US Senate Republicans are hurrying to release an updated version of President Donald Trump’s “grand and beautiful” bill. The party has set a self-imposed deadline of July 4 to pass this comprehensive legislation.
Lawmakers are still divided on issues such as spending cuts and increased borrowing needed to support tax cuts and boost defense and border security spending. The most pressing points of contention are cuts to the Medicaid program for low-income Americans and tax incentives for clean energy.
The House of Representatives previously passed a version of this multi-trillion-dollar legislation by a narrow margin. Republicans in the lower house just managed to overcome opposition from within the party and the Democrats.
Elon Musk, CEO of Tesla (NASDAQ:TSLA), is one of the most outspoken conservatives against this legislation with a net value of over $1 trillion. His comments last week sparked an intense online debate with Trump.
If the Senate passes its version, the House will then need to approve it before the final bill can be sent to Trump for signature.
When senators were debating the bill, analysts at TD Cowen identified three characteristics of the legislation that could particularly impact financial stocks. Firstly, the strategists pointed out Section 899 of the tax code, which imposes higher taxes on the US operations of foreign companies to counter discriminatory foreign taxation. “This affects foreign banks with operations in the US whose home countries’ taxes may be deemed discriminatory by the US. This includes banks from Canada, Europe, the UK, and Japan, as these banks will face higher taxes on their US operations,” the analysts said.
Secondly, analysts believe that procedural issues could also affect student loan reforms, which in turn would impact private lending institutions that provide student loans.
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