The US senate is set to vote on Donald Trump’s sweeping tax and spending bill, in what could be a defining moment for the President’s second term.
Both Republican and Democrat senators have opposed the legislation, dubbed “The One Big Beautiful Bill”, alongside tech billionaire Elon Musk, who fell out with Trump over the measures earlier this month.
The legislation seeks to increase the US debt ceiling by $5trn (£3.65trn), includes about $3.8tn (£2.77bn) in tax breaks and aims to boost spending on border security, defense and energy production.
The costs of the bill would be partly offset by cuts to healthcare and nutrition programmes, but it would leave the US with about $3.3bn in additional debt, according to the Congressional Budget Office (CBO), a federal agency which conducts non-partisan economic analyses on proposed legislation.
And economists say it is not just the US economy that will be hit, with the UK likely to be affected by the bill if it includes “retaliatory tax measures” or leads to higher inflation.
Here, The i Paper takes a closer look at how the bill could strengthen Trump’s executive authority – and what it could mean for the UK.
A power move
Critics have accused Trump of promoting his personal and political ends through the bill, which include tax breaks for his rich friends and a spending boost for his controversial migrant detention and deportation policies.
The bill authorises $45bn (£32.9bn) for new immigration detention centres, alongside increasing funding for the Trump administration’s mass deportation campaign by $27bn (£19.7bn).
This would cover the costs of an additional 10,000 deportation agents, nearly doubling the 6,000 currently employed by US Immigration and Customs Enforcement (ICE).
“We got a lot of people to look for, a lot of people to arrest, a lot of national security threats we know are in this country,” White House border czar Tom Homan said last week.
“We need to find them. We need more money to do that, we need more agents to do that. For God’s sake, let’s pass this bill.”
Earlier this month, violent protests erupted in Los Angeles over the deportation campaign, spreading across the US. Trump sent 700 Marines and 4,000 National Guard troops to LA to support federal officials’ efforts to contain the unrest.
The American Civil Liberties Union has accused Trump of defying “constitutional and other legal protections” in pursuit of his “draconian” immigration policies.
Last week, the US Supreme Court paved the way for the Trump administration to resume deporting migrants to countries they are not from, including South Sudan.
The court’s conservative supermajority voted to pause a ruling by a Boston-based federal judge, who said immigrants deserved a “meaningful opportunity” to bring claims that they would face the risk of torture, persecution or even death if removed to certain countries.
The Supreme Court’s three liberal justices dissented from the majority ruling, saying it was “rewarding lawlessness”.
Democrats have also condemned the bill’s permanent extension of tax cuts introduced during Trump’s first-term, which are set to expire in December, claiming they amount to a giveaway for the US President’s wealthy friends and supporters.
The extension would mean the federal income tax rate will remain at 37 per cent rate for those making £2m (£1.8m) or more per year, rather than 39.6 per cent if the cuts expired.
Those making between $9,525 and $38,700 (£6,957 and £28,267) would continue to be taxed at 12 per cent, instead of 15 per cent.
Virginia Senator Mark Warner said the tax cuts would allow wealthier Americans to save more money that low-income earners.
“What this does, and the baseline is all these cuts, all this cutback on healthcare, to provide the wealthiest in our country a disproportionate share of tax cuts, that just doesn’t seem fair,” Warner told CNN on Sunday.
The White House has denied the bill amounts to a tax break for wealthy Americans, claiming it would put more than $10,000 [£7,300] a year back in the pockets of typical hardworking families”.
Trump’s authoritarian tendencies
The US President has raised concerns after appearing to teeter on the verge of authoritarianism, both in terms of his rhetoric and policies.
In February, Trump declared “We are the federal law” amid a row with Maine’s Governor after she questioned his executive order on transgender student-athletes. He has also posted a social media image of himself wearing a crown with the words “Long live the king”.
Meanwhile, actions he has taken which appear authoritarian include:
Ordering mass deportations that have seen thousands of immigrants denied due legal process. Deployed the National Guard and US Marines to tackle protests in Los Angeles opposing immigration raids. Authorising spending cuts through the so-called Department of Government Efficiency, led by Musk, an unelected technocrat personally appointed by Trump. Invoked a 1798 law called the Alien Enemies Act to target young Venezuelan men for detention and deportation without due process.Irem Guceri, Associate Professor of Economics and Public Policy at the University of Oxford, said the UK economy could be directly affected by Section 889 of Trump’s bill, which “introduces retaliatory tax measures aimed at foreign countries that impose special taxes on US multinationals”.
The measure is a response to levies on US firms, including the digital service tax, imposed on social media services, search engines or online marketplaces.
It is also a retaliatory measure against the undertaxed profits rule (UTPR), which allows a country to increase taxes on a business if it is part of a larger multinational company that pays less than the proposed global minimum tax of 15 per cent in another jurisdiction.
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Read More“The Senate version of the bill is softer than the earlier version narrowly passed by the House, but it would still significantly constrain the UK’s ability to implement the global minimum tax’s key enforcement mechanism, the UTPR,” Professor Guceri said.
“Without this rule, US multinationals could escape the 15 per cent global minimum tax on their profits, substantially reducing the revenue potential of the reform.
“Despite agreement among more than 140 countries on the OECD-led framework, the US retaliation highlights the fragility of consensus-based efforts to tax multinational profits.”
Jill Rutter, senior fellow at the Institute for Government, warned the bill could have implications for the value of the US dollar, “which affects inflation here as a lot of stuff is priced in [dollars] but also makes exporting even harder”.
She added that “the big impact of Trump is just a massive dose of economic uncertainty… which is already taking a toll on growth”.
“The US can usually get away with more fiscal irresponsibility than other [governments] because of the position of the [dollar], but does not insulate rest of world from shocks.”
What is included in Trump’s bill?
Key aspects of the big, beautiful bill include:
Tax cuts: Raise the cap from $10,000 to $40,000 (£7,300 to £29,200) on state and local property tax deductions. Extension of lower federal income tax rates introduced by Trump in 2017.
Debt ceiling: Raise the upper limit of US debt by $5trn (£3.65trn), allowing it to borrow more.
Medicaid: Cuts to funding, more frequent eligibility checks and work requirements for some able-bodied citizens receiving Medicaid, US government-sponsored health care for low-income and disabled Americans.
Child tax credit: Make current $2,000 (£1,460) child tax credit permanent, meaning it will not return to the pre-2017 level of $1,000 (£730) in 2026, as originally planned.
Asylum fee: A minimum $100 (£73) fee for those seeking asylum.
Border and national security: A $350bn (£255.4bn) infusion for border and national security, including for deportations
Artificial intelligence (AI): A 10-year pause on state regulations on AI, federal aid to states as long as they do not regulate the technology.
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