‘Big Beautiful Bill’ – Sector Watch

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The “Big Beautiful Bill” passed a key procedural hurdle in the Senate over the weekend, opening the legislation for final debate in the chamber. Given the slim Republican majority there, everyone in the party has been viewed as a critical vote, though there still appears to be enough senators to get it over the line. Tensions over the bill prompted North Carolina’s Thom Tillis to announce he wouldn’t run for re-election, and with Kentucky’s Rand Paul the only other GOP member to break ranks, the legislation could pass the Senate as early as today.

Why it matters: Key pieces of the legislation will influence business and investment in the world’s largest economy. Defense spending will receive a boost in areas like shipbuilding, munitions and the Golden Dome missile defense system, along with a conditional moratorium on state AI laws, but new requirements and cuts will impact the Medicaid industry. There were also clauses that will end electric vehicle tax credits, as well as others that limit the incentives for wind, solar and hydrogen projects.

Tax policy is also on watch and how much cash will ultimately end up in consumer pockets. The bill would extend most of President Trump’s 2017 tax cuts, but there will be deductions for tips, overtime and social security. However, a “revenge tax” proposal – that would have imposed levies on countries that impose “discriminatory” taxes on U.S. businesses – was eliminated from the latest draft following a deal with G7 countries.

CBO estimates the bill would add at least $3.3T to federal deficits

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Timeline: The “Big Beautiful Bill” runs nearly 1,000 pages and remains subject to revisions. Once it passes, it will have to go back to the House, where Republicans also have a slim majority. President Trump has set a deadline of July 4, but there’s no rush if it doesn’t pass by then (2017 tax cuts expire at the end of the year and concerns over debt limit capacity would only come in August). Take the latest Seeking Alpha Sentiment Survey.