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On July 4, 2025, President Trump signed the "One Big Beautiful Bill" (OBBB), which was like a huge stone thrown into the lake of American finance, creating ripples. This bill not only brought the "sweetness" of tax cuts to the American people but also sowed the seeds of a huge deficit "hazard".
One of the core actions of OBBB was the permanent extension of the tax cuts implemented in 2017. It is worth noting that this tax cut policy, which was originally set to expire on December 31, 2025, involved an amount of several trillion dollars. In addition, the bill also introduced a series of new tax "benefits", such as tax exemption for overtime pay and additional deductions for the elderly, each of which affected countless families.
However, there is no such thing as a free lunch. To support these tax cuts, the bill targeted Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and student loan programs. By modifying these programs, it attempted to "pay" for the tax cuts, but behind this was a major adjustment to the social welfare system, with far-reaching and unpredictable impacts.
From a cost perspective, OBBB will cost 3.4 trillion dollars over the next ten years. If the additional interest on the national debt is included, this figure will exceed 4 trillion dollars. This scale makes it the most expensive law passed by Congress since the American Taxpayer Relief Act of 2012, which made most of the Bush tax cuts permanent. It is worth noting that the cost of that 2012 bill was only 4 trillion dollars.
It is important to note that the 3.4 trillion dollars in costs of OBBB are not evenly distributed over the next ten years. More than 60% of the costs are concentrated in the first half of the decade, before the new temporary tax cuts expire and before some scheduled spending cuts take effect. This means that in the coming years, the US fiscal situation will face even more severe tests.
What is even more worrying is that future Congresses and presidents may decide to extend the temporary tax cuts or cancel the scheduled spending cuts. If so, without corresponding funding or new spending cuts, the impact of OBBB on the ten-year deficit will far exceed 3.4 trillion dollars. According to BPC estimates, if the tax cuts set to expire in 2028 and 2029 are made permanent, an additional cost of about 800 billion dollars will be incurred over the next ten years.
When Congress cannot fund new tax or spending bills, the Treasury Department has to issue more bonds to make up for the shortfall, and the US government has to bear the interest costs of these new bonds. According to the Congressional Budget Office's (CBO) rule of thumb, BPC estimates that the additional debt required by OBBB will result in more than 700 billion dollars in interest payments. This means that from fiscal year 2025 to 2034, the total cost of the bill (including interest) will exceed 4.1 trillion dollars. It is worth noting that CBO had estimated that the 2012 bill to make the Bush tax cuts permanent would only increase interest payments by about 600 billion dollars.
Even worse, if the temporary tax cuts in the bill are made permanent, along with the resulting interest, the cost of the bill could soar to about 5 trillion dollars by fiscal year 2034.
The OBBB bill is like a grand party. The tax cut "revelry" temporarily made people forget the financial pressure, but when the party ends, the huge deficit bill left behind will ultimately be borne by American society. The ultimate outcome of this fiscal gamble is unpredictable.
https://bipartisanpolicy.org/explainer/what-does-the-one-big-beautiful-bill-cost/