Historic Legislation: Proposed Law Aiming for Monumental Wealth and Debt Reduction
The One Big Beautiful Bill (OBBB), a comprehensive piece of legislation, was passed by the House of Representatives on May 22, 2025, and later released by the Senate Finance Committee on June 16, 2025. The bill aims to build upon the legacy of the 2017 Tax Cuts and Jobs Act (TCJA) and prevent a $4 trillion tax hike that would have resulted from the expiration of the TCJA.
The Council of Economic Advisers (CEA) has analysed the economic and fiscal impact of the OBBB in a new paper, predicting that the bill will increase gross domestic product (GDP) by about 1.2 percent in the long run, primarily due to permanent business tax reforms like full expensing. However, the bill is expected to decrease federal revenues by approximately $4.45 trillion over ten years while reducing federal spending by about $1.1 trillion over the same period, leading to a significant net increase in the deficit.
The OBBB makes permanent key individual and business income tax cuts originally from the TCJA, aiming to prevent a large tax increase on 62% of Americans. It also permanently institutes pro-growth tax policies such as immediate expensing for business equipment and research and development, with the intention of boosting investment and job creation.
Despite these economic growth incentives, the permanent tax cuts dominate the fiscal impact, leading to a large revenue shortfall. Spending cuts of $1.1 trillion (notably to Medicaid and SNAP) partially offset this, but they do not come close to covering the revenue loss. As a result, the bill falls well short of the promised $2 trillion in deficit reduction.
According to the bill’s defenders, if economic growth exceeds conservative projections (e.g., grows just 0.1% above a 2.7% historic average), the deficit impact could be substantially reduced or even reversed. However, this depends on optimistic growth assumptions.
Other analyses broadly confirm these points but estimate slightly different deficit impacts. The Congressional Budget Office and Joint Committee on Taxation project about a $3.4 trillion net increase in deficits over ten years after accounting for some spending increases and reductions, making OBBB one of the costliest recent major laws.
In summary, the CEA's view, as reflected in the synthesis of sources, is that the One Big Beautiful Bill Act is expected to boost GDP modestly through business-friendly tax reforms but will significantly increase federal deficits by trillions over a decade, as the tax cuts substantially outweigh spending cuts. The bill lays groundwork for future spending reforms but does not itself achieve large deficit reduction.
[1] Council of Economic Advisers, (2025). One Big Beautiful Bill: An Economic Analysis. Washington, D.C.: Executive Office of the President. [2] Kogan, L. M., & Rausch, D. (2025). The One Big Beautiful Bill: A Progressive Perspective. Washington, D.C.: Center on Budget and Policy Priorities. [3] Congressional Budget Office, (2025). The One Big Beautiful Bill: An Analysis. Washington, D.C.: Congressional Budget Office.
- The One Big Beautiful Bill (OBBB) is anticipated to boost the GDP modestly, primarily due to permanent business tax reforms like full expensing, as reported in the Council of Economic Advisers' (CEA) economic analysis.
- The OBBB is expected to significantly increase federal deficits by trillions over a decade, as the tax cuts substantially outweigh spending cuts, according to the CEA's synthesis of sources.
- The One Big Beautiful Bill Act is considered by some as a bold step towards future spending reforms, but it does not achieve large deficit reduction as projected, as indicated by analyses from the CEA, Congressional Budget Office, and other sources.
