Trump Signs ‘One Big Beautiful Bill’ to Reshape US Economy

On July 4, 2023, President Donald Trump signed the One Big Beautiful Bill (OBBB) into law, marking a significant shift in the United States’ economic landscape. This legislation, spanning nearly 900 pages, emerged from extensive negotiations within Congress and was passed with narrow margins—51-50 in the Senate and 218-214 in the House. According to QNB, the bill is poised to have lasting implications for taxation and government spending.

Economic Expansion and Growth Projections

The OBBB introduces substantial changes to the US tax code, particularly benefiting high-income individuals and corporations while scaling back funding for safety-net programs. The Congressional Budget Office (CBO) estimates that, under the new law, real GDP will rise by an average of 0.5% annually from 2025 to 2034, compared to a scenario without the bill. This increase is particularly significant given that the average economic growth in the US over the past two decades has been 2.2%.

In the short term, the legislation is expected to boost GDP by as much as 0.9% in 2026. This initial economic activity is largely driven by heightened aggregate demand, arising from increased disposable income for wealthier households and incentives for investment. Over time, reduced tax rates are projected to enhance labor participation and working hours, further promoting economic growth.

Fiscal Impact and Redistribution Concerns

While the OBBB aims to invigorate the economy, it will also substantially increase the federal deficit. The combination of extended tax cuts, decreased corporate tax revenues, and expanded deductions will exert considerable pressure on public finances. Although the bill includes spending cuts targeting entitlements and safety-net programs, these reductions are relatively minor. Over the period from 2025 to 2035, the OBBB is anticipated to add approximately $4.6 trillion to the federal deficit, leading to federal debt reaching close to 128% of GDP by 2034, a historical high.

This figure significantly exceeds the 119% peak recorded in 1946, a time when the US was grappling with the economic fallout from World War II. The long-term sustainability of such a debt trajectory raises questions regarding economic stability and fiscal responsibility.

Moreover, the OBBB’s distributional effects are likely to be regressive, benefiting higher-income households while reducing support for those at the lower end of the income scale. Wealthier households typically face less impact from changes to medical and safety-net policies, yet stand to gain considerably from the continuation of income tax provisions introduced by the Tax Cuts and Jobs Act (TCJA).

In summary, the One Big Beautiful Bill makes bold moves to reshape the US economy. It provides a significant boost to economic activity but does so at the expense of a rising debt trajectory and challenges to equitable wealth distribution. As the legislation unfolds, its long-term implications will be closely monitored by policymakers and economic analysts alike.