Trump and the GOP Notched a Tax Bill Victory. Now Comes the Hard Part.

U.S. Speaker of the House Mike Johnson (R-LA) said he had the votes to give the bill final approval. (Getty Images)

President Donald Trump and Republicans will hit their July 4 deadline to pass the president’s signature tax and spending legislation and sign it into law. Now the pressure will be on to convince voters that Trump’s achievement will make the U.S. economy stronger. Americans thus far aren’t convinced.

The House voted 218-214 to pass the bill, which extends the individual tax cuts that Trump originally signed into law in 2017, among other provisions.

Over the past two days, fiscal conservatives have lambasted the bill for adding a projected $3.4 trillion to the $36.2 trillion national debt over the next decade. Meanwhile, some GOP moderates expressed concern about the bill’s cuts to Medicaid that the nonpartisan Congressional Budget Office has said will likely result in nearly 12 million people losing their insurance coverage.

In the end, both groups folded without any changes. Some previous holdouts said the White House made assurances on how they would enforce certain provisions in the bill, while House leadership also suggested Republicans would have a chance to pass another bill to make changes later in the year.

“What a great night it was. One of the most consequential Bills ever. The USA is the ‘HOTTEST’ Country in the World, by far!!!” wrote Trump on Truth Social on Thursday.

With the cornerstone of the White House’s legislative agenda in place, Trump and lawmakers will try to sell the bill’s benefits to a skeptical public, a critical task ahead of the 2026 midterm elections.

A slew of polls has shown the tax bill to be one of the most unpopular pieces of legislation in years.

Quinnipiac in early June found that voters opposed the bill that the House passed in May 53% to 27%, with 20% offering no opinion. KFF said the public opposed it 64% to 35%, while a Washington Post/Ipsos poll said it was opposed 42% to 23%, with the rest not offering an opinion. People who said they had heard a “great deal” about the bill were the most likely to oppose it.

The bill should have some positive effects on growth in the short-run, some analysts say. The bill permanently enacts corporate tax cuts retroactive to the beginning of the year, including deductions for business interest, accelerated depreciation for some capital expenditures, and research and development. The extensions were expected, and the market has likely priced much of the benefit in.

“Enactment of the bill will unlock significant free cash flow for US corporations,” wrote analysts for Wolfe Research in a note earlier this week, who added that the “benefits materializing should boost markets even if largely expected.”

The bill will also give a cut to upper-middle-class Americans in high-tax states. To win the support of GOP moderates in states like New York and New Jersey, Congress increased the cap on state and local tax deductions to $40,000 from $10,000 starting this year, a benefit that will phase out for those making more than $500,000. The cap will increase 1% yearly until 2029 before reverting to $10,000 in 2030.

Another positive for markets is that the bill eliminates any near-term threat of a U.S. default by raising the debt ceiling by $5 trillion. Treasury Secretary Scott Bessent had warned the U.S. could hit the current borrowing limit in August.

In the longer term, the bill’s fiscal costs could weigh on the Treasury market. The bill is expected to add $3.4 trillion to the national debt over the coming decade, according to the nonpartisan Congressional Budget Office. Unlike with some previous tax cuts, where the cost was partially offset by higher growth, with this bill, the CBO said revenue from any GDP boost would be more than washed away by higher expected interest as Treasuries come under strain.

Adding to the uncertainty is that the bill delays some of the spending cuts until after the midterm elections, meaning that lawmakers could end up passing another bill to prevent the cuts and nix whatever savings the bill might have delivered.

The White House has argued that tariff revenue will help balance the bill’s costs, and the White House’s Council of Economic Advisers has issued its own estimates that say the president’s policies will reduce deficits.

“CBO is not perfect. They make mistakes. They can be off in their forecasts, absolutely. The CBO however has every incentive and interest to get it right rather than to advocate for a particular policy,” said Ernie Tedeschi, director of economics for the Yale Budget Lab and a former chief economist for President Joe Biden’s CEA.

CBO’s forecasts, which can’t foresee crises such as the Covid-19 pandemic, in the past have sometimes proven to be far too rosy, Tedeschi noted.

Politically, Trump’s success in stamping out what little GOP opposition there was to the bill—without making any substantive concessions of his own—shows his absolute control over the party. That creates tailwinds for any other legislation he seeks to push forward, such as a potential bill to regulate stablecoins and crypto exchanges later in the year. Opposition from groups like the House Freedom Caucus has consistently withered when Trump turns his attention to Congress.

“I have worked both on Capitol Hill and in public policy roles and I have never seen a President with the sway over his Party like Donald Trump,” said Thomas Block, Washington policy strategist for Fundstrat Global Advisors.

Write to Joe Light at joe.light@barrons.com and Brian Swint at brian.swint@barrons.com