The One Big Beautiful Bill Act (OBBBA), the reconciliation bill recently passed by the House of Representatives and now being discussed and reworked in the U.S. Senate, has three main components: (1) It contains funding for the strongest border security in U.S. history including the entire wall at the southern border; (2) it fully extends the enormously successful 2017 tax rate cuts and (3) it provides the most significant welfare reform in 30 years.
Reconciliation versus Rescission
Elon Musk has recently expressed his disdain for OBBBA as he believes it has ignored the approximately $175 billion in federal spending that DOGE (Department of Government Efficiency) had earmarked for elimination. But 95% of DOGE recommendations cannot be included in a so-called “reconciliation” bill.
The reconciliation process is a tool that small majorities in Congress often use to pass very narrowly defined legislation. To qualify for this process, a bill can only cut mandatory (not discretionary) federal spending, enact revenue changes (like tax rates) and/or alter the federal debt limit.
The “elephant in the room” or the Capitol in this case is the looming expiration (December 31, 2025) of the tax rate cuts of the Tax Cut and Jobs Act (TCJA) of 2017. Keeping these lower rates in effect and avoiding the potential economic calamity if they terminate is, and should be, Congress’s number one priority.
Read moreOne Big Beautiful Bill – ensuring the “rich” continue to pay their fair share