Estimated reading time: 12 minutes
(1) TRUMP’S TAX AND SPENDING LAW (OBBBA): Winners and Losers
(The new law signed on July 4th, may only be the first in a series of GOP budget reconciliation bills. Senate Finance Committee Chairman Crapo and House Budget Chairman Arrington support moving a 2d bill this fall to re-draft provisions dropped out of the 1st bill due to Byrd Rule violations.)
OBBBA WINNERS:
Wealthy Americans: increased estate and gift tax exemption and tax cuts averaging more than $1 million to families in the top 0.1 percent.
Seniors: low- and middle-income seniors receive a new temporary deduction to partially “offset” taxation of Social Security benefits.
Homeowners in high-cost states: can temporarily deduct up to $40,000 in state and local taxes (SALT).
Defense Department and Defense Contractors: a $150 billion infusion of funds without Appropriations Committee oversight, including a $25 billion re-start of the failed 1980s “star wars” missile defense debacle.
Multinationals and Corporations: $1 trillion in business and international tax cut extensions and new incentives.
Silicon Valley: tax break for start-up investors.
Pass-Through Businesses get their 20% deduction permanently extended.
Restaurant Workers: no tax on tips during Trump’s term.
Car buyers: auto loan interest deduction (up to $10,000) for cars assembled in U.S.
Private schools: tax credits for contributions to private school scholarships.
Tax Preparation Companies: IRS direct file program replaced with “public-private partnership.”
Shooters: elimination of $200 tax on short barrel rifles and silencers.
Rural Developers: “opportunity zone” tax incentives focused on rural areas.
Oil and Gas Drillers: exemption from the corporate alternative minimum tax and repeal of a fee on methane emissions.
Coal producers: Millions of acres of federal land opened to coal leasing, and the royalty rate cut from 12.5 percent to 8 percent.
New Parents: $1000 placed into investment accounts for babies born during Trump term.
States with the highest SNAP payment error rates get a 2-year delay in reduced federal nutrition assistance payments. (Yes, you read this correctly.)
OBBBA LOSERS:
All Americans face—
16 million Americans who will lose health coverage resulting from $1 trillion in Medicaid cuts, $200 billion in other healthcare cuts, and failure to extend the expanded Affordable Care Act premium tax credits. Recent studies suggest these cuts could translate into at least 100,000 preventable deaths.
Low-Income Americans face serious food, healthcare, and education instability due to $1 trillion in Medicaid cuts, $186 billion in cuts to food assistance, and $314 billion in cuts to student financial aid. Read more.
800,000 Workers in solar, wind and other clean energy industries will lose their jobs.
Electricity Consumers who will see annual consumer energy costs increase by more than $16 billion.
Immigrants: Migrants seeking asylum and others lacking visas or work permits face a supercharged arrest, detention, and deportation system funded with a $150 billion in new money. In addition, taxes will be imposed on money that migrants seek to send to their families. And new fees are now levied: $100 to apply for asylum and $500 to apply for temporary protected status.
Rural Health Providers: the $50 billion rural health fund created by OBBBA will not offset the $155 billion in lost Medicaid funding in rural areas.
State Governments: Trump’s megabill is creating a budget nightmare for states. The cuts in federal healthcare and food benefits threaten states’ ability to fund other priorities—education, public safety, and disaster relief.
American Employers: OBBBA includes $150 billion to supercharge mass deportations. Recent studies say deportations will sap economic growth.
Banking Customers will have far less protection from predatory lenders and credit card companies due to OBBBA cutting the Consumer Financial Protection Bureau’s budget in half.
U.S. Solar and Wind Industries: losing federal grants and tax incentives.
Purchasers of Electric Vehicles: losing the $7,500 tax credit on 9/30/25.
Homeowners wanting more energy efficient homes: losing tax credits for heat pumps and rooftop solar on 12/31/25.
Americans with Health Insurance from the ACA Exchanges: higher monthly premiums due to 2025 expiration of expanded health premium subsidies.
Social Security Recipients: The Social Security Trust Funds, already facing bankruptcy in 2033, are now worse off due to lower revenue collections from mass deportations of tax-paying migrant workers.
Cancer Patients: Low-income patients face dwindling Medicaid coverage, seniors with cancer face Medicare cutbacks (due to automatic Medicare cuts triggered by OBBBA’s deficit increases), and all patients face fewer available treatment options as budget cuts end vital research at the National Cancer Institute.
Parents: higher monthly payments for student loans.
Colleges and Universities: higher taxes on endowments and new limits on student loans.
Public Schools: will lose students due to new tax credits for contributions to private school scholarships—on top of ongoing cuts in federal aid to local schools.
(2) APPROPRIATIONS: Congress slashes 2025 funds for USAID and Public Media; House and Senate Appropriators advance FY 2026 spending bills, while a possible shutdown looms on October 1.
Last Friday, the House passed 216-213 President Trump’s $9 billion rescission bill (H.R. 4) canceling funds for foreign aid and public broadcasting. The bill passed the Senate last Thursday 51-48, after it was amended to protect funding for PEPFAR, the global aids program launched by President Bush (43). The votes were party line except for “no” votes by GOP Senators Susan Collins of Maine and Lisa Murkowski of Alaska, and GOP Representatives Fitzpatrick of Pennsylvania and Turner of Ohio.
Recent appropriation actions on FY 2026 funding bills (click links for details): The House of Representatives passed the Defense bill, and the House Appropriations Committee passed Energy-Water and Transportation-HUD. House Appropriations Subcommittees have recently passed Financial Services-General Government, Commerce-Justice-Science, Interior-Environment, and National Security-State.
The House votes have been party line.
By contrast, some of the bills passed by Senate Appropriations have had bipartisan support. Thus far, the Senate Appropriations Committee has passed: Agriculture-Rural-FDA; Commerce-Justice-Science; Legislative Branch; and Military Construction-VA. Senate Floor action may begin this week.
Why a Shutdown or a Stopgap Continuing Resolution are more likely than completion of the 12 regular spending bills: Unless Congress has completed action on the 12 FY 2026 appropriations bills by September 30, the federal government will shutdown absent passage of a stopgap funding measure (called a “continuing resolution” or “CR”).
CRs are short measures that simply continue current spending at a specified rate, without the account-by-account detail included in regular appropriation bills and reports.
White House wants “less bipartisanship” on appropriations: A shutdown or stopgap CR are more likely than completion of the 12 regular bills because the President’s Budget Director, Russell Vought, is openly rejecting bipartisan negotiations and insisting on deep cuts which Democrats in the Senate will not agree to.
Passage of a stopgap CR may be difficult because CRs require 60 votes in the Senate and Senate Democrats may use a potential shutdown as leverage to force the White House to back down from its ongoing impoundment of funds, cancellation of grants, and threats to rescind more funds.
Recall the blowback Senate Democratic Leader Schumer experienced in March when he and other Democrats voted for the continuing resolution that is currently in effect.
The trouble with continuing resolutions is that they continue all government operations at a particular funding level without the detailed funding decisions for each program, project, and activity included in the 12 regular appropriation bills and accompanying report language—and therefore cede Congress’ appropriations authority to the President.
(3) TARIFFS AND THE ECONOMY:
Tariff watchers are laser focused on August 1st, when President Trump has threatened to impose industry-specific tariffs and country-specific tariffs. Trump insisted earlier this month that there will be no change in the August 1 deadline, but history suggests that Trump will back away from deeply unpopular moves—especially if they are unpopular with bond markets (as he did in April).
Thus far, few deals have been reached—Indonesia is one of the few—despite grandiose and unrealistic claims that dozens of new agreements would be formulated virtually overnight. Moreover, some of the tariffs are facing credible legal challenges to the President’s claims of emergency authority.
For quickly changing developments and the various categories of on-again, off-again tariffs, see Bloomberg’s Trump Tariffs Tracker HERE.
One thing we can say for sure is that business investment and job creation require certainty on trade rules and supply chains; but Trump’s tariff announcements have accomplished the opposite—creating massive economic chaos and uncertainty.
If the August 1st tariffs go forward, another certain outcome is American consumers getting hit with tariff price hikes--inflation.
Tariffs Neuter the Tax Cuts: The conservative Tax Foundation concluded in a report last week that Trump’s threatened tariffs will offset any economic benefit that might result from the recently enacted OBBBA tax cuts.
China is winning the competition in car manufacturing and government subsidies are not the only reason. Read this opinion piece: why auto tariffs won’t insulate American manufacturers from BYD or the bigger threat it represents.
(4) MAJOR DEVELOPMENTS ACROSS GOVERNMENT:
The Supreme Court last week cleared the way for President Trump’s cuts to the Dept. of Education—a dangerous expansion of executive power by allowing a President to unilaterally dismantle a federal department created by statute.
The three dissenting justices (Sotomayor, Kagan, and Jackson) said Trump exceeded his authority with “unilateral efforts to eliminate a cabinet-level agency established by Congress nearly half a century ago.”
The White House responded that “President Trump, as head of the executive branch, has absolute constitutional authority to direct and manage its agencies and officers.”
The order is technically temporary, in effect while courts continue to consider the legality of administration cuts, however the fired workers who had been reinstated by a federal judge are now subject to removal.
Following the Court’s decision, EPA Administrator Lee Zeldin announced mass firings and reorganizations and the Department of Health and Human Services (HHS) moved forward with thousands of layoffs.
In an effort to gain more control over federal employees and reduce civil service protections, President Trump last week issued an executive order creating a new “Schedule G” for employees who will be hired to “help faithfully implement the President’s policy agenda.”
VA cuts: House Appropriations Democrats slammed the Administration’s plan to cut 30,000 Veterans Affairs employees.
DOGE losing power to OMB: The White House’s “Dept. of Government Efficiency” formerly headed by Elon Musk is losing President Trump’s backing, while the power center has shifted to Office of Management and Budget Director Russell Vought.
Meanwhile, last week Vought defended the Administration’s decision not to release a full federal budget as required by law.
Independence of the Federal Reserve at Risk? Treasury Secretary Bessent has called for a review of “the entire” Federal Reserve — an amateurish statement for a Treasury Secretary to make considering the markets’ extreme sensitivity to the stability of the Fed.
(5) THE FIGHT FOR DEMOCRACY AND THE RULE OF LAW:
Threatening the Rule of Law, Trump defies 1 in 3 Judges: The Washington Post reported that “a comprehensive analysis of hundreds of lawsuits against Trump policies shows dozens of examples of defiance, delay and dishonesty, which experts say pose an unprecedented threat to the U.S. legal system.”
Last week, the Department of Justice hit states with broad requests for voter rolls and election data. The Washington Post reports that election clerks in both parties, already facing lawsuits over Trump’s false 2020 election claims, worry about efforts to examine voting machines.
(6) WHAT YOU CAN DO THIS WEEK TO MAKE A DIFFERENCE:
Contribute to your local PBS television or NPR radio station to help them stay open after the zeroing out of public funding.
About the author: Charles S. Konigsberg, J.D., served as Assistant Director at the White House Office of Management and Budget for three successive Budget Directors; General Counsel at the U.S. Senate Finance Committee; Minority Chief Counsel at the U.S. Senate Rules Committee; Staff Attorney at the U.S. Senate Budget Committee; Director of Congressional Affairs at CFPB and AmeriCorps; and Staff Director of a national bipartisan budget task force.
He is author of the book, Trillions: A Primer on Federal Spending, Taxes, the U.S. Debt Ceiling, and Fiscal Law. Click here to purchase.
He is also Publisher of Appropriations.com which tracks appropriation bills; and GovBudget.com which tracks major federal developments, by subject area, each day.
Speaking engagements and press interviews can be scheduled by calling: (202) 818-8578 or (301) 509-5688. Email comments, suggestions, and questions to: ckonigsberg@capitolpublicpolicy.com.