GOP Gridlock Pushes Stocks Down as Uncertainty Grows Over Trump’s Sweeping Tax-Cut Proposal

Stocks dipped midday as rising Treasury yields and renewed doubts over the fate of a sweeping tax-cut package rattled investors

Rare Overnight Hearing Reveals GOP Rift

In a rare step, the House Rules Committee met at 1 a.m. EDT to debate the so-called “big, beautiful bill,” highlighting sharp divisions within the Republican Conference. Hard-line House Freedom Caucus members delayed progress by pushing for deeper cuts to green energy tax credits and tighter spending restrictions on Medicaid and food assistance. Meanwhile, lawmakers from high-tax states demanded an increase in the SALT deduction cap from $10,000 to $30,000, casting uncertainty over the bill’s fate.

What’s in the Bill and Why Trump Wants It

The proposed legislation aims to extend and broaden the 2017 tax cuts enacted under President Trump, while introducing new tax breaks for tips and overtime pay and increasing the SALT deduction cap to $30,000. It also includes major changes to Medicaid and SNAP benefits, cuts to green-energy tax credits, and increased funding for border security and defense. According to the administration, these measures are designed to stimulate economic growth, increase household disposable income, and enhance the global competitiveness of U.S. businesses

Looking Ahead: Rally Potential vs. Debt Concerns

Nonpartisan analysts estimate the package could increase the federal deficit by $3.8 trillion to $5 trillion over the next ten years—a projection that has unsettled bond markets and led Moody’s to downgrade the U.S. credit rating from its top-tier status. Although swift passage could trigger a market rally, particularly in interest rate-sensitive sectors, investors should prepare for ongoing volatility as amendment negotiations and the timing of the final vote remain in flux.

Sources: Reuters; USA TODAY