One Big Ugly Law: The Fiscal Irresponsibility of the One Big Beautiful Bill Act

Summer 2025 was fiscal irresponsibility summer for lawmakers.  If you are settling in to organize your inbox after Labor Day for the first time since May, good for you and get ready to dive into a summary of the financial ruin coming for the United States.

First, here is a recap of our concerns from March when the House and Senate started debating the fiscal adjustments eventually seen in the One Big Beautiful Bill Act:

House and Senate Republicans are at odds over the country’s tax policy, and the party’s lack of strategic direction may impact your wallet and the economy as a whole. The 2017 Trump Administration tax cuts are set to expire at the end of 2025. House Republicans acknowledged the deficiencies of the 2017 cuts, including increasing the deficit, not promoting economic growth or increasing wages as promised, and offering benefits primarily to the wealthiest Americans. Concern about the outcome of these tax cuts prompted House Republicans to limit the amount of money the federal budget can lose due to tax cuts to $4.5 trillion through 2034.

Senate Republicans are more concerned with appeasing the president, a difficult position given the House’s restriction. Simply extending the 2017 Trump tax cuts would cost $4 trillion of the $4.5 trillion over the next ten years. Since many Americans are now used to the expanded child tax credit and higher standard deduction, taking these tax benefits away could upset constituents.

Combined with expiring business tax breaks that would cost $200 billion to renew, that leaves only $300 billion of potential tax cuts before hitting the $4.5 trillion House limit. But President Trump ran on additional tax breaks including lowering taxes on Social Security benefits, not taxing overtime pay, not taxing tips, and more that add up to over $1 trillion more.

To accommodate renewal of the 2017 Trump tax cuts and the promises from the president’s campaign, Senate Republicans want to set a new baseline treating the 2017 Trump tax cuts as the status quo. This after-the-fact reengineering fails to honor the intent of the House limit and would allow Congress to spend another $4.5 trillion on tax cuts beyond the $4 trillion it would cost to renew the 2017 Trump tax cuts.

Our take: This is fiscal irresponsibility to the tune of over $4 trillion—that is a 4 followed by twelve zeros—from a political party that is simultaneously trying to nickel-and-dime government workers by cancelling Adobe Acrobat subscriptions and cutting administrative assistants making $50k a year. The lack of strategic direction when considering fiscal policy objectives could have a detrimental impact on the entire U.S. economy for years to come if not reevaluated immediately.

How We Got Here

The bill that became law raises the debt ceiling by $5 trillion, the largest debt ceiling increase in U.S. history.  For reference, the national debt was below $20 trillion in 2017 when President Trump took office for the first time, and the OBBBA raised the debt ceiling to $41.1 trillion.

The unforced error that raised the increased U.S. debt accumulation was the 2017 Tax Cuts and Jobs Act implemented by the first Trump Administration.  Most people loved it because it lowered taxes for pretty much everyone.  But looking deeper showed the deep financial inequity.  For individuals making normal amounts of money, meaning anyone up to mid-six figures (yes, a high definition of normal!), the bill offered tiny financial concessions like a lower tax rate for each earning level and a higher Child Tax Credit.  For large businesses, the maximum corporate tax rate decreased by a whopping 14% from 35% to 21%.  

How I think about this:  For a family making six-figures, the 2017 TCJA provided a nice three-course dinner out at their favorite restaurant.  But the owners of the largest corporations received a two-week all-inclusive trip to the Maldives.  The poorest Americans received a candy bar.

The Trump Administration convinced voters that this bill benefitted everyone, because it did directly benefit everyone.  Even the poorest Americans had one more Snickers bar than before due to tax savings!  However, gifting a Snickers bar to the poorest Americans while the richest receive two weeks in the Maldives leads to more inequity.  There are more potential tax dollars to receive from the wealthiest Americans, and reducing the highest corporate tax rate by nearly half significantly decreases the funds for widespread social programs that help everyone, regardless of tax bracket.

The way the Trump Administration sold this change in tax policy was two-fold.  In addition to expressing that everyone was better off at tax time, a technically true but misleading reality, the increased earnings for corporations was supposed to benefit the regular employers in increased wages.  Even where this happened, it turns out getting three Snickers bars is still nowhere near close to two weeks in the Maldives.  Weirdly, the “trickle down economics” once suggested by the Reagan Administration did not work as advertised by the Trump Administration either, and the tax cuts exacerbated financial inequity, enriched the biggest corporations, destroyed social programs securing Americans’ health and safety, and set average Americans up for future financial turmoil.

What’s Another $5 Trillion?

I get it—it does not feel like lawmakers raising the debt limit impacts you and me.  Nothing in our lives changes because the debt limit is $5 trillion higher.  But how and why the debt is piling up has a significant impact on our everyday lives.  Like the TCJA, the OBBA is another unforced error when it comes to excessive debt accumulation.

Much of the additional debt can be traced back to the 2017 legislation.  These tax cuts were supposed to be temporary.  Frankly, the 2017 tax cuts were a political manipulation that backfired: If President Trump served two consecutive terms, these tax cuts would have abruptly stopped when a Democrat was likely in  office, giving the perception that the Democratic president was hurting taxpayers’ finances.  Since President Trump left office and then came back, he received his own fiscally irresponsible gift of expiring tax cuts.

Unfortunately, most Americans do not pay attention to the tax code, so most became accustomed to the 2017 tax cuts over the last several years and no longer know how to budget for a reality where those cuts disappear.  Eliminating these cuts would hurt Americans no longer prepared for the previous tax rates.  The unforced error keeps on giving.

This is problematic because eventually Americans need to pay taxes if they want to keep the societal conveniences they treasure.  Relearning to expect higher taxes will cause financial hardship for millions of Americans.

To make matters worse, lawmakers added more unforced errors and inequity.  The 2017 tax cuts primarily exacerbated inequity between income levels.  Now, though, individuals of the same level of income may experience inequity based on type of work.  No tax on tips and overtime sounds like a kind provision until you consider who is eligible and who is not.  It may sound great that a first-year firefighter can receive a few tax-free dollars for an overtime shift.  But a first-year teacher with more student debt than that firefighter makes $36,000 a year and is ineligible for overtime even if they average 80 hours a week to make sure your child has a positive learning experience.  Lowering teachers’ purchasing power relative to professions eligible for overtime or receiving payment in tips seems like a poor method for encouraging bright young individuals to become educators.

As someone who likes to challenge the system, if I were still teaching I would try to secure a part-time job at Starbucks or Chipotle instead.  Both offer health insurance for part-time employees, you get some tips, and you could pick up a shift beyond your part-time schedule to get some tax-free overtime dollars.  If you finagle your schedule correctly, you may just be able to earn more than a teacher by working part-time.

Disparities of purchasing power between professions of similar pre-tax income levels will change job preference throughout society, discouraging entry to some professions and encouraging entrance into others.  Over time, the overtime preference may also impact individuals’ health.  Shift workers age more quickly and experience higher rates of all-cause mortality due to their volatile schedules.  Encouraging employees to seek jobs with overtime opportunities promotes inconsistent schedules that detract from health.

This happens while the healthcare consequences of the OBBA loom, as a hit to Medicaid is scheduled to happen soon after the 2026 primaries.  We will discuss the coming healthcare crisis soon, but the fiscal irresponsibility of the tax disruptions is enough for today!

The Future

In a few years, workers receiving tips or overtime will be accustomed to their tax situation, and rolling it back would cause financial pain.  Just like rolling back the 2017 tax cuts would today.

But the United States of America will be even more in debt.  Medical care, emergency services, environmental responses, national security, the bond market, and more will suffer.  This legislation already cut vital services to not come close to paying for additional tax cuts.

We will have to give up more to pay for these tax cuts down the road, and this will cause more pain than if we started paying today because Americans will adapt to the new baseline.  Lawmakers have taught all Americans to be fiscally irresponsible and push payment to a future date that we hope to never reach.  Or at least push it to the next term, when someone of another political party needs to pick up the pieces.

In the long run, one of two things will happen.  Tax rates will increase for all Americans to start funding the luxuries that defined our society for decades, or the United States of America will regress to an “undeveloping” country that cannot afford to offer the common conveniences of other countries.  Votes for business owners who leverage debt rather than solutions will take the country down one path.  Votes for nuanced thinkers willing to make painful choices may allow us to shift course.

But for now, this is our financially irresponsible reality.  It will get worse initially.