One big beautiful bill act

Assessing the concept of a "One Big Beautiful Bill" encapsulates Trump's vision for sweeping legislative changes, the reality of his presidency involved a series of individual legislative efforts that often faced significant obstacles. The Bill reflects his style of promoting grand ideas but also highlights the complexities and challenges of enacting comprehensive policy changes in a divided political landscape.

Trump frequently spoke about a grand infrastructure plan that would invest heavily in rebuilding America's roads, bridges and public transportation systems. He envisioned a massive investment that would be funded through a combination of federal, state and private sector contributions. A gargantuan 900-page bill includes a mix of tax cuts, spending reductions, and key Republican priorities such as increased funding for national defence and immigration enforcement.

During his first term, Trump had signed the Tax Cuts and Jobs Act, which lowered taxes for corporations and for individuals across most income brackets. Trump had touted the law as one that would stimulate economic growth, but experts have argued that it has mostly benefited wealthy Americans. Key provisions of that law are set to expire in December, but the BBB, act currently before lawmakers aims to make those tax cuts permanent.

Proponents claim the bill will create millions of jobs and increase wages, arguing that tax relief for businesses will lead to economic expansion. Only time will tell. One of the most significant legislative achievements of Trump's first term presidency was the Tax Cuts and Jobs Act of 2017. This law aimed to reduce taxes for individuals and corporations, stimulate economic growth, and repatriate overseas profits. While it was a major legislative effort, it was not the "big beautiful bill" he often referred to, as it focused primarily on tax reform rather than a broader range of issues.

Now a recent bill just scraped through senate on July 1st and the House on July 3rd. On closer examination, it looks more like traditional tax-cutting, than it does a mega fantasy. Was it just a false alarm? Many recall the panic about the world economy that followed President Donald Trump’s “Liberation Day” tariffs in April. Has this now given way to growing optimism. Tariffs’ inflationary effect has so far been muted. In private, managers say they now expect trade fights to produce trade deals, not to be an end in themselves.

Surveys, show that business and consumer confidence in the US, though low, is improving. The S&P 500 index of stocks has lately hit a record high. Critics lament how the BBB act surreptitiously illustrates the long-term damage Mr Trump is doing to the foundations of America’s economy. It will menace the American economy for at least a decade. It extends existing, lavish tax cuts well into the future, and adds a few more for good measure, as well as boosting spending on defence and immigration enforcement.

Granted the popular admiration for Trump's "Big Beautiful Bill" stems from its promise of significant tax cuts, increased funding for national security, and economic growth, which many supporters believe will benefit the middle class and stimulate the economy. However, critics argue it may disproportionately favour the wealthy and lead to cuts in essential social programs. The bill also temporarily increases the state and local tax deduction limit to $40,000, benefiting high earners in high-tax states.

There’s also an increase of $200 in the child tax credit, indexed for inflation. The BBB act allocates $46.5 billion to expand border infrastructure, including the construction of a border wall. It provides funding for 100,000 additional detention beds and the hiring of 10,000 new ICE officers. New fines are introduced for individuals attempting to illegally cross the border or for asylum violations, continuing the administration’s hardline stance on immigration enforcement.

It comes as no surprise how the Republican leadership convinced representatives to approve the Senate’s bill, by 218 to 214. As can be expected, the bill did not receive any votes from the Democrats in either chamber. Estimates from the Committee for a Responsible Federal Budget, suggest the bill will add $4.1trn to the public debt over the next decade if the temporary provisions turn out not to be temporary. Some forecasters are more upbeat, saying that lower taxes will draw more people into work and attract investment, yet one cannot overlook that over the past 12 months America’s budget deficit has been an astonishing 6.7% of GDP. Democrats view this as a scandalous number for the world’s richest big country. Many of those who lose health insurance coverage will fall foul of new requirements so that recipients must work harder. More savings come from repealing tax credits for clean energy passed under President Joe Biden.

The credits were littered with protectionist “buy American” requirements. Sadly, the country will once again lack a federal policy for decarbonisation, and its greenhouse-gas emissions will be greater than they would have been. Mr Trump’s nostalgia for fossil fuels ignores the potential of renewables to make energy much more abundant. His popular moniker is Drill, baby Drill. Ideally, faster growth would ease the burden of debt, benefit the poor through more jobs and higher wages. Sure enough, the administration projects nearly 5% more output over the next four years. That is foolish when the race for artificial general intelligence is in part a race for clean electricity necessary to train massive models.

Optimists acknowledge some or all this but argue that economic growth will wipe out all these worries. Faster growth would ease the burden of debt, benefit the poor through more jobs and higher wages and make political dysfunction seem economically irrelevant. Sure enough, the administration projects nearly 5% more output over the next four years. Many new tax cuts, including exemptions for tips and overtime, are gimmicks. Mr Trump ignores the foundations of America’s success. He has renewed his attacks on the Fed, adding another threat to economic stability. His recent defunding of scientific research at Harvard and Columbia universities will harm American innovation. A reality check shows a 11% fall in the dollar this year which reflects long-term risks to the American economy that are real and growing.