The US Senate passed the "Big and Beautiful" tax and spending bill by a narrow margin of one vote

The US Senate passed President Trump's "Big and Beautiful" tax and spending bill by an extremely narrow margin and submitted it to the House of Representatives. Both chambers must reach an agreement on the final version of the bill before it can be submitted to Trump for signature into law.

Reuters reported that the US Senate passed a bill on Tuesday (July 1) with 51 votes in favor and 50 against, advancing a plan to cut taxes, reduce social safety net programs, increase military and immigration law enforcement spending, while increasing the country's debt by 3.3 trillion US dollars over the next 10 years.

The bill includes extending the tax cuts for businesses and individuals passed by Trump in 2017 during his first term, exempting tips and overtime pay income from taxation, reducing investment in Medicare and nutrition assistance programs, and authorizing the provision of hundreds of billions of dollars in combating illegal immigration and national defense.

The bill passed by the Senate also stipulates that the United States will no longer offer tax credits for electric vehicles starting from September 30 this year. Meanwhile, only wind and solar projects that come on stream before the end of 2027 are eligible for tax credits.

This bill has exposed the divisions within the Republican Party over the rapidly growing US debt of 36.2 trillion US dollars. The Senate version of the bill will raise the federal government's self-set debt ceiling by 5 trillion US dollars, higher than the amount in the previous House version. Congress must raise this cap in the coming months; otherwise, it will face a catastrophic risk of default.

Trump has demanded that the Big and Beautiful Bill be signed into law before the Independence Day holiday on July 4th. House Speaker Johnson said his goal is to pass the bill before this deadline. The House of Representatives will debate and vote on the Senate version of the bill on Wednesday (the 2nd), and some Republican representatives have expressed opposition to some provisions of the Senate version.

The bill will increase the US deficit

According to the estimation of the US Congressional Budget Office, the House version and the Senate version of the bill will increase the US deficit by 2.8 trillion US dollars and nearly 3.3 trillion US dollars respectively from 2025 to 2034. In addition, the amendments to the Medicaid and Affordable Care Act in the Senate version of the bill will lead to an increase of nearly 12 million uninsured people in the United States by 2034.

Some Democratic senators accused the Senate version of the bill of "robbing the poor to help the rich". Vermont Senator Sanders said the bill was "a gift for the billionaire class." Michigan Senator Peters said the bill was "reckless and irresponsible".

Us media reports that market concerns over the fiscal sustainability of the United States are pushing the exchange rate of the US dollar against the euro to its lowest point since September 2021. The US dollar index, which measures the exchange rate of the US dollar against six major currencies, dropped below 96.50 in the early hours of the 1st, reaching its lowest level since late February 2022.

Anna Sislak, a professor at Duke University in the United States, said, "The fiscal deficit, the depreciation of the US dollar, the uncertainty of the successor to the Federal Reserve chair, and (Trump's) doubts about the independence of the Federal Reserve have all had a negative impact on the dollar's safe-haven status."

The U.S. House of Representatives, in which Republican lawmakers hold a majority, passed the Big and Beautiful Bill by a narrow margin of one vote on May 22. As the Senate has made significant amendments to this bill, the version passed by the Senate still needs to be approved again by the House of Representatives before it can be submitted to Trump for signature and become law.