The Economist: Ten charts to explain Trump’s big, beautiful bill. The overhaul of taxation and spending would spell trouble for America 《經濟學人》：十張圖表解讀川普那份宏大而華麗的法案。稅收和支出改革將給美國帶來麻煩.

On july 1st, after 27 hours of non-stop voting and debate, America’s Senate passed the One Big Beautiful Bill Act (obbb), the most consequential legislation of Donald Trump’s second term. The House of Representatives—which passed its own version of the bill on May 22nd—must now reach agreement with the Senate on the bill before Mr Trump can pass it into law. (He has demanded that it reach his desk before Independence Day celebrations on July 4th.)

The Senate fiddled with the bill right up until the end. In the days before the final vote, a variety of forecasts were released suggesting that a combination of unfunded tax cuts and spending reforms in the bill would widen America’s budget deficit, slow long-term economic growth and hurt the poorest Americans. The charts below show by how much.

chart: the economist

The Trump administration insists that the obbb would reduce borrowing. But that is true only if you assume that tax cuts during Mr Trump’s first term, which were due to expire at the end of this year, are already permanent (even though they were costed as temporary measures the first time around). Preliminary analysis by the Committee for a Responsible Federal Budget (crfb), a think-tank, estimates that the House version of the bill would add $3trn to America’s public debt over the next ten years, using normal accounting methods. The Senate version, which among other changes proposes higher relief from state and local taxes, is even costlier.

In the Senate most laws need 60 votes to pass. But majority parties often use a shortcut known as reconciliation, which allows certain budget-related bills to pass with a simple majority. It requires each provision in the bill to focus on fiscal issues and not to raise the deficit beyond the ten-year budget window being considered. Republicans modified the rule to allow their new scoring method.

chart: the economist

In the days leading up to the final vote, the crfb assessed that the measure would add between $3trn and $4trn to the deficit. It includes a smorgasbord of tax cuts whose fiscal effects are only partially offset by other reforms. The tax cuts include Mr Trump’s campaign promises to remove tax on tips and overtime pay. In theory those are temporary and will elapse when Mr Trump leaves office. In practice, once taxes are cut they often stay cut (as Republicans’ new accounting method implies). The bill would also set up “Trump accounts” for newborns, including one-off payments to new parents for the next three years. It would give big boosts to spending by the Department of Defence and to Immigration and Customs Enforcement, which the administration wants so that it can increase the number of people deported from America.

chart: the economist

Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s gdp by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.

chart: the economist

America’s debt surged after the financial crisis of 2007–09 and the covid-19 pandemic. The ratio of debt to gdp is already close to the level reached after the second world war. By extending tax cuts that were set to lapse, without offsetting savings, the obbb will drive it higher still. According to the crfb, the Senate’s version as of June 30th would push debt to between 125% and 130% of gdp by 2034—well above the 117% forecast if the 2017 tax cuts were allowed to expire, and higher even than the 124% expected under the House bill (chart)

chart: the economist

The clearest reason why this matters concerns interest payments. Interest rates rose sharply in response to post-pandemic inflation and have stayed elevated ever since. Higher rates plus a higher stock of debt mean much higher debt-repayment costs. Last year these were 3% of gdp, but the obbb could push them sharply higher over the coming decades. At some point, those repayments will become unsustainable and the federal government will have to cut spending, raise taxes, default or inflate away its debt. How far off that day is remains unclear, but the bill brings it closer.

Changes to household income

Average % change in after-tax-and-transfer income from

the House OBBB proposals, by household income group

First quintile, $0-17k

Second quintile, $17k-51k

Middle quintile, $51k-93k

Fourth quintile, 93k-174k

80-90%, $174k-263k

90-95%, $263k-388k

95-99%, $388k-988k

99-99.9%, $988k-4.325m

Richest 0.1%, $4.325m+

Source: Penn Wharton Budget Model

Despite Mr Trump’s talk of helping the least well-off, the bill’s biggest beneficiaries would be the rich. Analysis of the House version by scholars at the University of Pennsylvania suggests that Americans earning less than $16,999 would lose about $820 a year—a 5.7% reduction in median income for that group. The richest 0.1%, earning more than $4.3m, would gain $390,000, a 2.8% increase.

map: the economist

One way the House and Senate bills cut spending is to cut programmes that benefit poorer Americans. Food stamps or, to give the programme its full title, the Supplemental Nutrition Assistance Programme (snap), is one such programme. Analysis of the House bill by the Commonwealth Fund, a think-tank, shows that this would particularly affect some states where Mr Trump won very high shares of the vote, such as Mississippi.

map: the economist

The biggest change to social policy, though, is in health insurance. Through a mixture of tax changes and cuts to Medicaid, health insurance for the poor, the number of Americans without health insurance will rise. The Congressional Budget Office estimates that the House bill would increase the number of uninsured Americans by nearly 12m by 2034.

chart: the economist

Republicans are also using the obbb to gut the Inflation Reduction Act (ira), Joe Biden’s signature climate law. The House bill included measures that critics say will choke off clean-energy investment. Analysis by the Rhodium Group, a research firm, suggests that under the ira America was on course to cut greenhouse-gas emissions by 40% from 2005 levels by 2035. A de facto repeal would reduce that by more than ten percentage points (see chart)

The changes could hit utility bills, too. The Senate version adds taxes on wind and solar projects that fail to comply with rules that limit the use of materials from certain foreign countries, such as China. Rhodium reckon that could raise the cost of renewables by 10-20%, on top of the loss of ira tax credits.

chart: the economist

One less-discussed but consequential provision buried in the bill is a tax on remittances (https://archive.ph/o/SiQ51/https://www.economist.com/united-states/2025/05/29/america-has-found-a-new-lever-to-squeeze-foreigners-for-cash).

Early drafts proposed a rate as high as 3.5% but the Senate’s version pulled the tax rate down to 1% and narrowed the types of transactions that it applies to. Modelling by the Centre for Global Development, a think-tank, found that the impact on El Salvador, would be equivalent to just 0.6% of gross national income, down from more than 1% under the House bill. Still, after the deep cuts to foreign aid earlier this year, the obbb will be another squeeze on some of the world’s poorer countries.

Even if the bill clears the Senate, several House Republicans have said they will oppose the latest version, citing concerns about cost and content. Whatever its eventual shape and ultimate fate, the obbb is a test of the Republican majority’s fiscal credentials—and of its loyalty to Mr Trump. ■