U.S. President Donald Trump signed the "Big Beautiful" tax and spending bill into effect on July 4.
The U.S. House of Representatives passed President Trump's bill on the afternoon of July 3 by a vote of 218 in favor to 214 against, while the Senate had already approved the bill on the 1st of this month. Domestic concerns in the U.S. warn that this legislation will further exacerbate the country's fiscal deficit and debt risks.
What is the "Big Beautiful Bill?"
The "Big Beautiful Bill" represents Trump's signature legislative agenda, anticipated to follow his return to the White House in early 2025. The bill's main provisions include:
- Extending corporate and individual tax cuts originally passed during Trump's first term in 2017
- Exempting tip income and overtime wages from taxation
- Its core provision being the reduction of corporate taxes
The bill has drawn significant controversy due to:
- Cuts to federal assistance programs
- Increased long-term debt
- Tax breaks favoring the wealthy and large corporations
The New York Times noted that this legislation "puts nation on a new, more perilous fiscal path."
Preliminary analysis shows the bill would:
- Increase the U.S. deficit by approximately $3.3 trillion over the next decade
- Reduce national tax revenues for decades to come
This shortfall could fundamentally alter America's fiscal trajectory and heighten debt crisis concerns.
Brian Riedl, Senior Fellow at the Manhattan Institute, stated this may be the most expensive piece of legislation since the 1960s. The danger lies in Congress adding trillions in new borrowing atop already substantially increased deficits. Jason Furman, who chaired the Council of Economic Advisers under President Obama, noted that the bill could make it harder for lawmakers to control debt.
Currently, U.S. national debt stands at US$36.2 trillion (approximately HK$284 trillion). U.S. media notes that with debt at historic highs, this bill will further expand structural deficits.
Previously, due to increasing U.S. government debt and interest payments, international credit rating agency Moody's downgraded U.S. sovereign credit ratings in May - becoming the third major international rating agency to do so.
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