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Legislative bills

U.S. House Passes Tax and Spending Bill Amid High Debt Concerns

Strategic Insights

— 2 min read

The U.S. House of Representatives has narrowly passed a large-scale tax and spending bill that has drawn strong outcry from observers and the public, with critics warning that it will heighten the already record-high national debt and deprive lower-income people of scarce resources. The bill, which aims to extend corporate and individual tax cuts, provide new tax relief, and increase defense spending, will now be sent to the Senate for consideration.

Key Takeaways:

  • The bill was approved by a razor-thin Republican majority, with 215 voting for the bill and 214 against.
  • The bill will extend the corporate and individual tax cuts passed by Trump in 2017, provide new tax relief for tips, overtime and car loans, increase defense spending, and allocate more funds to combat illegal immigration.
  • The bill will also repeal several clean energy incentives promoted by former President Joe Biden and raise the eligibility thresholds for Medicaid and food assistance for low-income groups.
  • The bill has been criticized for raising the national debt by around $3 trillion and throwing around 13 million people off Medicaid or the exchanges created by the Affordable Care Act.
  • The bill will cut nearly $800 billion from the Medicaid program, posing a huge political risk as the program is very popular and nearly one-fifth of Americans rely on it for health insurance.
  • The Congressional Budget Office estimates that if the bill becomes law, overall resources for the lowest 10 percent of households will decrease, while resources for the highest 10 percent of households will increase.
  • The bill is expected to significantly raise the federal debt, with the Committee for a Responsible Federal Budget estimating it will add more than $3 trillion to the debt.

Statistics:

  • The U.S. national debt has surpassed $36.2 trillion, according to the latest data from the U.S. Treasury Department.
  • The international credit rating agency Moody's recently downgraded the U.S. sovereign credit rating to Aa1 from Aaa, citing concerns over rising national debt and increasing interest payments.
  • The U.S. Treasury market has experienced continued volatility, reflecting widespread concerns about the federal debt.
  • The yield on 30-year Treasury bonds briefly rose to 5.15 percent, an increase of about 0.7 percentage points from the April low.
  • The U.S. deficit has reached $2 trillion in recent years, according to Federal Reserve Governor Christopher Waller.

Sources:

  • Xinhua
  • Washington Post
  • Brookings Institution
  • Committee for a Responsible Federal Budget
  • U.S. Treasury Department
  • Moody's credit rating agency

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