The focus will now shift to the U.S. Senate, where lawmakers have a much different set of priorities, and have recently unanimously passed a separate No Tax on Tips Act that would accomplish President Trump's campaign pledge of "no tax on tips," which was ultimately adopted by Democratic candidate Kamala Harris and many other Democrats.
Democrats say they are uniformly opposed to the House-passed legislation, citing studies that the bill would cut benefits for low-income Americans while boosting after-tax income of higher-income Americans.
In addition to the Senate, the bond markets will be a key indicator of the fate of the bill and its impact on the U.S. economy. Long-term interest rates on U.S. Treasuries, a key indicator of the perceived riskiness of government-issued debt, have been rising in recent months. Moody's rating agency recently downgraded its rating of U.S. Treasury debt, citing persistent budget deficits, growing public debt, and a lack of political will from both political parties to put the government on a more balanced fiscal trajectory. The current bill, if enacted, would exacerbate this situation.
Congressional Republicans have stated that the enactment of this legislation on or before July 4 is their goal. GBQ will continue to provide you with updates as the Senate considers the bill and the two versions are reconciled.
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