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--:-- Annie Minoff: Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, July 2nd.
--:-- Richard Rubin: Our colleague Richard Rubin spent his Monday and much of his Tuesday at the U.S. Capitol. He was watching as Republican senators tried to pass their version of President Trump's signature legislation, his big, beautiful bill. And it was a nail-biter.
--:-- Annie Minoff: So they started at 9 a.m. on Monday and kept going. There were multiple things going on. Amendment votes and votes happening on the floor. And there were also negotiations in the back rooms where senators were trying to get the final votes that they needed to pass this thing.
--:-- Richard Rubin: So this thing dragged, right? It went to late in the evening, and then it went to midnight, and then it went to 3 a.m. Senators forged ahead, fueled partly by energy drinks and carrot cake. Some took turns huddling under a blanket in the chilly Senate chamber.
--:-- Annie Minoff: And then the sun came up. And then they finally figured out a version, maybe mid to late morning, that was going to work for the last hold-up vote, which was Lisa Murkowski of Alaska.
--:-- Richard Rubin: And she ended up voting for it, and the thing passed just after noon on Tuesday. If you're keeping score, that's 27 hours where the Senate was fully in session working on this. And it went from June to July in there.
--:-- Annie Minoff: But the bill went from not passed to passed. And how big of a victory is this for Republicans to have cleared this hurdle? Oh, it's big. There's a giant sigh of relief, basically, that they got through this thing.
--:-- Richard Rubin: The question now is whether the House can get the bill to President Trump's desk by a self-imposed deadline, Independence Day.
--:-- Annie Minoff: Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, July 2nd. Coming up on the show, the mad dash to get Trump his big, beautiful bill.
--:-- Richard Rubin: How long have you been tracking this big, beautiful bill? Are you sick of hearing the words big, beautiful bill?
--:-- Annie Minoff: Sure. I mean, in some sense, I've been following this bill for eight years because we've known this was coming, right? As soon as Congress in 2017 passed the 2017 tax cuts that set an expiration date of 12-31-25, we all knew that something was going to happen probably this year.
--:-- Richard Rubin: So you marked your calendar eight years ago. So why is this big bill so important to President Trump?
--:-- Annie Minoff: This is what Republicans ran on. They ran on cutting taxes. They ran on cutting spending. They ran on tougher immigration. They ran on more for defense. So this is a significant part of what the Trump agenda is on the legislative side.
--:-- Richard Rubin: The one big, beautiful bill to secure our borders, to charge our economy, and bring back the American dream. That's what's happening.
--:-- Annie Minoff: So a version of this bill passed the House back in May. It then went to the Senate. And the Republican majority in the Senate is tight. And no Democrats are going to vote for this bill.
--:-- Richard Rubin: So how many senators could Republicans afford to lose? So they could afford to lose three. They have 53. You count down one, two, three, and then you're at 50.
--:-- Annie Minoff: And then that's the minimum they needed because the vice president can come break the tie.
--:-- Richard Rubin: There were a few sticking points that would make it hard to get to 50 yes votes. One big one was Medicaid.
--:-- Annie Minoff: In a bid to reduce federal spending on Medicaid, the Senate bill proposed a few changes. Among them was a new work requirement of 80 hours a month for adults.
--:-- Richard Rubin: The bill was also going to put limits on Medicaid provider taxes. These are taxes that states impose on healthcare providers and then essentially give back to the healthcare providers, but it's done in a way that increases the federal government's spending on Medicaid.
--:-- Annie Minoff: Some Senate Republicans supported changes to Medicaid, arguing that they would save the federal government money. But other Republicans worried about the impact on rural hospitals and their constituents' access to care.
--:-- Richard Rubin: Here's Lisa Murkowski from Alaska. When it comes to Medicaid, those cuts that would harm Alaskan beneficiaries, that's not something that I can take home, right?
--:-- Annie Minoff: The Senate is still a very rural institution, right? Two senators per state. Those sparsely populated states are heavily Republican. And so anything that really hit rural hospitals was going to be a problem.
--:-- Richard Rubin: And so the Senate solved that in part by adding a rural hospital fund. The fund would allocate over $50 billion for rural hospitals to be distributed over the next five years.
--:-- Annie Minoff: This fund helped to allay concerns of senators like Murkowski and Josh Hawley from Missouri.
--:-- Richard Rubin: But the bill's approach to Medicaid also rankled some Republican senators in the opposite direction.
--:-- Annie Minoff: There's actually a problem on the other side of the Republican conference. You had a number of senators on the more conservative wing of the Republican Party who wanted even more Medicaid cuts.
--:-- Richard Rubin: And this is one of those, you know, squeeze the balloon and see what happens sort of things, because you make changes to satisfy one person and that irritates somebody else.
--:-- Annie Minoff: So this is a very complex exercise, but it's also really challenging because they're doing lots of things at once here.
--:-- Richard Rubin: All right. So another big bone of contention in this bill has been clean energy.
--:-- Annie Minoff: What is President Trump's agenda when it comes to clean energy for this legislation? I mean, so look, the president describes what Democrats did in the 2022 Inflation Reduction Act as the Green News scam.
--:-- Richard Rubin: He does not like tax credits for wind and solar in particular. And he's urged Republicans to ratchet those back.
--:-- Annie Minoff: And again, like on Medicaid, we've seen a divide among Republicans. The thing about clean energy tax breaks is a lot of those projects that have been created since 2022 are happening in Republican states and Republican districts, right?
--:-- Richard Rubin: Right. So same thing. Republicans represent these rural, sparsely populated areas. That's where there's land and availability for wind and large winds and solar projects.
--:-- Annie Minoff: To sweeten the deal for senators like Alaska's Murkowski and Iowa's Joni Ernst and Chuck Grassley, Senate Republicans made some changes.
--:-- Richard Rubin: They still phasing out subsidies for green energy projects but they doing it more slowly. They also removed a proposed tax on wind and solar projects.
--:-- Annie Minoff: And then there was the third big sticking point in this bill the budget deficit.
--:-- Richard Rubin: That's after the break.
--:-- Annie Minoff: So, Rich, we talked about two big sticking points in this bill, Medicaid and clean energy. But there is a third sticking point, which is the deficit.
--:-- Richard Rubin: How would the Senate's version of this bill impact the deficit? If you ask Senate Republicans, it reduces the deficit. If you look at it the way the Congressional Budget Office and most budget experts do, it increases the deficit.
--:-- Annie Minoff: If that sounds a little bit confusing, it is. On the one hand, Senate Republicans are arguing that the tax cuts in this bill aren't really new. They're just extending tax cuts we already have.
--:-- Richard Rubin: And therefore, they should not be calculated as a new hit to the deficit. Basically, Senate Republicans are saying, okay, we all know we're going to extend the expiring tax cuts, so don't count that.
--:-- Annie Minoff: On the other hand... That's not the way Congress normally looks at things. Congress normally says, well, you have to look at what the law is.
--:-- Richard Rubin: Congress did not account for tax cuts beyond 2025. They didn't enact them. Republicans chose this expiration date. And therefore, by continuing these tax cuts, Republicans are making a change that does impact the deficit pretty significantly.
--:-- Annie Minoff: Then this bill adds about $3.4 trillion to budget deficits over the next decade. That's a very different number.
--:-- Richard Rubin: How are, you know, everyday people, news consumers, supposed to make sense of those numbers?
--:-- Annie Minoff: Yeah. I mean, it's challenging, right? I mean, I think we've tried to kind of explain as best we can for people. In some ways, it helps to have both numbers. It's different from how Congress has done it before, and Democrats certainly call it a gimmick.
--:-- Richard Rubin: On Monday, Senate Minority Leader Chuck Schumer accused his Republican colleagues of using, quote, fake math, to hide the true cost of their bill.
--:-- Annie Minoff: Republican Mike Crapo, who chairs the Senate Finance Committee, said that the accounting was something that, quote, 90% of Americans would intuitively understand.
--:-- Richard Rubin: If you take the point of view that this bill will increase the deficit, what is increasing the deficit the most? I mean, it's the extension of the tax cuts, right?
--:-- Annie Minoff: Republicans view the 2017 tax cuts as a roaring success. They came into 2025 saying those tax cuts were great. People had more money. Businesses were able to invest. It's great for estates, great for farms, great for business owners, great for average people.
--:-- Richard Rubin: It was good. And that is the core of what this bill does from a fiscal perspective. The Senate's version of the bill would extend most of Trump's 2017 tax cuts.
--:-- Annie Minoff: Those included reducing tax rates, increasing the estate tax exemption, and limiting deductions. Additionally, it includes new provisions designed to largely make good on Trump's campaign promises, not to tax tips and overtime pay.
--:-- Richard Rubin: What about spending? Does this bill increase spending at all?
--:-- Annie Minoff: There are spending increases in here. So there's maybe $300 billion-ish total in border security and national defense.
--:-- Richard Rubin: So there a lot of money in here that will go toward immigration enforcement toward missile defense to all the kinds of shipbuilding a lot of the president priorities for the Defense Department and for immigration enforcement.
--:-- Annie Minoff: But those are outweighed by the spending reductions on Medicaid and SNAP and elsewhere. On net, this bill lowers spending.
--:-- Richard Rubin: Who got this bill over the line and who did Republicans lose in this vote?
--:-- Annie Minoff: Yeah, Senate Republicans lost three votes. Rand Paul of Kentucky said he loved everything in the bill and would vote for it, but it had the increase in the debt limit. So that was one.
--:-- Richard Rubin: Susan Collins of Maine wanted more money for rural health care and was concerned about the Medicaid cuts. She voted no. She's up for reelection next year.
--:-- Annie Minoff: Tom Tillis of North Carolina shared some of her concerns, came out as a very firm no over the weekend. So those are the three no's that put a lot of pressure in two areas.
--:-- Richard Rubin: One is the conservatives, particularly Ron Johnson, who had complained about this bill for weeks and said it was rushed and couldn't happen. He eventually voted yes.
--:-- Annie Minoff: And then the last was Lisa Murkowski of Alaska. And she got basically three things, some of which we've talked about. One is the change in clean energy tax credits.
--:-- Richard Rubin: Two was taking the rural health care fund up from $25 billion to $50 billion. And so she was able to get a bunch of things for her unique state.
--:-- Annie Minoff: She said she didn't really like the bill and she wants the House to change it, but she was able to get enough for Alaska in there that she was able to vote for it.
--:-- Richard Rubin: With Lisa Murkowski on board, the Senate bill passed just before noon on Tuesday. Vice President J.D. Vance cast the tie-breaking vote.
--:-- Annie Minoff: On this vote, the yeas are 50, the nays are 50. The Senate being evenly divided, the vice president votes in the affirmative. The bill as amended is passed.
--:-- Richard Rubin: What was that moment like? Well, that moment was 27 hours in the making, so I think everyone was a little fried.
--:-- Annie Minoff: You know, there's a sense of relief and exhaustion. It's sort of a last day of school feeling for the side that wins, you know, so we can just go home now.
--:-- Richard Rubin: The bill now heads back to the House for approval before Trump's self-imposed deadline of July 4th.
--:-- Annie Minoff: It remains to be seen if the Republicans will have enough votes to pass it.
--:-- Richard Rubin: So the House doesn't have to pass the Senate version, right? The House, you know, if you remember civics class, the House can change it.
--:-- Annie Minoff: So are they going to do it? Are they going to get this legislation to President Trump's desk by July 4th?
--:-- Richard Rubin: Maybe. I mean, I keep saying the shrug emoji is undefeated in this process so far.
--:-- Annie Minoff: It has been highly variable, highly uncertain, but inexorable in some way because Republicans really do want to get these tax cuts done.
--:-- Richard Rubin: So anytime we've seen that it seems like this thing might be in trouble, that doesn't mean that the effort to extend the tax cuts and make a bunch of other changes is in trouble.
--:-- Annie Minoff: Republicans really, really want to find a way to do it. This may be the way. It may get through the House. It may take some more changes. But something roughly like this is on the way.
--:-- Annie Minoff: That's all for today, Wednesday, July 2nd. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Natalie Andrews, Olivia Beavers, Jasmine Lee, and Lindsay Wives.
--:-- Richard Rubin: Thanks for listening. See you tomorrow.
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