Congress Delivers Historic Win for Trump After Fiscal Hawks Cave

The House of Representatives today passed the sweeping bill containing much of President Donald Trump's legislative agenda. Here's what you need to know.

Congress Passes Trump's Megabill After Fiscal Hawks Cave

House Republicans on Thursday passed their party's huge package of tax cuts and spending changes, delivering a political win for President Donald Trump ahead of the July 4 deadline he set for what he titled the "One Big Beautiful Bill."

The vote was 218-214, setting off cheers and chants of "USA!" among Republicans on the House floor. Reps. Brian Fitzpatrick of Pennsylvania and Thomas Massie of Kentucky were the only Republicans to vote against the bill, joining all Democrats. Conservative holdouts who had railed against the legislation as passed by the Senate — in some cases slamming it as "morally and fiscally bankrupt" — fell in line after a long day and night of pressure from and negotiations with Trump and party leaders.

"This is without a doubt the most important vote of this Congress and I think this one may be the most important vote that any of us take in our entire lifetimes," House Speaker Mike Johnson said in a speech before the final vote.

The outcome was undoubtedly a historic accomplishment for Trump and Republicans, who managed to enact a long list of their priorities in one fell swoop, showcasing the sway the president holds over his sometimes-fractious party. And the bill will undoubtedly be hugely consequential, in both political and economic terms. It will make Republicans' 2017 tax cuts permanent, enact a host of new tax cuts that Trump campaigned on, boost funding for defense and immigration enforcement, phase out clean energy tax credits, increase the Child Tax Credit, quadruple the limit on state and local tax deductions and raise the debt limit by $5 trillion.

To help pay for some $4.5 trillion in tax cuts, the bill also cuts food assistance and slashes Medicaid spending by $1 trillion as part of the largest-ever cuts to federal support for health coverage. The Congressional Budget Office estimates that an additional 11.8 million people could be uninsured by 2034 because of the bill, including about 1.4 million undocumented immigrants, and the number of people who may lose coverage rises to about 17 million due to changes being made to the Affordable Care Act. Millions more will see their out-of-pocket healthcare costs rise. (For more details about what's in the budget reconciliation bill, see this piece from The Fiscal Times, this one from the Associated Press or this one at CNN.)

"This bill is a middle finger to working people," said Democratic Rep. Jim McGovern, the top Democrat on the House Rules Committee.

Fiscal hawks are furious: The package is also projected to add some $4 trillion to the deficit over the next decade including higher interest costs, leading budget hawks to describe this as a dark day for the nation's fiscal future and to warn that Republicans are accelerating the financial shortfalls projected for Social Security and Medicare. They also caution that the high cost of the bill may grow if temporary tax breaks are extended in the coming years.

"In a massive fiscal capitulation, Congress has passed the single most expensive, dishonest, and reckless budget reconciliation bill ever - and, it comes amidst an already alarming fiscal situation," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "Never before has a piece of legislation been jammed through with such disregard for our fiscal outlook, the budget process, and the impact it will have on the well-being of the country and future generations."

Jeffries stalls, but can't stop, the bill: The vote was delayed for hours as House Democratic Leader Hakeem Jeffries of New York delivered a record-breaking speech lasting 8 hours and 44 minutes, topping the 8-hour-and-32-minute record for the longest floor speech set in 2021 by then-Speaker Kevin McCarthy, a Republican.

In a speech that began at 4:53 a.m. ET and ran until 1:37 p.m., Jeffries blasted the Republican legislation and warned of the harm it will do by taking healthcare coverage and food assistance from people while delivering tax breaks that largely benefit top earners. "I ask the question, if Republicans were so proud of this one big, ugly bill, why did debate begin at 3:28 a.m. in the morning?" he asked, later adding, "We made clear that we're going to expose all of the things that are being done to harm the American people, not in the dark of night but in the light of day."

Jeffries' speech was reminiscent of the record-setting 25-hour speech that New Jersey Sen. Cory Booker delivered in April, showing some of the fight that many on the left have been demanding of Democratic leaders.

But while Democrats now hold oratorical records in both chambers of Congress, Trump and Republicans have secured a huge legislative win - albeit one that carries huge political risks as well. Johnson said the American people could see for themselves the difference between the two parties. "What they saw on display here today is that Democrats deliver performances and Republicans deliver results," he said in his remarks before the vote.

Hours of uncertainty: The process by which Johnson and Republicans delivered their desired result was torturous and involved holding open a procedural vote for a record amount of time while negotiations continued with the GOP holdouts. Another procedural vote also remained open for hours and looked uncertain until around 2 a.m., when Johnson declared he had the votes needed. "House Republicans were finally able to unite on the test vote around 3:30 a.m. Thursday," Politico noted, "closing out a six-hour voting window that might have been extraordinary if the previous vote hadn't been held open nine hours for similar reasons."

Hardliners who held out failed to win any changes to the Senate version of the bill, and their late-stage talks reportedly focused on ways that the administration would implement the legislation. In the end, Johnson's decision to push ahead with the Senate bill and essentially dare Republican holdouts to defy Trump on his signature policy plan paid off.

House Freedom Caucus members touted the conservative policies that had advanced. "The real story of the OBBB is reforming Medicaid to require work & to return spending to pre-COVID levels, saving over $1 Trillion," Rep. Chip Roy of Texas posted on X Thursday morning. "A modest but important reform that would not have happened if the @freedomcaucus had not fought for it."

What's next: Just as he wanted, Trump will hold a signing ceremony tomorrow at 5 p.m. ET. "President Trump looks forward to signing the One Big, Beautiful Bill into law to officially usher in the Golden Age of America," Press Secretary Karoline Leavitt said in a statement.

In the longer run, Republicans will unleash a messaging blitz to defend the legislation, which has proven to be unpopular in polling thus far, though many Americans still don't know much about its contents and many Republicans have publicly criticized the package. Democrats will be making the bill the centerpiece of their 2026 election efforts, highlighting the historic cuts to safety net programs and decrying tax breaks for billionaires.

The battle over passing the bill is over. The battle to define the legislation is just beginning.

Defying Expectations, US Labor Market Keeps Chugging Along

U.S. payrolls grew by 147,000 in June, the Commerce Department reported Thursday, handily beating expectations by more than 25,000. The unemployment rate ticked lower, too, dropping a tenth of a percentage point to 4.1%, defying expectations for a slight increase.

Analysts have been expecting a slowdown in hiring, and a private-sector jobs report from ADP released earlier this week suggested that the surprisingly resilient labor market might be starting to turn over. But the gains in Thursday's report, which also saw previous estimates for April and May revised higher by 16,000 jobs, boosted confidence that the labor market is still in solid shape.

"The economy is BOOMING again and it will only get better when the One, Big Beautiful Bill is passed and implemented!" White House Press Secretary Karoline Leavitt said on social media.

Still, there were some signs of potential distress in the June numbers. Job growth was concentrated in a handful of areas, including state and local governments (up 80,000) and healthcare (up 39,000). Private firms hired just 74,000 workers, about half the level of May, and some key sectors such as manufacturing and professional services were flat or lost jobs. Federal employment shrank, but only modestly, by 7,000.

"The headline number exaggerates the underlying trend of job growth," Henry McVey, head of global macro and asset allocation at KKR, told The Wall Street Journal. "The underlying data tells you that we're having a manufacturing recession."

The overall labor force participation rate slipped by a tenth of a point to 64.3%, while the rate for foreign-born workers fell more dramatically, dropping to 66.3% from 67.3% a year earlier. Economists at Morgan Stanley said the decline could reflect the Trump administration's immigration crackdown. "We think we are starting to see a chilling effect on labor force participation from increased immigration enforcement," the economists said in a research note.

The outlook: Most economists still expect to see a significant decline in hiring this year, driven largely by the Trump administration's tariff and immigration policies. Sarah House, senior economist with Wells Fargo, told the Associated Press that she expects job growth to drop under 100,000 per month in the second half of the year. "We're bracing for a much lower pace of job growth," she said. "There's still a lot of policy uncertainty."

A report released this week by economists at the Brookings Institution and the American Enterprise Institute estimates that low or even negative immigration in 2025 and 2026 will reduce economic growth by as much as 0.4 percentage points, putting "significant downward pressure on growth in the labor force and employment."

"Monthly payroll employment growth could be near zero or negative in the next few years," the analysts said.

Have a happy Fourth of July! Send us your feedback by emailing yrosenberg@thefiscaltimes.com.

Fiscal News Roundup

• The House Gives Final Approval to Trump's Big Tax Bill in a Milestone for His Second-Term Agenda - Associated Press
• The Megabill Will Soon Be Megalaw - Politico
• They Savaged Their Party's Bill. Then They Voted for It. - New York Times
• Democrats to Focus on Unpopular GOP Cuts in Bid to Take Back the House - Washington Post
• All the Times the Freedom Caucus Folded Under Pressure From Trump - Washington Post
• GOP Megabill Would Add Trillions to the Country's Debt, Budget Analysts Say - NPR
• GOP Governors Mum as Congress Prepares To Slash Medicaid Spending for Their States - KFF Health News
• 5 Under-the-Radar Pieces of Trump's "Big, Beautiful Bill" That Could Impact Your Life - Axios
• Trump Keeps Saying the GOP Mega Bill Will Eliminate Taxes on Social Security. It Does Not - Associated Press

Views and Analysis

• Congress Just Pushed the U.S. Toward a Debt Crisis. The Fed Can't Save Us. - Washington Post Editorial Board
• The Last Gasp of Small-Government Conservatism - Dana Milbank, Washington Post
• 6 Things You Probably Didn't Know Were in Trump's Mega-Bill - Natasha Sarin, Washington Post
• Republicans Are Cutting Medicare. Not Only Medicaid, Medicare. - David Dayen, American Prospect
• How Bad Is This Bill? The Answer in 10 Charts - Steven Rattner, New York Times
• How Trump's 'Big, Beautiful Bill' Will Make China Great Again - Thomas L. Friedman, New York Times
• Trump's Budget Bill Sells Out America's Future - Soon, Republicans Will Pay - Paul Bledsoe, The Hill
• Why Trump Tax Deductions - for Tips, Car Loans and More - May Not Carry Large Benefits for Low Earners - Greg Iacurci, CNBC
• A Thought Experiment on How to Fix the National Debt Problem -- Jeff Guo, Alexi Horowitz-Ghazi, Jess Jiang and Emma Peaslee, NPR (podcast)
• Sizing Up the Debt -Evan Gorelick New York Times
• 'Abundance' at the Fore of Democrats' New Ideas Sweepstakes - E.J. Dionne Jr., Washington Post
• Why Some Fear Government Sata on the U.S. Economy Is Losing Integrity - Andrew Ackerman, Washington Post
• The Hidden Bad News in the June Jobs Report - Lucy Bayly, CNN