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4 months ago
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Fact Check
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As President Trump sought to pass his tax and domestic policy bill, he and his allies have insisted that the legislation would be a boon for seniors and the middle class.
The Senate narrowly passed its version on Tuesday, with Vice President JD Vance casting a tiebreaking vote. Now, both chambers of Congress will reconcile differences between their versions.
Still, some of their most repeated talking points — a warning about vast tax increases if the bill did not pass, a purported elimination of taxes on Social Security and boasts about a record tax cut for average Americans — are not accurate.
Here’s a fact-check.
What Was Said
“If it’s not approved, your taxes will go up by 68 percent.”
— Mr. Trump at a news conference on Friday
False. If the 2017 tax cuts expired, most taxpayers would see a modest increase in taxes, but nowhere near the 68 percent Mr. Trump cited.
The Tax Policy Center, a nonpartisan think tank, estimated that not extending the tax cuts would lead taxes to increase by 7.5 percent on average, or about $2,100. Taxes would increase for every income quintile, from 7 percent to nearly 12 percent.
The Tax Foundation, which generally favors lower taxes, has estimated that expiration would lead to an average tax increase of about $2,800. And an analysis from the Brookings Institution found that tax increases would average $1,900.
Mr. Trump may have been misconstruing a different statistic. Both tax think tanks have estimated that about two-thirds of taxpayers would see an increase in taxes if the 2017 law expired.
What Was Said
“There’s also no tax on tips, no tax on Social Security, no tax on overtime.”
— Mr. Trump, in an interview on Fox Business Network on Sunday
This is exaggerated. The bill creates deductions for tips and overtime, but those breaks are temporary. And its tax reductions for Social Security benefits are even more limited.
The Senate bill would allow workers to deduct tips and overtime pay from the 2025 to 2028 tax years. The deductions are capped at $25,000 and $12,500, and decrease for individuals making more than $150,000 a year. (The House version of the bill did not include a cap, but only people making less than $160,000 annually qualified.)
Under current law, up to 85 percent of Social Security benefits are taxable for seniors making more than $25,000 and joint filers making more than $32,000. Seniors over 65 also qualify for an additional deduction. More than half of Social Security beneficiaries pay taxes on their benefits. Half of taxes paid on Social Security benefits shore up Social Security’s trust fund and 35 percent goes to the Medicare Hospital Insurance Trust Fund ($50.7 billion and $35 billion in 2023), according to the Congressional Research Service.
The Senate bill creates an additional deduction of $6,000 for seniors on top of that. (The House bill’s amount is $4,000.) That deduction phases out for higher incomes and would expire in 2028. That’s not quite eliminating all taxation on benefits.
The House’s $4,000 deduction would cost $66 billion from 2025 to 2028, according to the Joint Committee on Taxation. For context, eliminating all taxation of Social Security would cost more than $1.4 trillion over 10 years — almost 10 times as much as the Republicans’ deduction proposal.
Analyses from the Tax Foundation and the Bipartisan Policy Center found that the additional deduction would primarily benefit those with higher incomes.
What Was Said
“Senate Republicans are voting for the largest tax cut for middle-class Americans in history.”
— the Senate Republican conference on social media on Thursday
False. Several recent pieces of legislation provided bigger boosts to the middle class.
Analysis from the Tax Policy Center shows that the tax provisions in the Senate version of the bill would provide a tax cut of 1.9 percent or about $1,750 for the middle quintile of taxpayers. That amounts to a 2.2 percent increase to their after-tax income.
A coronavirus stimulus package in 2021 cut taxes by 6 percent, or $3,700, for the middle quintile. That was equal to a 6 percent increase in after-tax income, though the benefit was temporary.
Tax cuts signed into law in 2012 provided a cut of about 2.3 percent or nearly $1,200, not adjusted for inflation. That was equal to about a 2.8 increase in after-tax income.
And under the 1981 tax cut, a family of four earning $20,000 (roughly the median family income at the time) received an 11 percent tax cut, or $223, according to the Joint Committee on Taxation.
It is also worth noting that beyond tax cuts, both the Senate and the House bills contain numerous other provisions that may adversely affect the middle class. The Congressional Budget Office, in a distributional analysis of the House bill, estimated that the fifth and sixth deciles of households would see an increase of $853 and $1,256 from tax cuts, but see state and federal benefits reduced by $433 and $370.
News Analysis
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Washington has not exactly won a reputation for fiscal discipline over the last few decades, as both Republicans and Democrats passed bills that have, bit by bit, degraded the nation’s finances.
But the legislation that Republicans passed through the Senate on Tuesday stands apart in its harm to the budget, analysts say. Not only did an initial analysis show it adding at least $3.3 trillion to the nation’s debt over the next 10 years — making it among the most expensive bills in a generation — but it would also reduce the amount of tax revenue the country collects for decades. Such a shortfall could begin a seismic shift in the nation’s fiscal trajectory and raise the risk of a debt crisis.
The threat is a reflection of the fact that Senate Republicans have voted to make tax cuts that the party first passed in 2017 a permanent feature of the tax code. That means the growth in the country’s debt, already at levels economists find alarming, would only accelerate as the bill shaves down the country’s main source of money.
“We are looking at the most expensive piece of legislation probably since the 1960s,” said Jessica Riedl, a senior fellow at the Manhattan Institute, a conservative think tank. “The danger is that Congress is piling trillions of new borrowing on top of deficits that are already leaping.”
Historically, lawmakers have been unable to make such a large change in the country’s finances without bipartisan support, helping contain how much debt is added at a time.
That is because reconciliation, the special legislative procedure that Republicans used to avoid the filibuster in the Senate and pass the bill along party lines, has long included the requirement that bills cannot add to the debt for more than a decade. But Republicans decided to disregard that rule, relying on an accounting gimmick to argue that the $3.8 trillion cost of extending the 2017 tax cuts is actually zero and therefore they can continue indefinitely.
Not only has that argument opened the door to an even larger increase in the debt over time, but it is also an indication that lawmakers in Washington are becoming even less serious about containing the debt, analysts said. Bond markets, where investors from around the world buy and sell the government’s debt, have already shown some signs of stress as Republicans have pushed forward their bill.
“If I’m bond markets, and I’m forward-looking, I would be not just disappointed in what’s happening right now, in terms of the actual numbers, but also upset in terms of the precedent that’s being set,” said Kent Smetters, an economist at the University of Pennsylvania’s Wharton School. “It’s a little depressing.”
The cost is a critical sticking point as the bill heads back to the House, where some hard-right lawmakers have insisted that it needs to be cheaper before they can support it. But lowering the overall impact of the cost of the bill, much of which is caused by tax cuts, would probably require Republicans to cut the social-safety net even further, its own political challenge.
Even without this bill, the debt has been expected to reach record levels in the coming decades, with the nonpartisan Congressional Budget Office estimating that the debt held by the public, now about the same size as the economy, would grow to become roughly 56 percent larger than the economy by 2055. Making the 2017 tax cuts permanent could push the debt to become more than twice as large as the economy over the next 30 years, Ms. Riedl said.
The doomsday scenario for the nation’s debt is that the investors who lend to the government eventually lose faith in Washington’s ability to always pay them back. That could push investors to start expecting a higher interest rate on government bonds, a shift that could increase borrowing costs across the economy and weigh heavily on Americans’ financial fortunes.
At the same time, it is not a huge surprise that the 2017 tax law — which slashed individual income rates and expanded the standard deduction, among other changes — is persisting. Lawmakers in both parties are hesitant to ever claw back tax cuts, and bond investors have in all likelihood expected higher deficits stemming from the 2017 law’s extension.
“If you’re a bond investor, in reality you expected this thing to become law,” said Don Schneider, deputy head of U.S. policy at Piper Sandler, an investment bank, and a former Republican tax aide. He said that investors would continue to snap up government bonds, the bedrock of the global financial system.
“Everyone knows the budget is a total mess and it’s getting worse,” Mr. Schneider said. “But people don’t say, ‘The deficit is going to be really bad 20 years from now, I’m not going to buy Treasuries.’ They’re still doing it.”
But the Republican bill goes beyond simply extending existing tax cuts. It also introduces several new ones, including versions of President Trump’s campaign promises to not tax tips or overtime pay. Those policies are slated to last only through 2028, meaning Congress will again have to decide whether to extend expiring tax cuts. Given the popularity of lower taxes, and Democratic support for many of Mr. Trump’s ideas, lawmakers are likely to vote to extend them, effectively raising their cost.
“All of a sudden, it’s just this endless daisy chain of expiring tax cuts and temporary tax cuts, on and on, which really ratchets down federal revenue,” said Brendan Duke, senior director for federal fiscal policy at the Center on Budget and Policy Priorities, a liberal think tank.
It is for that reason that some budget analysts actually peg the price of the Senate bill far beyond the $3.3 trillion price tag. First, they add in the interest payments necessitated by that borrowing, an extra cost that the Committee for a Responsible for a Federal Budget said would bring the total to $3.9 trillion. And then adding in the cost of measures like no taxes on tips over 10 years, rather than just four, the group puts the price of the bill at $5.3 trillion.
Such a huge hit to the budget will only complicate future fiscal negotiations. Budget experts around Washington are already starting to prepare for the looming exhaustion of Social Security’s trust fund in 2033, which would jeopardize its ability to make full payments to beneficiaries. Diminished tax revenue will make finding a fix to the broadly popular program even more difficult.
“The biggest thing this fiscal change does is, when we’re staring at Social Security insolvency in 2032 or 2033, it’s going to make it a lot harder,” said Zach Moller, director of the economic program at Third Way, a center-left group. “The next president is going to be stuck dealing with Social Security. The fiscal situation is so bad that the next president is going to have a bad time.”
The Senate has passed the G.O.P. domestic policy bill carrying President Trump’s agenda, 51 to 50, with Vice President JD Vance casting the tiebreaking vote. Three Republicans, Senators Susan Collins of Maine, Thom Tillis of North Carolina, and Rand Paul of Kentucky, voted against it.
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Three Republican senators have voted against an attempt to finalize their party’s bill: Susan Collins of Maine, Thom Tillis of North Carolina, and Rand Paul of Kentucky, leaving it in a 50-50 tie. Unless they change their votes, Vice President JD Vance will be needed to break the tie, allowing the Senate to advance to a vote to pass the bill.
Some potential monumental news: Democrats say they successfully struck “Big Beautiful Bill” as the formal name of the legislation by raising a point of order against what they consider a farcial and inappropriate title.
Megan Mineiro
Reporting from Capitol Hill
Senator John Thune, the majority leader, told reporters as he entered the chamber that he hasn’t spoken to Speaker Mike Johnson “in the last 12 hours” as Senate Republicans made last minute changes to their version of the tax and domestic policy measure, ahead of an upcoming vote to send it to the House where Johnson hopes to pass the bill in that chamber.
Asked if Republicans have the votes after hours of wrangling intraparty holdouts in the Senate, Thune said: “Let’s hope so.”
Senator Jim Justice, Republican of West Virginia, said that he believed the parliamentarian was currently reviewing “handwritten” language for the latest version of the bill, as staff from both parties hashed out whether the changes fit with the special budget rules Republicans are using to push their bill through the chamber on a simple majority vote.
Asked about the timing of the vote, Justice, who uses a motorized scooter to navigate the Capitol, joked, “All I’m doing is just driving around in circles.”
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According to a Republican draft of final changes to the bill that is circulating in the Senate, they are planning to propose doubling, to $50 billion, a fund to support rural health care providers. Senator Susan Collins, Republican of Maine, has been repeatedly requesting more money for the fund, and an amendment she proposed yesterday to double it failed. She has been a key holdout against the bill, citing the impact it would have on rural health providers in her state.
President Trump is in Florida for a visit to the planned site of a detention camp for migrants that officials in his administration have called “Alligator Alcatraz.” Standing alongside Trump, Gov. Ron DeSantis said he was hoping to deputize National Guard judge advocates to process immigration cases at the new detention facility.
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After landing in Florida, President Trump told reporters that his tax and domestic policy bill will only impact “waste, fraud and abuse” when it comes to Medicaid coverage. In fact, the bill would would slash spending on Medicaid and federal nutrition assistance to help pay for its costs. According to a Congressional Budget Office report released over the weekend, 11.8 million more Americans would become uninsured by 2034. Federal spending on Medicaid, Medicare and Obamacare would be reduced by more than $1.1 trillion over that period — with more than $1 trillion of those cuts coming from Medicaid alone, the report found.
Republican leaders have said senators should plan to be in their seats soon for voting to resume. Asking senators to take their seats usually occurs only on big votes like the one upcoming. On most occasions, senators wander in and out of the chamber and vote in front of the clerks with a thumbs up or down, or sometimes from the doorway if they are not dressed appropriately. Voting from their desks during a formal roll call bestows a certain solemnity on the moment such as when Democrats pushed through the Affordable Care Act in 2009 or during impeachment.
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A fiery dispute between Elon Musk and President Trump that had been fading out whirled back to life on Tuesday.
The two men reignited their conflict over the Republican policy bill, which about a month ago tore up their political alliance. On Tuesday morning, after days of posts from Mr. Musk on X in which he voiced his displeasure with the bill, Mr. Trump ratcheted up his own rhetoric, at one point suggesting that he could be interested in deporting Mr. Musk, a U.S. citizen who was born in South Africa.
The resumption of hostilities was something of a surprise after Mr. Musk phoned Mr. Trump in mid-June and posted a message apologizing for some of his online attacks.
On the South Lawn of the White House on Tuesday, the president told a reporter who asked if he would deport Mr. Musk: “I don’t know. We’ll have to take a look.”
“DOGE is the monster that might have to go back and eat Elon. Wouldn’t that be terrible?” he said, referring to the Department of Government Efficiency, which Mr. Musk formed. Mr. Trump then repeated his claim that Mr. Musk was only opposing his signature policy bill because it would cut back on subsidies for electric vehicles like those made by Tesla, which Mr. Musk runs.
Earlier on Truth Social, Mr. Trump said there was “BIG MONEY TO BE SAVED” if DOGE took a close look at the subsidies received by Mr. Musk’s companies.
Mr. Trump has threatened to go after those subsidies before, but not for several weeks, as he has generally wandered to other things. Mr. Musk’s posts in recent days — including several on Monday in which he called for a new political party and primaries against congressional Republicans — seem to have gotten his attention.
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The defeat early Tuesday of a ban on state laws for artificial intelligence dealt a major blow to the tech industry on the verge of a policy victory.
In a 99-1 vote, the Senate voted overwhelmingly to strike an amendment to the Republican economic policy package that would have imposed a decadelong moratorium on attempts to regulate A.I. by the states.
The before-sunrise vote was a win for consumer groups and Democrats, who had argued for weeks against the provision that they feared would remove any threat of oversight for the powerful A.I. industry.
“The Senate came together tonight to say that we can’t just run over good state consumer protection laws,” Senator Maria Cantwell, Democrat of Washington, said in a statement. “States can fight robocalls, deepfakes and provide safe autonomous vehicle laws.”
There are no federal laws regulating A.I. but states have enacted dozens of laws that strengthen consumer privacy, ban A.I.-generated child sexual abuse material and outlaw deepfake videos of political candidates. All but a handful of states have some laws regulating artificial intelligence in place. It is an area of deep interest: All 50 have introduced bills in the past year tied to the issue.
The Senate’s provision, introduced in the Senate by Senator Ted Cruz, Republican of Texas, sparked intense criticism by state attorneys general, child safety groups and consumer advocates who warned the amendment would give A.I. companies a clear runway to develop unproven and potentially dangerous technologies.
The proposed ban on state A.I. laws stemmed from a proposal championed by Speaker Mike Johnson, Republican of Louisiana. On May 22, the House’s approved version of the bill included the “Artificial Intelligence and Information Technology Modernization Initiative,” a 10-year moratorium on state A.I. laws.
The Silicon Valley venture capital powerhouse Andreessen Horowitz and A.I. startups OpenAI and Anduril, a defense tech company, lobbied fiercely in favor of the amendment. They said it was too difficult for startups to comply with dozens of different state A.I. laws.
The Trump administration also threw its support behind the proposal. Commerce Secretary Howard Lutnick called the moratorium a critical policy to advance American leadership in A.I.
“If we’re serious about winning the AI race, we must prioritize investment and innovation,” Mr. Lutnick posted on social media Monday.
On Sunday, it appeared more likely the A.I. amendment might go through after Senator Marsha Blackburn, Republican of Tennessee, reached a compromise with Mr. Cruz on a shorter moratorium of five years. But the compromise included language that many legal experts said could neuter existing state laws. Ms. Blackburn withdrew her amendment written with Mr. Cruz late Monday and introduced a motion to strike his original amendment.
“The Senate did the right thing today for kids, for families and for our future by voting to strip out the dangerous 10-year ban on state A.I. laws, which had no business being in a budget bill in the first place,” said Jim Steyer, chief executive of the child safety group, Common Sense Media, in a statement.
The so-called wraparound amendment from Senate Republican leadership will strike a tax on wind and solar energy, according to a Republican draft of final changes to the bill that is circulating in the Senate. The tax has alarmed many in the renewable energy industry.
Megan Mineiro
Reporting from Capitol Hill
Asked if Republicans have a deal to pass their sweeping policy bill, Senator John Thune, the majority leader, told reporters at the Capitol: “I believe we do,” but noted that he is “always a bit of a realist.” Senators have been voting for more than 24 hours on amendments, as Thune worked to try to strike back room deals to secure Republican holdouts.
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With the sweeping domestic policy bill to advance his agenda stalled in the Senate, President Trump has returned to criticizing Representative Thomas Massie of Kentucky, one of the bill’s vocal Republican opponents in the House, and again threatened to back a primary challenger to him. “Get ready,” he wrote on social media. “Massie is a very bad guy!” Last night, Elon Musk, who, like Massie, has opposed the bill for adding significantly to the national debt, vowed in a social media post to back Massie‘s re-election campaign.
Megan Mineiro
Reporting from Capitol Hill
Senator John Barrasso of Wyoming, the majority whip, told reporters at the Capitol that he expected to vote this morning on the policy bill. He was heading into an elevator with Senator Lisa Murkowski of Alaska, a key Republican holdout.
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President Trump suggested he was open to pushing back the July 4 deadline he set for the passage of his sprawling domestic policy bill in Congress. “I’d love to do July 4, but I think it’s very hard to do July 4,” he told reporters on Tuesday morning on the South Lawn of the White House. Trump still said that he wanted the bill to pass soon and that it would be “very wise” for all Republicans to get on board.
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Republicans are trying to work toward an end game almost 24 hours into this marathon. Senators Lisa Murkowski of Alaska and John Barrasso of Wyoming, the No. 2 Senate Republican, just left the Senate floor and went into Barrasso’s Capitol office. Barrasso has stayed at Murkowski’s side for hours as the leadership wooed her. The two have worked closely over the years and have similar energy issues in their states.
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Prime Minister Benjamin Netanyahu of Israel and President Trump plan to meet next week in the United States, in what would be the Israeli leader’s third U.S. visit in less than six months.
The visit would come after the United States intervened in the Israel-Iran war last month, striking three Iranian nuclear facilities before helping secure a cease-fire to halt the deadly regional escalation. Mr. Netanyahu’s arrival would also occur as international attention refocuses on efforts to achieve a truce in the nearly two-year-old war between Israel and Hamas in Gaza.
Indirect talks between Israel and Hamas have repeatedly failed to produce a cease-fire, prolonging the suffering of more than two million Palestinian civilians in Gaza and the captivity of Israeli hostages. The two sides have not been able to agree on how long a cease-fire should last, with Hamas demanding a total end to the war and Mr. Netanyahu expressing interest in only a temporary truce until Hamas’s military wing and government are dismantled.
Mr. Netanyahu, speaking at a meeting of government ministers on Tuesday, said that while in the United States, he planned to meet other senior Trump administration officials, including Vice President JD Vance, Secretary of State Marco Rubio, Secretary of Defense Pete Hegseth, and Steve Witkoff, Mr. Trump’s special envoy for peace missions.
Mr. Trump told reporters at the White House on Tuesday that he and Mr. Netanyahu would discuss Gaza and Iran. Asked about a cease-fire in Gaza, he said, “We hope it’s going to happen, and we’re looking forward to it happening sometime next week.”
Mr. Trump did not clarify why he thought a breakthrough was imminent.
An Israeli official, who spoke on condition of anonymity to discuss the prime minister’s schedule, said that Mr. Netanyahu planned to fly to Washington on Sunday and meet with Mr. Trump on Monday.
On Sunday, Mr. Trump publicly demanded progress on a deal in Gaza. “MAKE THE DEAL IN GAZA,” the president wrote on social media. “GET THE HOSTAGES BACK!!!”
Some analysts have speculated that Mr. Netanyahu may now be willing to agree to end the war in Gaza, even if it risks far-right political allies leaving his governing coalition. Mr. Netanyahu, those analysts say, could feel that he is in a better position to campaign for re-election because of Israeli and American strikes on Iran’s nuclear program.
Though the extent of the damage to Iranian nuclear facilities remains unclear, Mr. Netanyahu has portrayed the campaign as a success and his domestic popularity appears to have risen.
Since the cease-fire, Mr. Netanyahu has faced growing calls at home to secure an agreement to free the remaining hostages in Gaza. Up to 20 hostages abducted in the Hamas-led attack of Oct. 7, 2023, are still believed to be alive, according to Israeli authorities. The remains of 30 others are also being held, the authorities said.
Humanitarian officials have also warned of increasing desperation among Palestinians in Gaza, who are struggling to obtain food aid amid deadly violence near distribution points and enduring miserable conditions in sweltering makeshift shelters.
On Sunday, Mr. Netanyahu told a group of workers for the Shin Bet, the country’s domestic intelligence service, that Israel’s campaign in Iran had opened up opportunities. He spoke about rescuing hostages being held in Gaza, adding that Israel must “resolve the Gaza issue and defeat Hamas.”
In recent days, Hamas officials have suggested to the Arabic media that they will not compromise on their demand to end the war.
Tyler Pager in Washington contributed reporting to this article.
Voting in the Senate has ground to a halt for now, and G.O.P. leaders are using a procedural tool — in this case a quorum call — to buy time for negotiations to continue. They are focused on winning the vote of Senator Lisa Murkowski of Alaska.
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Treasury Secretary Scott Bessent signaled that the Trump administration may wait until next week to announce any trade deals it may have struck, while President Trump focuses on securing passage of the sweeping tax and domestic policy bill before his July 4 deadline. “We want to get this signed on Friday, and then talk about the trade deals next week,” Mr. Bessent told Fox News, describing it as a matter of “sequencing.” Bessent also sought to defend the policy bill from criticisms that it would add considerably to the federal debt, a line of attack reprised this week by the tech mogul Elon Musk. “I admire Elon’s leadership on rockets. I will take care of the finances,” Bessent said. The two men notably sparred while Musk advised President Trump.
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The marathon voting session in the Senate has reached 45 consecutive votes, this sets a new record for the longest ‘vote-a-rama’ in Senate history. The previous record of 44 votes was set in March of 2008.
In a sign of the grumpy early morning mood in the Senate following an all-night session, Republican Senators Susan Collins of Maine, Lisa Murkowski of Alaska and Rand Paul of Kentucky voted to join Democrats in a quixotic proposal to deny the White House Office of Management and Budget of operating funds. Russell Vought, head of the O.M.B., has angered some senators with his claims that the White House has the final word on spending. The proposal failed on a 50-50 tie vote. Paul is a firm no against the underlying bill because it increases the federal debt ceiling by $5 trilllion, Collins is leaning no because of Medicaid cuts and Republican leaders are bending over backward to try to turn a reluctant Murkowski into a yes.
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President Trump will leave the White House soon for a quick trip to Florida, where he will visit the planned site of a detention camp for migrants that officials in his administration have called “Alligator Alcatraz.” Florida’s attorney general, James Uthmeier, has said the state will not need to invest much in security at the camp because it is surrounded by alligators, pythons and other dangerous creatures.
The Senate parliamentarian has ruled against a provision in the G.O.P. legislation that would have allowed some states, including Alaska, to get a boost in the amount the federal government pays for their Medicaid programs, according to Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee. That provision appeared to be aimed at winning the support of Senator Lisa Murkowski of Alaska, a key holdout.
Megan Mineiro
Reporting from Capitol Hill
Vice President JD Vance has arrived at the Capitol prepared to cast a tiebreaking vote on the sweeping policy bill, after Republican leaders worked through the night to secure the votes to pass the bill carrying President Trump’s agenda. A final vote on the measure has not begun, and it remains unclear if Republicans have locked in the necessary support.
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