of living in Boston for 3 years. If I hadn’t gotten any financial aid I would have easily surpassed that $200,000 borrowing cap.

Under the bill, many student loan repayment options will be phased out, with just 2 repayment options remaining: the standard repayment plan or the income based repayment plan, and it would get rid of unemployment and economic hardship deferment. According to the Hill, advocates warn the new plans will raise the monthly payments for most borrowers and removes an important student loan safety net. It will push students and parents into more risky and expensive private student loans. And of course no one should go more than $250,000 into debt for higher education. But this doesn’t really address the underlying issue with our education system, instead it just limits who can borrow and, therefore, who can access higher education in this country. Especially combined with the Trump regime’s attacks on funding for higher education, this means that schools will be left to make up the difference in financial aid for lower income students while also receiving less in federal aid unless they bend the knee to Trump. Low income students are hurt the worst. On top of that, the bill increases the amount of tax that private universities have to pay on income from their endowments. It’s currently set at 1.4% tax and the bill will increase that to 8% for colleges whose endowments exceed $2 million per enrolled student. It is, once again, an attack on higher ed, especially elite institutions who have the largest endowments.

And another major issue in this bill is Immigration, the central policy area of the entire Trump regime and therefore a very big focus of the bill. The bill gives $350 billion for Trump’s immigration agenda, including $46 billion for that stupid wall he keeps promising, $45 billion for 100,000 migrant detention facility beds, 10,000 new ICE officers, including a $10,000 signing bonus. It would create a $10 billion fund that would give grants to reward states that help federal immigration officials. It also provides $25 billion for Trump’s controversial Golden Dome missile defense system. It will also increase fees that immigrants have to pay to apply for asylum, work authorization, immigration court filings, temporary protected status, and more, and it would limit access to federal benefits so a larger group of immigrants, including refugees, asylum seekers, victims of domestic violence and sex trafficking would no longer qualify for federal aid.

During the course of the Senate debates on the bill, the Senate threw out the provision in the House bill that would bar states from regulating AI for 10 years. That got thrown out with a vote of 99 to 1 and is frankly a relief because it would have allowed AI to flourish with NO regulation for a DECADE. Just seeing how far it’s come since ChatGPT first crawled its way out of its own primordial sludge a couple years ago, unchecked AI growth for a DECADE was a scary prospect. The Senate also increased rural hospital subsidies to $50 billion over five years, acknowledging that the cuts to Medicaid will hurt providers, especially rural hospitals. Unfortunately for Republicans a lot of their constituents rely on rural hospitals so this is something they can point to and say see, I’m definitely working for you!! Ignore all the other cuts to your benefits.

Okay, that’s what’s in this bill. What does this mean for you, big picture? After tax income would temporarily increase for all Americans. Looking at 2026 specifically, because projections beyond that are tricky given some of these tax things expire after a few years, according to the Tax Policy Center, the bottom 20% would see an after tax income increase of .8%, second quintile by 1.6%, middle 40-60% of wage earners would see income increase of 2.3%, 60-80% wage earners would see increase of 2.6% and the top 80-100% of wage earners would see after tax income increases of 3.4%. This all sounds hunky dory until you do the math on what those percentages actually mean, and then start to look at all the other benefits that are being cut beyond the tax savings. Because the reality is that Republicans like to wave lower taxes in the air and say THIS is what prosperity looks like, but that ignores the increased cost of living for the lowest income earners who lose out on social services and safety nets. And the reality is that a .8% increase in after-tax wages for the lowest quintile of income earners, means on average they’ll be paying $150 less in taxes for the lowest wage earners in the country. The second lowest quintile would see $750 in lower taxes. $150 or even $750 does not make up for loss in food stamps, medicaid coverage, and more that this bill does especially to the lowest earners. Meanwhile, the top 80-100% of wage earners will pay $12,500 less in taxes. And they already don’t need SNAP or Medicaid or any of the other programs being cut. So at the cost of an additional $3.3 trillion in the national deficit, the lowest 40% of wage earners will get, at most, an extra hundred dollars a month to cover the costs associated with gutting social programs. That means that nearly 60% of the share of the total tax change from this bill will go to the top 20% of income earners in this country, while the lowest quintile will get 1.4% of the share of the tax benefits. In fact, the Yale Budget Lab released a report on the Senate bill taking all of the changes to the taxes and to Medicaid and SNAP into account to calculate the real costs for individuals as a result of this bill. They found that the bill will actually result in a decline in income for the bottom 20% of about $700 per year, while the top 20 percent would see an increase in income of $5700 on average. The top 1 percent would see an increase in their income of about $30,000. And comparing the House and Senate bills, the difference in outcomes is pretty minimal. The house bill would decrease the lowest 20% income by $600 instead of $700 and increase the top 20% income by 6500 instead of 5700.

According to the Tax Foundation, all these changes to the tax code that I just laid out would increase GDP by 1.2% and would increase the federal deficit by $3.6 trillion. You may see Republicans touting that this bill will actually reduce the deficit by $507 billion. This is intentionally misleading. They literally asked the Congressional Budget office to produce two numbers: its typical current law base line estimate as well as a “current policy” base line. The typical base line looks at what the law currently is set to do and then estimates how much the policy will cost. The Trump tax cuts and jobs act was set to expire at the end of this year. So the typical CBO estimate looks at what this will cost if nothing happened, if the tax law was allowed to revert back to pre-Tax Cuts and Jobs Act levels. That number is estimated to add over $3 trillion to the deficit. The Republican-requested “current policy” baseline looks at if the tax cuts and jobs act were to be extended as is, how much this new bill changes the deficit compared to that alternate, non-existent reality. That’s where they’re getting the $507 billion deficit reduction numbers. According to the New York Times, quote “The Committee for a Responsible Federal Budget, a nonpartisan group that calls for lower deficits, has characterized the “current policy” estimate as a “massive budget gimmick” used to hide the true cost of legislation. For example, the budget group argued, Congress could create a temporary universal health care or “Medicare for all” program with a single-year cost of $3 trillion and, in the next year, claim that making the program permanent would cost nothing under a “current policy” estimate.”

So despite what clever Republican marketing and White House Websites would have you believe, the numbers do not lie. The real effect of the One Big Beautiful Bill is to take money from programs that benefit the poor and put it in the pockets of the people who are already the wealthiest in this country. It is a massive redistribution of wealth that, frankly, would make Ronald Reagan blush. Republicans are going to point to the lower tax payments and the no tax on tips provisions and say “see, your life is better now than it was before this bill” and meanwhile 12 million people will lose Medicaid coverage, 16 million children will receive less in food stamps, hospitals will close, the number of ICE agents on the streets will surge, and the budget deficit will balloon out of control. And the Republican disinformation machine will continue humming on down the road, with the entire MAGA cult still on board.

The margins are really slim to get this thing passed. The news moves fast so it might have gone through by the time you’re watching this, but if it hasn’t and you have a Republican representative, pick one thing I mentioned in this episode and call them ceaselessly to complain about it. Be a thorn in their side and don’t let them get away with this without knowing their constituents are not happy with them. It’s still going to pass. But you might as well strike fear in the hearts of your Republican representatives in the meantime.

If you want to support my work, all my videos are completely ad free and uncensored over on Patreon, Patreon dot com slash leeja miller.

Thank you to my multi-platinum patrons Marc, Art, David, R_H, L’etranger (Lukus), Thomas Johnson, and Tay. Your generosity makes this channel what it is, so thank you!

And if you liked this episode, you’ll like the one from Monday about the ban on nationwide injunctions!

Leeja Miller
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