Why The 'One Big Beautiful Bill' Is Trump's Best Chance To Influence Fiscal Policy This Year
Fiscal policy in the second half of 2025 will be dominated by the fate of the "One Big Beautiful Bill" tax and spending bill being debated in Congress.
The bill will make sweeping changes to the federal budget, including extending the 2017 Tax Cuts and Jobs Act and reducing spending on Medicaid.
Members of Congress have imposed a July 4 deadline to pass the bill, but face a major obstacles.The second half of 2025 could start off with a bang for fiscal policy as Congress faces a July 4 deadline to pass the "One Big Beautiful Bill" tax and spending bill. President Donald Trump pushed for the Republicans to pass the reconciliation bill by next week in time for Independence Day, warning senators not to go on vacation until it's passed.
The bill, a version of which was passed by the House of Representatives last month, extends Trump's 2017 tax cuts which were set to expire at the end of the year and introduces other tax breaks. It also cuts spending on SNAP food aid and Medicaid, the government's health insurance program for people with low incomes. Estimates have found it would add trillions to federal spending deficits over the next 10 years.The reconciliation bill represents the biggest opportunity for the Trump administration to change fiscal policy over the course of the year. Republicans only have a 53-47 majority in the Senate, meaning Democrats have enough votes in that chamber to block most other legislation using the filibuster rule. Reconciliation allows bills to avoid the filibuster, but can only be used once a year, and has other restrictions.
The bill faces some obstacles to passage. Several Republican senators have said they are skeptical of the legislation because of its cuts to Medicaid, according to reporting by The Hill. The bill in its current form is unpopular: a Fox News poll conducted in mid-June showed 59% of U.S. adults opposed it while only 38% supported it.As of Friday, the bill was undergoing major overhauls, and its passage by July 4 was far from certain. In one major change this week, the Senate's Parliamentarian, a nonpartisan advisor, said the reconciliation bill could not include several provisions, including one of the proposed Medicaid cutbacks.
Trump, speaking to reporters at a press conference Friday, said the Independence Day deadline was "not the end all" but that he would like to have it done by the deadline. Trump has reportedly been calling individual senators, encouraging them to quickly pass the bill.If the Senate passes its version of the bill, the next step would be for the two chambers of Congress to hammer out the differences and put the final version on Trump's desk to sign.
The administration does have several other ways to influence fiscal policy this year.
The White House is pushing for spending rescissions, clawing back money that Congress previously authorized to be spent, which can also be done without being subject to a filibuster. Trump and his DOGE cost-cutting task force have canceled programs and contracts and virtually shut down entire departments without approval from Congress.
This rescission bill would essentially allow Congress to approve some of those reductions. However, opponents have challenged many of the unapproved cuts as unconstitutional, and legal cases are proceeding through the courts.
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