Senate Passes Controversial Tax and Spending Bill Amidst GOP Division
The Senate side of the U.S. Capitol is seen in Washington, D.C., early Monday, June 30, 2025, ahead of a final vote on President Trump’s signature domestic policy bill.
In a significant legislative move, Senate Republicans approved President Trump’s major domestic policy initiative, advancing it to the House for a decisive vote. The legislation proposes extensive tax cuts while reducing funding for Medicaid, food assistance, and renewable energy initiatives.
The bill passed narrowly in the Senate with a 51-50 vote, relying on Vice President JD Vance to break the tie. Notably, three Republican senators, Susan Collins of Maine, Thom Tillis of North Carolina, and Rand Paul of Kentucky, opposed the measure. The bill now faces resistance in the House, where some Republican members have expressed strong disapproval.
The Senate’s approval concluded a period of intense negotiations between budget-conscious members seeking deeper spending reductions and other Republicans worried about the potential nationwide impacts of such cuts.
Designed to extend the tax reductions enacted in 2017, the bill aims to prevent a rise in tax rates at the year’s end. The financial implications will be offset by reductions in the Supplemental Nutrition Assistance Program (SNAP) and significant modifications to Medicaid. Estimates indicate that around 11 million people might lose Medicaid coverage if the bill becomes law.
Under pressure from the White House, Republicans managed to reach a consensus just days before a self-imposed July 4 deadline. This legislative success underscores President Trump’s influence in unifying the GOP’s diverse factions.
“With this legislation, we’re fulfilling the mandate we were entrusted with last November and setting our country and the American people up to be safer, stronger and more prosperous,” stated Senate Majority Leader John Thune, R-S.D.
Senate Majority Leader John Thune, R-S.D., walks to the Senate floor during overnight votes at the U.S. Capitol on July 1.
Despite the Senate’s approval, the bill’s journey is not over, as it must still navigate through the House. Using reconciliation, the GOP bypassed a potential Democratic filibuster, enabling a simple majority vote. However, this process required the bill to adhere strictly to budget-related elements, resulting in the omission of several Republican priorities.
Both the House and Senate Republicans need to agree on an identical version before it can be presented to President Trump. The Senate’s version might not be entirely acceptable to the diverse factions within the narrow GOP majority in the House.
House Speaker Mike Johnson, R-La., faces a significant challenge in steering the bill through the House without amendments. Previously, the bill passed by a narrow margin, with heavy reliance on President Trump’s influence to sway undecided votes. With a slim majority, Republicans face minimal room for error.
After the Senate vote, Johnson expressed optimism, stating in a statement that the House intends to pass the bill by Independence Day. “The American people gave us a clear mandate, and after four years of Democrat failure, we intend to deliver without delay,” he declared.
Tax Reductions Coupled with Social Program Cuts
The Senate’s legislation closely resembles the House’s earlier version, aiming to extend significant tax cuts from 2017 while increasing military and immigration enforcement funding. The bill also aligns with President Trump’s campaign promises, including tax exemptions for overtime and tips, albeit temporarily.
Disagreements persist between the House and Senate over funding mechanisms, with some House Republicans outright rejecting the Senate’s amendments. Medicaid is a primary target for budget cuts, with the House proposing work requirements for childless adults, while the Senate extends these to parents of older children.
The Senate also addressed provider taxes, a mechanism states use to leverage additional federal Medicaid funds, by establishing a $50 billion fund to support rural hospitals. This measure intends to mitigate concerns about potential closures of rural healthcare facilities when the change takes effect in 2026.
Despite additional funding for rural hospitals, Senator Collins opposed the bill, citing its detrimental impact on Medicaid. “I strongly support extending the tax relief for families and small businesses,” she commented. “My vote against this bill stems primarily from the harmful impact it will have on Medicaid, affecting low-income families and rural health care providers like our hospitals and nursing homes.”
Senator Paul expressed willingness to support the bill if not for the provision increasing the national borrowing limit by $5 trillion, and criticized the adjustments made to secure Senator Murkowski’s vote. Murkowski, who labeled the vote “agonizing,” emphasized her constituents’ needs and the bill’s imperfections.
Sen. Lisa Murkowski, R-Alaska, and Sen. John Barrasso, R-Wyo., walk toward the Senate floor after lawmakers stayed in session throughout the night ahead of a Tuesday vote on the GOP megabill. Murkowski called the vote “agonizing.”
The expansive bill, nearly 1,000 pages long, introduces changes across various policy areas, including SNAP cuts, increased border security funding, a federal student loan program overhaul, and the repeal of a $7,500 electric vehicle credit from the Inflation Reduction Act.
Deficit Concerns
Another contentious issue is the debt ceiling increase. The House approved a $4 trillion raise, while the Senate opted for $5 trillion. Raising the debt limit allows the government to fund existing programs, with Treasury Secretary Scott Bessent warning of a potential default by August without action.
The Congressional Budget Office projects that the Senate bill will add over $3 trillion to the deficit over the next decade, primarily due to extended tax cuts and other changes.
The Senate modified a deduction for state and local taxes, increasing the cap from $10,000 to $40,000 for married couples earning up to $500,000, with the provision expiring after 2028. The bill also targets clean energy credits, including those for wind and solar projects, proposed cuts that align with the fiscal priorities of the House Freedom Caucus.
Senate Democrats, unified in their opposition, attempted to delay the vote by requesting a full reading of the bill and proposing amendments, all of which Republicans rejected. Senate Minority Leader Chuck Schumer, D-N.Y., criticized the bill, stating, “The American people will remember the Republican betrayal. Americans will pay the price for this perfidy for generations.”
