Tax & Spending Bill, Tariffs, and AI Blackouts
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Tax Policy/News:
July 4: What’s in the Tax and Spending Bill That Trump Has Signed Into Law
President Donald Trump signed into law a sweeping 900-page tax and spending bill that makes permanent the 2017 tax cuts, introduces new deductions, and enacts deep cuts to social welfare programs.
The legislation includes $4.5 trillion in tax breaks, such as a $25,000 tip exemption, a $6,000 senior deduction, and an increase in the child tax credit to $2,200. It also allocates $350 billion for border security and national defense, including funding for mass deportations and the Golden Dome missile defense system.
To offset costs, the bill imposes work requirements for Medicaid and SNAP recipients and introduces co-pays for Medicaid services, potentially leaving millions uninsured or without food assistance. Clean energy incentives are significantly rolled back, while new taxes target university endowments and remittances.
Additional provisions include the creation of “Trump Accounts” for children, funding for a National Garden of American Heroes, and a $5 trillion increase to the national debt limit. The Congressional Budget Office estimates the bill will add $3.3 trillion to the deficit over the next decade, though Senate Republicans argue it could reduce deficits under alternative accounting methods.
July 3: Business Tax Updates in the One Big Beautiful Bill
The One Big Beautiful Bill, signed into law on July 4, 2025, introduces significant changes to business and employment tax policy, including the permanent extension of the 20% pass-through deduction under Section 199A and the reinstatement of full expensing for domestic R&D costs and bonus depreciation.
The legislation expands eligibility for manufacturers using U.S.-based facilities and introduces new limitations on interest deductions and corporate charitable contributions. It also provides temporary deductions for tip income (up to $25,000) and overtime pay (up to $12,500), both phasing out for higher earners and expiring at the end of 2028.
Additionally, a new $6,000 senior deduction was created for taxpayers over 65, also set to expire in 2028. These provisions are expected to impact tax planning and compliance strategies for businesses and employers nationwide.
July 3: How Your Income Taxes Will Change After Trump Signs the ‘Big, Beautiful Bill’ Into Law
President Donald Trump’s signing of the GOP’s “Big, Beautiful Bill” introduces sweeping changes to the U.S. tax code, making permanent the 2017 tax cuts and adding new deductions, including a $25,000 tax exemption on tips and a temporary $6,000 deduction for seniors.
While 85% of households are projected to receive tax cuts in 2026, the benefits are heavily skewed toward high-income earners, with the top 20% receiving nearly 60% of the total tax relief. Middle- and low-income households will see smaller gains, which may be offset by significant cuts to Medicaid and nutrition assistance programs.
The bill also phases out clean vehicle and energy-efficiency tax credits and repeals funding for several climate and infrastructure initiatives. The Congressional Budget Office estimates the legislation will add $3.4 trillion to the national debt over the next decade, with other estimates ranging as high as $6 trillion.
Economic News/Policy:
July 8: Trump Threatens 'No Extensions' on New Aug. 1 Tariff Deadline, Warns of Higher Import Taxes
President Donald Trump reaffirmed that there will be “no extensions” to the newly set August 1 deadline for U.S. trading partners to negotiate revised trade deals or face steep tariff hikes.
In a Truth Social post, Trump emphasized that tariffs would begin on that date, following letters sent to multiple countries warning of impending duties. The Yale Budget Lab noted that these measures could raise the effective tariff rate on U.S. consumers to the highest level since 1934.
While markets initially reacted negatively, they stabilized after Trump appeared to soften his stance in later remarks. Analysts remain skeptical about the permanence of the tariffs, viewing the deadline as a potential negotiation tactic. The move has drawn international criticism, with countries like China and Germany warning of retaliatory measures if fair agreements are not reached. The renewed tariff threats come shortly after Trump signed his major tax and spending bill, reigniting concerns over trade volatility and inflation.
June 26: US Economy Shrinks 0.5% in Q1, Worse Than Expected
The U.S. economy contracted at a 0.5% annual rate in the first quarter of 2025, a sharper decline than the previously estimated 0.2%, according to the Commerce Department.
The downturn was driven largely by a 37.9% surge in imports, as businesses and consumers rushed to purchase foreign goods ahead of anticipated tariffs from President Donald Trump, subtracting nearly 4.7 percentage points from GDP. Consumer spending also slowed significantly, rising just 0.5% compared to 4% in the previous quarter.
The report noted a decline in federal spending and a drop in consumer confidence, with the Conference Board’s index falling to 93 in June. Despite the contraction, economists expect a rebound in the second quarter, with projected growth of 3%.
June 25: US Could Default on Its Debt Between August and Early October, Analysis Finds
A new analysis by the Bipartisan Policy Center warns that the U.S. could default on its debt between August 15 and October 3 if Congress fails to raise the debt ceiling.
The projection, known as the “X-date,” reflects updated estimates based on stronger-than-expected tax revenues and a stable economy. The Treasury Department, currently relying on extraordinary measures to manage government finances, had $384 billion in cash and $89 billion in such measures as of June 18.
The debt ceiling, last suspended in 2023, caps how much the Treasury can borrow to meet financial obligations. Congressional Republicans are seeking to tie debt ceiling negotiations to President Trump’s tax agenda, which could significantly increase future deficits.
June 24: Fed's Powell Defends Higher Interest Rates Amid Attacks from Trump, GOP
Federal Reserve Chair Jerome Powell defended the central bank’s decision to maintain current interest rates during testimony before the Republican-led House Financial Services Committee, despite mounting pressure from President Donald Trump and other GOP figures.
Trump has called for immediate rate cuts, arguing that inflation is no longer a concern and that the economy is performing well. Powell, however, cited lingering inflation risks and policy uncertainty stemming from Trump’s trade and immigration strategies as reasons for the Fed’s cautious stance.
He acknowledged the economic strain higher rates place on consumers but emphasized the need to prevent a resurgence of inflation. Economists warn of potential stagflation, with both inflation and unemployment on the rise, driven by factors such as tariffs, oil prices, and immigration restrictions.
Energy and Environmental Policy/News:
July 3: Trump Signs ‘Big, Beautiful Bill,’ Spelling Disaster for Clean Energy
President Donald Trump signed the “Big, Beautiful Bill” into law on July 4, following a narrow House vote and a 50-50 Senate split broken by Vice President JD Vance.
The legislation significantly rolls back clean energy provisions from the 2022 Inflation Reduction Act, curtailing or eliminating tax credits and funding for solar, wind, EVs, and other renewable technologies. While a proposed excise tax on foreign-sourced clean energy components was removed, the final bill imposes strict deadlines and “foreign entity of concern” provisions that experts say effectively repeal incentives for many clean technologies.
The bill also ends or limits funding for numerous federal programs supporting emissions reduction, energy efficiency, and clean infrastructure, while redirecting support toward fossil fuel-based energy under a revised Energy Infrastructure Reinvestment program.
July 3: What to Know About Buying Electric Vehicles After the Federal Tax Incentives End
With the passage of the new tax and spending bill, federal tax credits for electric vehicles (EVs) will end on September 30, 2025, eliminating the $7,500 credit for new EVs and up to $4,000 for used ones.
While this change may make EVs less accessible for lower- and middle-income buyers, experts emphasize that EVs remain financially advantageous over time due to lower fuel and maintenance costs. A 2020 study found that EV drivers can save an average of $7,700 in fuel over 15 years, with even greater savings in states with cheaper electricity.
Despite higher manufacturing emissions, EVs become cleaner than gas-powered cars after about 15,000 miles and emit significantly less pollution over their lifespan—even in coal-reliant states like West Virginia. Experts continue to recommend EVs as a smart long-term investment for both financial and environmental reasons.
June 24: Judge Blocks Trump from Withholding EV Charger Infrastructure Funds
A federal judge has blocked the Trump administration from withholding electric vehicle (EV) charger infrastructure funds from 14 states, ruling that the administration exceeded its constitutional authority.
U.S. District Judge Tana Lin stated that the funds, allocated under the Infrastructure Investment and Jobs Act signed by former President Biden, were intended to support the National Electric Vehicle Infrastructure (NEVI) Formula Program. This program aims to alleviate EV drivers’ range anxiety by establishing a nationwide charging network.
The Department of Transportation had suspended the program in February, but under the court’s order, state plans in Arizona, California, Colorado, Delaware, Hawai‘i, Illinois, Maryland, New Jersey, New Mexico, New York, Oregon, Rhode Island, Washington, and Wisconsin will be reinstated. The ruling excludes Minnesota, the District of Columbia, and Vermont, which did not demonstrate immediate harm. The Trump administration has seven days to appeal the decision.
Technology:
July 7: Senate Scraps 10-Year Block on State AI Laws
The U.S. Senate voted 99–1 to eliminate a provision that would have barred states from enforcing their own artificial intelligence (AI) regulations for the next decade.
The restriction, originally part of President Trump’s tax and spending plan, would have preempted a wide range of state-level AI laws, including those addressing deepfakes and other AI-generated content. The decision to remove the ban followed widespread concern from academics, advocacy groups, and lawmakers who argued that the moratorium could hinder accountability in the tech sector.
While some major AI firms, including Google and OpenAI, favored a unified federal approach to avoid regulatory fragmentation, the Senate’s move now allows states to proceed with their own AI legislation.
July 7: Blackout Risks Rising as AI, Reindustrialization Push Strain Grid
A new report from the Department of Energy warns that the U.S. faces a dramatic increase in blackout risks by 2030 due to surging electricity demand from artificial intelligence development and domestic manufacturing, coupled with planned retirements of 104 gigawatts of power capacity.
Even with 209 gigawatts of new capacity expected online, average annual outage time could rise from 8 to over 800 hours. Energy Secretary Chris Wright emphasized the need to preserve coal and natural gas plants to ensure grid reliability, aligning with the Trump administration’s “energy addition” strategy.
However, the report has drawn criticism from groups like Advanced Energy United, which argue it overstates risks and undervalues renewable resources such as wind, solar, and battery storage. The report, produced in response to an April executive order, will inform decisions on which power plants to retain.
June 27: 'Big, Beautiful Bill' Passes Senate Without AI-Law Moratorium
The U.S. Senate passed the GOP’s sweeping tax and spending package, known as the “big, beautiful bill,” after removing a controversial provision that would have imposed a 10-year moratorium on state-level AI regulations.
The amendment to strike the moratorium, introduced by Senator Marsha Blackburn, passed overwhelmingly in a 99–1 vote, following her withdrawal from a compromise with Senator Ted Cruz that would have shortened the moratorium to five years. The decision came amid bipartisan opposition from lawmakers, civil rights groups, and state officials who argued the moratorium would hinder states’ ability to address AI-related harms such as deepfakes and algorithmic discrimination.
While major tech firms and industry groups supported the moratorium to avoid a fragmented regulatory landscape, critics emphasized the need for state autonomy in the absence of comprehensive federal AI legislation. The final bill passed 51–50, with Vice President JD Vance casting the tie-breaking vote.
June 25: Does Using ChatGPT Change Your Brain Activity? Study Sparks Debate
A recent study led by Nataliya Kosmyna at the MIT Media Lab suggests that using ChatGPT to write essays results in lower brain engagement compared to writing without online tools.
The experiment involved 60 university students who composed essays under different conditions—using ChatGPT, using Google, or without internet access—while wearing EEG caps to monitor brain activity. The findings showed that those writing unaided exhibited the strongest brain connectivity, while the ChatGPT group showed the least. Interestingly, participants who initially used ChatGPT and then switched to unaided writing did not reach the same engagement levels as those who never used AI tools.
While the study has generated significant attention, researchers caution against overinterpreting the results due to the small sample size and limited scope. Experts emphasize that the timing and manner of AI tool use may influence cognitive outcomes, and that AI should ideally support reflective learning rather than replace it.
For Fun:
July 9: Scientists Use AI to Create Protein That Kills E. coli
Australian researchers have successfully used artificial intelligence to design a protein capable of killing antibiotic-resistant E. coli, marking a significant advancement in biomedical science.
Published in Nature Communications, the study was led by Dr. Rhys Grinter and Associate Professor Gavin Knott, who co-head Australia’s first AI Protein Design Program at Monash University and the University of Melbourne. The platform, inspired by Nobel laureate David Baker’s work, enables rapid, de novo protein creation for use in pharmaceuticals, vaccines, and diagnostics.
The team utilized open-source AI tools to engineer proteins with specific binding capabilities, aiming to democratize access to protein design. This breakthrough positions Australia alongside global leaders in AI-driven drug development and highlights the potential of deep learning to accelerate and reduce the cost of therapeutic innovation.