(A)Political - July 5th

Good morning everyone,

Happy 4th of July weekend! Let’s dive into the biggest legislation of 2025!

Trump signs his monumental ‘Big, Beautiful Bill’ legislation into law. U.S. envoy Steve Witkoff and Iranian foreign minister Abbas Araghchi are expected to meet in Oslo next week, where the sides must decide whether to freeze high-grade enrichment and restore IAEA monitoring or watch diplomacy stall again. Trading partners that receive President Trump’s tariff letters on July 7 have until July 9 to cut last-minute deals, otherwise the higher duties written into those notices will hit incoming shipments on August 1.

• Trump’s Cornerstone Legislation ‘Big, Beautiful Bill’ Signed Into Law

• US-Iran Nuclear Talks Begin Again Next Week In Norway - Trump Offers To Talk Directly To Iranian Leadership

• Trump Threatens Tariffs Up To 70% For A Dozen Non-Compliant Countries

Trump’s Cornerstone Legislation ‘Big, Beautiful Bill’ Signed Into Law

_{By: Atlas}

President Donald Trump signed the 887-page One Big Beautiful Bill Act into law on July 4, 2025, completing a tax-and-spending package that had cleared the Senate 51-50 on July 1 and the House 217-214 on July 3. The statute makes permanent the individual and corporate rate cuts enacted in 2017, lifts the child-tax credit to $2,200, permits new deductions for tips, overtime pay, and interest on U.S.–built auto loans, and raises the cap on state-and-local-tax (SALT) deductions to $40,000 for five years. It also authorizes $150 billion for immigration enforcement, $157 billion for defense programs, and phases out several clean-energy tax credits beginning in 2025. The Congressional Budget Office projects a ten-year deficit increase of about $3.3 trillion even after the spending offsets, while the statutory debt ceiling rises by $5 trillion.

Fiscal and Economic Effects

The permanent rate extensions remove a scheduled tax increase set for 2026, providing roughly $4.5 trillion in relief over a decade. Business expensing for equipment and research is extended through 2030, a change supporters argue will boost private investment. Critics note that the deficit impact pushes projected federal debt above 126 percent of GDP by 2034 under baseline growth assumptions. Market response has been mixed: major equity indexes closed the July 4 week at record highs on expectations of lower effective corporate rates, while Treasury yields edged higher on the prospect of larger bond issuance.

Policy Changes Beyond Taxes

Immigration and Border Security: The act funds 100,000 detention beds, 10,000 additional Immigration and Customs Enforcement officers, continued border-wall construction, and a new 1 percent excise tax on cross-border remittances. These appropriations run through fiscal 2029.

Defense: Appropriations include $29 billion for shipbuilding, $25 billion for munitions replenishment, and $25 billion for the “Golden Dome” missile-defense project, with multi-year contract authority granted to the Pentagon.

Safety-Net Programs: Starting January 2027, able-bodied adults ages 19–64 must complete 80 hours of work per month to retain Medicaid or Supplemental Nutrition Assistance Program benefits, subject to hardship exemptions defined in forthcoming regulations. States with payment-error rates above 6 percent will assume between 5 and 15 percent of SNAP benefit costs; their share of administrative costs rises to 75 percent. CBO estimates about 11.8 million people could lose Medicaid coverage and 3 million could leave SNAP rolls by 2034.

Energy and Climate: Electric-vehicle purchase credits end on September 30, 2025. Production and investment credits for wind, solar, and hydrogen projects terminate for facilities not operational by the end of 2027. A new deduction for metallurgical coal is introduced to support domestic steelmaking.

Implementation Timetable

• By September 30, 2025: Treasury and the Internal Revenue Service must revise withholding tables reflecting the new tip, overtime, and Social Security deductions.
• October 1, 2025: Immigration and defense funds become available; DHS plans to award the first new wall contracts by March 2026.
• Tax Year 2026: SALT cap increase, Social Security benefit deduction, and business expensing extensions take full effect.
• January 2027: Medicaid and SNAP work requirements begin after federal rulemaking finalizes verification procedures and exemption criteria.

Anticipated Consequences

Budget Oversight: The House and Senate budget committees have scheduled quarterly reviews of projected deficits and debt-service costs. Independent watchdogs warn that if economic growth falls short of administration estimates, the combined effect of tax relief and higher discretionary spending could widen annual deficits beyond current projections.

State Fiscal Pressure: States will have to finance the new SNAP cost-sharing formula and, in expansion states, adjust to a lower allowable Medicaid provider-tax rate. Rural hospitals receive a $50 billion stabilization fund, but analysts caution that provider-tax changes could still erode margins in low-population areas.

Energy Sector Shift: Sunsetting of clean-energy incentives may slow new wind and solar builds after 2027, while the early end to the electric-vehicle credit is likely to affect domestic demand projections used by automakers. Developers racing to qualify projects before deadlines face supply-chain bottlenecks and permitting constraints, raising uncertainty in power-sector investment plans.

Healthcare Coverage: The Department of Health and Human Services projects that work-requirement compliance systems will cost states about $15 billion over five years. Medicaid disenrollment could raise uncompensated-care expenses, particularly in emergency departments. Supporters argue that work incentives will boost labor-force participation and reduce long-term spending; opponents predict coverage gaps and higher state outlays for public hospitals.

Trade and Manufacturing: Immediate expensing and rate permanence may encourage capital-equipment purchases, but the simultaneous imposition of broader import tariffs—if current trade negotiations fail—could offset gains by raising input costs for manufacturers reliant on foreign components.

Political Outlook

Republicans present the law as proof they can deliver permanent tax relief and expanded border security. Democrats plan to focus on safety-net cuts, SALT cap temporariness, and deficit growth during the 2026 midterms. Litigation is expected over the Medicaid work rule and over the accelerated phase-out of renewable-energy credits. The Treasury’s next debt-management announcement, due in August, will provide the first detailed borrowing schedule under the higher ceiling, offering early insight into investor appetite for additional long-duration securities.

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