H.R. 1 Passes: A Mixed Bag for Federal Employees and the Economy

Today, in a party-line 218-214 vote, the House passed the One Big Beautiful Bill Act (H.R. 1). The bill, which originated in the House in May, returned to the chamber after being significantly altered and passed in the Senate on Tuesday. The bill now heads to President Trump's desk for his signature.

Of particular note to letter carriers, the final package was stripped of any provision that would negatively impact letter carriers, our bargaining rights, and the postal network. In the last two months of congressional consideration, many direct threats were proposed. These included increasing Federal Employee Retirement System (FERS) contribution rates as high as 15.6 percent, calculating annuities based on the high-5 average salary instead of the current high-3, eliminating the FERS Special Annuity Supplement, forcing new federal hires to choose between at-will employment or an increased FERS contribution, imposing a fee for Merit Systems Protection Board Claims and Appeals, taking back unspent funds designated for USPS electric vehicles (EVs) and requiring the agency to sell all its EVs and associated infrastructure, and attacks on other federal employees’ collective bargaining rights. Ultimately, NALC successfully got all threats directly targeting letter carriers removed.

"Letter carriers' activism and NALC's strong bipartisan relationships helped us defeat devastating provisions for current and future letter carriers,” NALC President Brian L. Renfroe said. “We successfully delivered a powerful message to Capitol Hill. When lawmakers come after our 295,000 members’ jobs, retirements and futures, we say, 'Hell no!'"

Overall, H.R. 1 claims to cut government spending. However, it allocates billions of dollars for border security, immigration enforcement, and defense measures and makes permanent President Trump’s 2017 tax cuts while extending corporate tax breaks. All the while, the measure limits eligibility and funding for Medicaid, student loan repayments, and clean energy tax credits. The bill is estimated to increase the deficit by $3.3 trillion over 10 years and cost $507.6 billion over the same time.

“While the White House and some in Congress may claim victory following today’s passage, the real victory is NALC fending off innumerable attacks on our retirement benefits and the postal vehicles we desperately need in a massive bill that guts working families,” Renfroe said. “This legislation prioritizes corporations and the wealthiest Americans, instead of the workers who keep this country running.

"I am proud that NALC members came together and fought like hell to defend what we’ve earned, deserve and were promised. Unfortunately, this process is expected to happen again later this year for the next fiscal year. NALC members are ready to fight like hell, just as we do every day to protect each other."



The potential economic implications of the $3.3 trillion deficit increase over 10 years, as projected by H.R. 1, are significant and multifaceted. This deficit increase is primarily driven by a $4.5 trillion reduction in revenues and a $1.2 trillion reduction in noninterest outlays, as outlined in the framework for H.R. 1. The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) have provided detailed analyses that highlight several key economic impacts:

1. Increased Interest Rates: The bill is expected to increase interest rates, which would boost interest payments on the baseline projection of federal debt by $441 billion over the 2025-2034 period. This increase in interest rates is a direct result of the higher deficit, as the government will need to borrow more to finance its spending. Higher interest rates can have a cooling effect on the economy by making borrowing more expensive for businesses and consumers, potentially slowing down economic growth.

2. Economic Output: The economic effects of H.R. 1 would decrease the primary deficit by $85 billion over the 2025-2034 period, primarily reflecting an increase in economic output. This suggests that while the deficit increases, there may be some economic benefits from the bill's provisions, such as increased spending on defense and border security, which could stimulate economic activity.

3. Net Interest Costs: The bill would increase net interest costs by $1,067 billion over the entire 2025-2034 period. This significant increase in interest payments could crowd out other government spending or lead to further borrowing, exacerbating the deficit problem. The CBO's analysis under House Rule XIII(8) estimates that the bill would increase deficits by $2.8 trillion over the 2025-2034 period, accounting for both the primary deficit and the increased interest payments.

4. Debt Held by the Public: The increase in debt held by the public is projected to be 5.3% of Gross Domestic Product (GDP) by the end of 2029 and 7.1% by the end of 2034. This increase in public debt could lead to higher borrowing costs for the government and potentially for private sector entities as well, as investors demand higher returns to compensate for the increased risk.

5. Financial Markets: The potential for higher interest rates and increased government borrowing could have ripple effects on financial markets. Higher interest rates could lead to a sell-off in bonds, as investors seek higher yields. This could also affect stock markets, as higher borrowing costs for businesses could reduce their profitability and stock valuations. Additionally, increased government borrowing could lead to higher yields on Treasury securities, which could impact the broader bond market.

6. Economic Growth: While the bill's provisions may stimulate certain sectors of the economy, such as defense and border security, the overall impact on economic growth is uncertain. The CBO's analysis suggests that the economic effects of H.R. 1 would decrease the primary deficit by $85 billion, but this is offset by the $441 billion increase in interest payments. The net effect on economic growth is therefore unclear, and could depend on a variety of factors, including how the additional spending is allocated and how the economy responds to higher interest rates.

In summary, the $3.3 trillion deficit increase projected by H.R. 1 has the potential to significantly impact the broader U.S. economy and financial markets. Higher interest rates, increased government borrowing, and potential economic stimulus from additional spending are all factors that could shape the economic landscape over the next decade. The CBO's analysis provides a detailed breakdown of these potential impacts, highlighting the complex interplay between fiscal policy, economic growth, and financial markets.