Senate Minority Leader Chuck Schumer (D-NY) didn’t have many victories in the struggle over the large budget reconciliation bill that Republicans pushed through Congress and President Donald Trump signed into law on July 4. However, he did change its name.
“I raise a point of order against lines page 1, lines 3-5, of the pending amendment, which violates section 313(b)(1)(a) of the Congressional Budget Act of 1974,” he said, hours before the bill’s passage.
Sen. Pete Ricketts (R-NE), who was chairing the Senate at that moment, didn’t fight him on it, saying only, “The point of order is sustained.” Accordingly, he announced, “The text will be stricken.”
What had been called the One Big Beautiful Bill Act was stripped of that Trump-coined title and reduced to simply The Act. Meanwhile, like “Obamacare,” most supporters and detractors of the bill are continuing to use the nickname, regardless. The administration and its supporters just rolled on to selling the bill in all of its bigness and alleged beauty.
Selling the ‘big, beautiful bill’ to the markets
Many Republicans touted the economic growth potential of the Trump agenda law. The stock market did not rally after its passage. However, crucially, neither did it tank.
The Dow Jones Industrial Average dipped on the Monday of that week, June 30, by almost 500 points, but all four trading days — the New York Stock Exchange was not open on July 4, when the bill was signed — it closed with 44,000 and change. That continued to be the sweet spot at the final bell for the next full week that followed the bill’s passage.
This stability could be notable, given that Trump continued to ratchet up tariff threats against many countries the whole time. The first time he went broad with tariff threats on April 2, a “Liberation Day” that will live in infamy for many investors and penguins, it temporarily cost trillions of dollars in lost market capitalization.
There are many mixed economic signals coming out of Washington as the second Trump administration finds its legs. In addition to tariff rumblings, the president has been feuding with the head of the Federal Reserve over high interest rates and demanding his resignation, to take one example that investors might care about.
In the midst of all this, the Trump agenda law, which cut taxes, raised the debt ceiling by a whopping $5 trillion. It also pushed back a possible government shutdown at the end of September, which appears to have been received by a critical mass of investors as business as usual in our nation’s capital, as opposed to complete chaos. Its enactment may have thus had a calming, rather than a stimulative, effect on financial markets, at least in the short run.
The Trump agenda law and America’s credit rating
Whether the credit rating agencies will see it that way is a different question. The Congressional Budget Office scored an early version of the bill’s “cumulative debt effect” at an additional $4.5 trillion. The version that finally passed was not scored, but it was, by all accounts, still in the trillions of dollars.
Of the three major agencies, Fitch had already downgraded U.S. debt from AA1, or AA+, to AAA in 2023. Moody’s did the same in May. Only Standard and Poor’s has maintained the highest rating.
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s explained in May.
The ratings agency added, “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals,” including the “big, beautiful bill.”
What that likely means is that Moody’s had already priced in the effects of the Trump agenda law and will take no further action. However, if Fitch downgrades further, or if S&P moves at all, it will become more expensive to finance future U.S. debt. This could be a problem as payments on the debt, which came to a little over $1 trillion last year, now rival military spending.
The struggle over spending
The America First Policy Institute, a Trump-boosting think tank, ran down some of the particulars of the Trump agenda law to rally the faithful: tax cuts from Trump’s first term extended, greater funding for deportation efforts, some Department of Government Efficiency spending cuts codified, energy policies oriented toward production over emission reductions, and most taxes on tips, overtime, and Social Security phased out.
It could have added: Planned Parenthood cut off from federal funding for a year and significant Medicaid reforms, though there was cause to be wary of piping up about Medicaid cuts at this point.
Progressive opponents painted a dire picture of the legislation, warning of more than 40,000 deaths annually should the bill pass. Opponents based these predictions on an analysis in early June by the University of Pennsylvania’s Leonard Davis Institute of Health Economics about the bill’s changes in Medicaid coverage that overlooked a few details. A dueling Penn Wharton Budget Model analysis points out that a “rural hospital fund” was created by the legislation to “partially offset” those controversial cuts.
Republicans control the 100-member Senate 53-47, which means that they can usually comfortably prevail on votes that are not subject to a filibuster. Sen. Susan Collins (R-ME), facing a tough reelection next year, voted “no.” Sen. Thom Tillis (R-NC) unexpectedly announced his opposition to the bill and thus his impending retirement after the 2026 elections rather than duking it out with a Trump-backed primary challenger.
That made the vote a 51-49 affair, but the Senate GOP faced two additional problems. Sens. Rand Paul (R-KY) and Lisa Murkowski (R-AK) were both iffy on the legislation, for contrary reasons.
Paul did not like what the bill would do to America’s ever-growing debt problem, with trillions more tacked on to the country’s almost $37 trillion national debt. Murkowski, meanwhile, wanted no part of the Medicaid reforms for Alaskans.
So the choice became: Cut a deal to privilege Alaska or cut a deal that began to really address the government’s spending problem, in part by paring back the debt ceiling extension.
Trump and Senate Republicans decided to do business with Murkowski. They attempted to get a specific Medicaid carve-out for Alaska that was nixed by the Senate parliamentarian from the bill. Still, Murkowski did get an effective exception for her state for having to pay for any share of SNAP benefits, one cost-saving feature of the bill, along with several other handouts and subsidies for Alaska residents.
‘Big, beautiful bill’ and the third-party threat
Two of the men who ended up most unhappy with the final legislation were Paul and DOGE avatar Elon Musk, who came out against the legislation, calling it “utterly insane and destructive,” “a disgusting abomination,” etc., and started openly feuding with Trump over it.
Musk, the billionaire head of Tesla, SpaceX, X, and other companies, started musing on X about forming a third party to break the Republican-Democrat duopoly and rebalance politics.
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For his part, Paul called it the “Not-Yet-Beautiful-Bill” and worse. He complained that the “uniparty in Washington, Republicans and Democrats alike,” had “derailed” an “America First” fiscal agenda in an op-ed published by the Washington Examiner.
It’s still too early to tell if Musk will put his money where his mouth is, though he has done so in the past. It’s also too early to tell if Paul going it alone on this legislation will signal a larger break with the GOP, or if the two men could even find a way to work together. Still, politics in Washington has produced far stranger bedfellows in our nation’s history.
Jeremy Lott is the author of many books, including The Warm Bucket Brigade: The Story of the American Vice Presidency.