Last Thursday, President Trump’s proposed domestic spending bill, “One Big Beautiful Bill,” passed the House after contentious debate—the final vote was 214-215. The next step would be for the Senate to approve or amend the bill.

The Senate has no set deadline for when they need to approve or change the bill prior to sending it back to the House, though Republicans have called for a July 4th deadline.

The plan proposes tax cuts that would eliminate trillions of dollars in collected taxes, driving up the deficit, while also making major changes to programs that affect the nation’s most vulnerable, like the Supplemental Nutrition Assistance Program (SNAP) and Medicaid.

The bill is also ringing alarms for those concerned about the ballooning US debt. The bill that passed the House lifts the debt ceiling by $4 trillion, meaning the government can use the additional $4 trillion to pay for previously Congressionally authorized programs.

However, if the bill is still under negotiations when the government needs to pay up, the U.S. will be at risk of default. Treasury Secretary Scott Bessent has said a government default could happen as soon as August.

Medicaid provides health care for low-income, elderly, and disabled Americans. Under the new bill, Medicaid would mandate an 80-hour per month work requirement for childless, non-disabled Americans beginning at the end of 2026.

The proposed legislation also changes enrollment requirements. Instead of enrolling once per year, members would need to enroll every six months to remain eligible for benefits, in addition to passing residency verifications.

According to a Congressional Budget Office analysis, this legislation is projected to cause roughly 10 million Americans to lose their health insurance.

Student loans would also be affected by the proposed legislation. The bill cancels the SAVE program instituted by the Biden administration. This program based student loan repayments on income and the size of a person’s household. The SAVE program would be replaced by a standardized income-based plan called the “Repayment Assistance Plan.”

SNAP provides food assistance to over 40 million Americans with low incomes. Under the new bill, states would need to contribute more to the program. The new bill also mandates work requirements for SNAP enrollees without dependents or a disability. Estimates predict that the new requirements will prevent some Americans who currently receive SNAP benefits from doing so.

An analysis by the Congressional Budget Office found that, by 2027, this bill would result in the bottom 10% of Americans losing approximately 2% of their income due to reduced benefits, while tax cuts would increase the wealth of the top 10% of Americans by 4%.

While the bill cuts funding to programs that were created to support the poorest Americans, some of the bill’s provisions are designed to put money back in Americans’ pockets.

The plan includes an extension of Trump’s 2017 tax cuts, which would have expired at the end of this fiscal year. These tax credits could help many middle-class Americans see after-tax income gains—though the biggest gains go to the wealthiest Americans, and lower-income Americans may end up taking a hit.

Martha Gimbel, co-founder of the Yale Budget Lab, told USA Today:

“It doesn’t really matter if people at the bottom are getting relatively small tax cuts if they’re losing their health care, they’re losing their SNAP benefits and they’re having to pay more money in tariffs.”

According to the Congressional Budget Office, these cuts are expected to increase the national debt by $2.4 trillion over the next 10 years.

The bill also includes a clause that provides no taxes on tips for service industry workers and those in the beauty industry. The exemption would expire at the end of 2028.

The bill also raises the child tax credit to $2,500 and opens $1,000 “Trump” accounts for babies born between 2024 and 2028.

While these provisions might help some Americans hold onto their hard-earned dollars in the short-term, critics are concerned about how these new tax breaks could affect the national debt—eventually trickling down to higher interest rates for consumers.

Republican Rep. Andy Harris, called the bill a “debt bomb” before the House vote. Federal Reserve Chair, Jerome Powell, told reporters earlier this month that the U.S. debt is “on an unsustainable path”—a situation that would almost certainly be exacerbated if the proposed bill passes the Senate as-is.

Investors are also signaling unease over the President’s proposed economic program.

U.S. 30-year bond yields, or interest rates, briefly climbed over 5% following the House passage of the bill. To compensate for the risks of climbing debt, investors in U.S. assets were demanding higher interest rates.

If bond yields remain high, these interest rates will affect other aspects of the economy that more directly affect consumers. Higher interest rates on mortgages, credit cards, and automobile loans are likely, according to The Washington Post.

Those who closely monitor national debt levels were already concerned prior to the new legislation—last year, the federal government ran a budget deficit of over 6% of GDP, a level that is considered unprecedented unless there is a war or financial crisis.

The U.S. is currently in $26 trillion of debt. As that level rises, investors in U.S. securities will need higher interest rates to justify their investment in federal bonds and assets. As interest levels rise for the U.S., the government will be forced to pay higher rates over time, further increasing the debt.

The Senate plans to amend the 1,000+ page House bill. Beyond the bill, Republicans have no alternative plan for raising the debt ceiling.

House Republicans had to offer concessions to extreme fiscal conservatives within the party to win their votes: members who would never vote for a bill that increased the national debt were eventually persuaded by cuts to Medicaid and SNAP, and increased border security measures.

If Senate Republicans are unable to reach a conclusion before federal government bills are due, they might need to start courting Democrats, who would likely demand spending increases for safety net programs—making it harder for the bill to be confirmed by the House.

However, if the Senate passes the bill using budget reconciliation, which limits all debate to 20 hours, they would be able to bypass a Democratic filibuster (which requires 60 votes to override). Using budget reconciliation, Senate Republicans could pass the bill without needing any Democratic votes—but with 53 Republicans in the Senate, all but 2 need to vote to approve the bill for it to pass.

Whether the Grand Old Party can build that kind of cohesion against such divisive legislation remains to be seen.

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