Is the “big, beautiful bill” too big?

Two House committees just pulled all-nighters working on the bill that represents all of President Donald Trump's legislative priorities. Joshua Green writes today about the high stakes and the high cost of the "big, beautiful bill." Plus: DeepSeek propels China's AI industry, and there are ways to help US manufacturing without tariffs.

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Donald Trump has spent the past few months reveling in the executive powers of the presidency: unleashing DOGE to cut federal jobs, ramping up deportations and imposing (and then partially revoking) a global wave of tariffs that sent traders racing for their heartburn medication.

There's little Trump loves more than issuing directives and watching the world react. But it's striking that Republicans have full control of Congress and the White House and have managed to pass so little legislation.

That's about to change—though probably not without plenty of drama.

Back in January, Trump decided he'd rather not wrangle his party to support a series of bills to realize his legislative agenda, especially given its extraordinarily slim majority in the House. Arm-twisting isn't fun, and bipartisan deals didn't seem to interest him. Instead, he insisted Republicans cram everything into what he called "one big, beautiful bill."

This week, with Trump in the Middle East, three key House committees are holding hearings on their portion of the bill. It's an enormous package containing much of the president's legislative wish list. It aims to cut taxes by almost $4.5 trillion, extending Trump's 2017 cuts while tacking on new goodies he campaigned on, such as eliminating taxes on tipped wages and loan interest for American-made cars. Trump also wants to help rich people pay less estate tax and reduce taxes on small-business owners, while helping parents by increasing the child tax credit. A vocal group of blue-state Republicans is threatening to mutiny if the package doesn't also substantially increase the $10,000 deduction limit for state and local taxes. So add that on, too.

Democratic Senators Brian Schatz (third from right), Tina Smith and Cory Booker attend the House Energy and Commerce Committee's bill markup on Tuesday. Photographer: Kent Nishimura/Bloomberg

Further swelling the price tag is Trump's desire for hundreds of billions in new spending for defense, border wall construction, immigrant detention centers and other priorities.

Republicans still profess to care about the deficit. So, out of necessity, their bill also contains some big, beautiful spending cuts—about $1.5 trillion worth. Here's where things get tricky for Trump and the GOP. To offset the cost of their tax cuts, they're proposing to phase out clean energy tax credits, sell off public land and repeal President Joe Biden's student loan forgiveness plan. They might (but also might not) modestly raise taxes on multimillionaires—a policy Trump opposed, then embraced, then backed away from last week, while leaving the door open a crack. The current bill contains no such hike.

The centerpiece of the Republicans' cost savings is a whopping $880 billion in cuts to Medicaid. The nonpartisan Congressional Budget Office found that these cuts, and the expiration of health-care tax credits Republicans don't plan to renew, will leave at least 13.7 million Americans uninsured.

Cutting health insurance presents a significant political risk for Republican lawmakers, many of whose constituents rely on Medicaid. In a survey in April by the Kaiser Family Foundation, more than 75% of adults—including more than half of the Republicans polled—said they oppose major cuts to Medicaid funding.

The Democratic attack ads practically write themselves. "Millions of Americans will lose their health-care coverage," Democratic Representative Frank Pallone of New Jersey said last week. "Hospitals will close, seniors will not be able to access the care they need, and premiums will rise for millions of people if this bill passes."

And it's not just Democrats balking at the cuts. Republican Senator Josh Hawley of Missouri warned that slashing health care to fund tax breaks was "morally wrong and politically suicidal."

As if the stakes weren't already high, the fate of the global economy could also hang in the balance. Treasury Secretary Scott Bessent warned last week that the federal government is running out of cash and needs Congress to raise the debt ceiling by mid-July or risk a catastrophic default. House Republicans have also tossed a $4 trillion debt-limit increase into the big bill, infuriating dozens of their own members, who understand they'll soon be placed under tremendous pressure to take what House Speaker Mike Johnson called "one big up or down vote which can save the country."

As these pressures come to a head over the next few weeks, strains are already emerging in the Republican coalition. Trump may see his bill as big and beautiful. But the early signals from Capitol Hill are that beauty is in the eye of the beholder.

In Brief

With Trump in the Middle East, the US announces more than $243 billion in deals with Qatar. Plus: Oil giant Saudi Aramco signed agreements with major US companies potentially totaling about $90 billion.
Harvard University on Tuesday expanded its lawsuit against the Trump administration for freezing billions of dollars in federal funds.
Italy is attracting wealthy foreigners from the UK, particularly from London, with its flat tax rate of €200,000 and proximity to Britain.
On the new Elon, Inc. podcast: An insider's view of what ails Tesla. Listen and subscribe on Apple, Spotify, iHeart and the Bloomberg Terminal.

A Peek Into DeepSeek's Ambitions

DeepSeek founder Liang Wenfeng in January. Source: ZUMA Press

With his wispy frame and reserved style, Liang Wenfeng can come off as shy, nervous even, in meetings. The founder of DeepSeek—the Chinese startup that recently upended the world of artificial intelligence—is prone to faltering speech and prolonged silences. But new hires learn quickly not to mistake his quiet rumination for timidity. Once Liang processes the finer points of a discussion, he fires off precise, hard-to-answer questions about model architecture, computing costs and the other intricacies of DeepSeek's AI systems.

Employees refer to Liang as lǎo bǎn, or "boss," a common sign of respect for business superiors in China. What's uncommon is just how much their lǎo bǎn empowers young researchers and even interns to take on big experimental projects, habitually stopping by their desks for updates and pushing them to consider unusual engineering paths. The more technical the conversation the better, especially if it leads to real performance gains, milestones Liang has personally shared on their internal Lark messaging channel. "He's a true nerd," says one former DeepSeek staffer who, like many people interviewed for this article, requested anonymity because they weren't authorized to speak publicly about the company. "Sometimes, I felt he understood the research better than his researchers."

Liang and his young company catapulted to international prominence in January when it released R1, an AI model that had the feel of an explosive breakthrough. R1 beat the dominant Western players on several standardized tests commonly used to assess AI performance, yet DeepSeek claimed to have built its base model for about 5% of the estimated cost of GPT-4, the model undergirding OpenAI's ChatGPT.

The company's sudden emergence illustrates how China's industry is thriving despite Washington's efforts to slow it down: DeepSeek Races After ChatGPT as China's AI Industry Soars

You've got questions about AI. We've got answers. Sign up for Bloomberg Technology's weekly Q&AI newsletter by Shirin Ghaffary.

Three Ways to Bring Back American Factories

Photo illustration: Andre Rucker for Bloomberg Businessweek

American industry has certainly seen better days. Manufacturing output has never recovered to the peak recorded on the eve of the 2008 financial crisis, when the sector's workforce was a million people stronger. The double whammy of Covid-19 and Russia's invasion of Ukraine laid bare that US factories were unable to quickly scale up production of essential goods—whether masks or munitions. Storied manufacturers such as Boeing Co. and Intel Corp. and Detroit's automakers are beset by constant crises, while China's national champions (companies like BYD, CATL and Huawei) have been climbing from strength to strength.

For President Donald Trump, tariffs are a cure-all—to be levied on friends, foes and penguins alike. For almost all economists, though, tariffs are quack medicine that might deliver American manufacturers into even worse agony. Building a wall around the world's largest economy is the wrong approach. Here we present a tariff-free menu of policies that offer a surer path to revitalizing US manufacturing.

Keep reading Dan Wang and Ben Reinhardt's essay: Tariffs Won't Reindustrialize America. Here's What Will

Private Credit Boom

$1.6 trillion

That's the size of the upstart private credit asset class, which has lately notched up a string of wins. Investors are still flocking to private credit, but questions persist about the strength of its underlying assets.

Small-Business Nightmare

"I thought I was going to lose an arm and a leg, and today I found out I am only losing two fingers."

Dan Turner

Turner Hydraulics owner

President Trump's sudden move to lower tariffs on goods from China to 30% from 145% has thrown a lifeline to small businesses that were running low on inventory—and cash. But owners warn the reprieve will be limited.