KUALA LUMPUR – The US Senate has passed a controversial tax and spending bill that extends Trump-era tax cuts and slashes federal aid programmes, while the government also moved to dismantle its longstanding foreign aid agency, USAID.
Dubbed the One Big Beautiful Bill, the 940-page legislation passed Tuesday in a narrow 51-50 vote, with Vice President JD Vance breaking the tie.
It proposes over US$3 trillion in new deficit spending by 2034, driven by higher allocations for defence, border control and energy production, alongside deep cuts to healthcare, food assistance, and subsidies for electric vehicles.
The bill also extends the 2017 Tax Cuts and Jobs Act, which was due to expire in 2025.
Democrats and some Republicans criticised the bill’s social spending cuts. Senator Bernie Sanders called it “the most dangerous piece of legislation in the modern history of our country.”
“This bill is literally a death sentence for low-income and working-class people,” he added.
Republican Senator Thom Tillis warned the party was “betraying a promise” on Medicaid. He voted against the bill and announced his retirement a day later after being criticised by Donald Trump.
Tillis was among three Republican senators who voted against the final package, alongside Susan Collins and Rand Paul.
Despite the internal dissent, the Republican-controlled Senate pushed the bill through. It now heads back to the House of Representatives for approval of the revised version.
Separately, the Trump administration has shut down the United States Agency for International Development (USAID), marking a major shift in how Washington handles foreign aid.
From July 1, all US foreign assistance will be managed by the State Department instead. Secretary of State Marco Rubio said the change aims to create more “accountability, strategy, and efficiency” by moving away from what he called a failed “charity-based model.”
“America should not pay taxes to fund failed governments in faraway lands,” Rubio said, adding that future assistance will be “targeted and time-limited,” and will prioritise countries that can “help themselves” while encouraging private sector investment, including from US firms.
While not directly tied to the spending bill, the USAID move aligns with the administration’s broader push to reduce overseas aid and focus more on domestic priorities and trade. – July 2, 2025