Big Beautiful Bill Will Result In Big Debt Without the Big Beautiful Economic Growth

President Trump spent his Fourth of July signing into law the One Big Beautiful Bill Act (OBBBA), a budget reconciliation bill passed by the 119th Congress. OBBBA contains a number of policy priorities from Trump's second term, including removing the tax on overtime, funding Trump's deportations of undocumented workers, extending individual income tax provisions from the 2017 Tax Cuts and Jobs Act, and removing the tax on tips. Given its sheer size, I cannot cover everything in one entry. We will have to see if I cover various provisions in the future. 

What I can say is that on the whole, the OBBBA is not looking good for the United States. The White House's Council of Economic Advisers (CEA) is optimistic. According to the CEA's analysis, the OBBBA is expected to reduce the debt-to-GDP ratio to 94 percent, reduce the deficit by $8.5 to $11.1 trillion over the next ten years, and increase the real GDP by between 4.6 percent to 4.9 percent over the next four years. But none of the policy wonks on any side of the political aisle share the White House's optimism. 

While the Right-leaning Tax Foundation calculates that there will be modest GDP growth as a result of the OBBBA, Tax Foundation is anticipating an extra $3 trillion in debt. The Congressional Budget Office (CBO) estimates that OBBBA will increase the debt by $3.4 billion. The Wharton School, which is the premiere business school in the United States, assessed the OBBBA and found that it would increase deficits by $4.1 trillion, as well as the debt-to-GDP ratio increasing by 7.7 percent and decreasing the GDP by 0.3 percent over the next decade. The bipartisan Committee for a Responsible Federal Budget (CRFB) found that OBBBA will increase the deficit by $4.1 trillion, accelerate Medicare and Social Security insolvency to 2032, and explode interest costs to $2 trillion a year. 

For those of us who care about the deleterious effects of debt on everyday living, this "Big Beautiful Bill" is a big mess. Neither the expanded tax preferences nor the subsidies like the ones in OBBBA are going to do us any favors. We should all be concerned about deficits and economic growth, but that is not evident in the bill that the Republicans passed. Without considerable spending cuts to get the U.S. government's spending binge under control, OBBBA will be nothing but a big, bloated blunder in the United States' budgetary history.