Federal Budget Update

​Trump Administration Domestic Agenda Signed Into Law
Budget reconciliation legislation, or the “Big Beautiful Bill” as named by President Trump was signed into law by him on July 4th after earlier passing the U.S. House of Representatives by a vote of 216–214 on July 3rd. The measure was approved by the Senate on July 1st  by 51-50, with Vice President JD Vance casting the tie-breaking vote, following a 24-hour vote-a-rama during a budget reconciliation process that allowed passage with a simple majority. Republican Senators Susan Collins (ME), Thom Tillis (NC), and Rand Paul (KY) joined all Democrats in voting against the bill, citing concerns over Medicaid cuts, clean energy provisions, and the $5 trillion debt ceiling increase, respectively. The Senate's version, shaped by Majority Leader John Thune (R-SD) and Finance Committee Chair Mike Crapo (R-ID), made significant changes to the House-passed bill, including permanent business tax cuts, deeper Medicaid reductions, and accelerated phaseouts of clean energy tax credits.
 
The passage was marked by intense negotiations, particularly to secure the vote of Sen. Lisa Murkowski (R-Alaska), a key swing vote. Murkowski, after extensive discussions with Thune and Majority Whip John Barrasso (R-WY), secured concessions such as expanded SNAP exemptions for Alaska, clean energy tax credit adjustments, and a unique tax break for bowhead whaling boat captains, increasing deductions from $10,000 to $50,000. The vote-a-rama saw several amendments, including the Graham substitute amendment #2360, which incorporated a final "wraparound" amendment addressing Medicaid and clean energy provisions, adopted by a vote of 51-50. The Klobuchar amendment #2849, aiming to strike a SNAP cost-share provision, failed 45-55, with some Democrats from high-error-rate states joining Republicans to preserve exemptions.

 
Recap of Previous Legislative Actions:
The legislative journey of H.R. 1 began in the House, where it was introduced as a budget reconciliation bill to advance President Trump's domestic agenda. The House Budget Committee compiled contributions from multiple committees, including Ways and Means, Energy and Commerce, and Agriculture, in April 2025. The bill, with $3.8 trillion in tax cuts and $1.5 trillion in spending cuts, passed the House on May 15, 2025, by a narrow margin of 218-212, reflecting the GOP's slim majority. The House version included a compromise on Medicaid provider taxes and retained certain clean energy tax credits, expecting Senate moderation.
 
In the Senate, the Budget Committee reviewed H.R. 1 in June 2025, with Finance Committee Republicans, led by Crapo, prioritizing permanent business tax cuts. The Senate process culminated in a vote-a-rama that began on June 30, 2025, during which amendments were debated, and the bill was significantly altered before its passage on July 1, 2025. Senate rules, enforced by Parliamentarian Elizabeth MacDonough, led to the removal of $200-$300 billion in House-proposed spending cuts, contributing to the bill's $651 billion deficit increase, as noted by the Congressional Budget Office (CBO). 

• Medicaid Cuts: The Senate version includes nearly $800 billion in Medicaid reductions, scaling back provider taxes more aggressively than the House's compromise cap. 
• Clean Energy Tax Credits: The Senate increased the speed of phaseouts of Inflation Reduction Act wind and solar tax credits, requiring projects to be placed in service by 2027. However, a "wraparound" amendment removed tax and provided a one-year carve-out for construction start. 
• SNAP Exemptions: The Senate expanded SNAP cost-share exemptions to states with high payment error rates (above 13.33% in 2025-2026), starting in 2028. This change was not impacted by Sen. Amy Klobuchar's (D-MN) potential amendment.
• Deficit Impact: The Senate's permanent business tax cuts, costing $466 billion more than the House's temporary extensions, contribute to a $651 billion increase in the deficit, according to CBO and Joint Committee on Taxation estimates. This caused backlash from the House Freedom Caucus and Elon Musk.