On July 4, 2025, during a South Lawn ceremony at the U.S. Independence Day, the Republican President Donald J. Trump signed a long-awaited “Big, Beautiful Bill”. He declared it one of the biggest tax and spending reforms in the U.S. history. As its name shows, it is around 900-page document that is aimed at not only restructuring tax laws, government spending, health-care system, and economic regulations, but also reconsiders the U.S. immigration policy and military budget. Earlier this year, the bill was introduced into the House of Representative by a Republican Jodey Arrington on May 20, and was passed by a narrow margin i.e. 215-214. At the start of the following month, the senate approved the amended version of the bill, with the tie-breaking vote of the Vice President J.D. Vance. Its amended version passed again in the House with 218-214 votes. The increase of 3 votes is the result of negotiations with the three hesitant Republicans by the leadership.
Although the bill is vast and covers almost every aspect of the U.S. economy, for the sake of general understanding, only the most debated and relevant provisions of this bill (now turned into an act) needs detailed overview. For instance, it implements Trump’s signature Tax Cuts and Jobs Act of 2017– reducing cooperate tax to 15%, exempting tax on the overtime work, auto loan, social security, and tips (in the service sector), and providing government sponsored tax-free savings accounts to newborn Americans. Also, it increases the limit of deductions from the state and local taxes up to $ 40,000 for households earning less than $ 5, 00,000 annually, a landmark increase as compared to earlier policy. While some tax exemptions are of permanent nature, the others are valid for short-term period (until 2028).
Moreover, its shockwaves can be felt in the healthcare and welfare system. For the sake of reference, it cuts Medicaid by 12%. It means that states, from now, will receive less money for the public healthcare. Ultimately, directly or indirectly, it will impact the lives of up to 12 million Americans. Apart from that, the minimal qualification for SNAP and Medicaid has increased from being a middle-class working adult to a parent with 14-18 years old dependent children. On the one hand, it eliminates Biden-era subsidies for solar and wind energy, and EVs. On the other hand, it provides undue tax advantage to oil and gas companies to enhance domestic production of the fuel. It reflects Trump’s cornucopian attitude (the view that natural resources, including environment, are unlimited and must be freely exploited).
Surprisingly, it adds $150 Billion to already stretched military budget to integrate the emerging technologies into the U.S. military i.e. AI, cyberwarfare, and hypersonic missiles. It also adds $150 to increase the border security to curb the illegal immigration. Nearly one-third of this amount is solely dedicated for finishing the wall at the Southern border. New detention centers, surveillance cameras and drones, and expanded ICE operations are also on the cards. In an unprecedented move, a new tax on the remittances (a money sent home by the legal migrants/ workers/ job holders/ business persons to their home country by a legal channel i.e. via banks).
Overall, it will increase the debt ceiling by $5 Trillion to allow government borrowing to operationalize these changes. The Congressional Budget Office (CB0) expects a huge rise in the national debt in the coming years. For instance, the deficit is expected to grow by $2.8- 4.6 Trillion over next 10 years.
Here arises an interesting question: why do experts are debating this bill while it is an internal legislative issue of the United States? The problem in this regard is that the U.S. has long been a propagator of the neoliberal international economic order. This politico-economic discourse relies on the assumptions that the free market economy, minimal government interference, and deregulations are the pre-requisites for the economic well-beings of the nations in a long-run. Prior to 1970’s crisis of stagflation, hyper-inflation, and oil issues, the U.S. strictly followed Keynesian economic principles, the concept that the government interference is necessary to keep the economy on the right track.
The application of this model could be observed in Roosevelt’s “New Deal” that was directed to reverse the post- World War 2 shocks. But, since early 1970s, the U.S. led international financial system has been following economic neoliberalism. Many a times, when states, particularly those of third-world, tried to violate this principle, the U.S. adopted liberal-militarism for the protection of its so called self-propagated norms. This time, the deviation is coming from internally and it may have global spillover effect. This inference emerges from the fact that historically as any crisis in the U.S. market had global consequences. The prominent among these is the Wall Street Crisis.
Given the dominance of U.S. led Washington consensus, any change or an apparent attempt in the economic trajectory of the United States have implications for the entire world as the value of most of the state currencies are determined in comparison to the U.S. dollar that itself is not backed by gold standards. Instead, the U.S. dollar is a fiat-money. Fluctuations in its values could affect the dependent states.
The recent uncertain policies of the United States under Trump 2.0, characterized mainly by the rising debt crisis, fiscal rigidity, and persistent deficits, has resulted in the downgrading of the Moody’s rating for the U.S sovereign debt from Aaa to Aa1 since May 2025. Though still very stable, the B3 can result in the further downfall, with nation-wide and global consequences.
For instance, the U.S. government bonds, previously been known for their stable outlook, are now considered riskier. Investor my demand comparatively higher interest rate to compensate their profits. Resultantly, the expensive national debt service can worsen the deficit, especially worth considering when Big, Beautiful Bill (B3) is already adding trillions of dollars into it. Coupled with the weakening dollar value, this emerging economic discourse can increase the inflation in the short and medium term, and can compel the foreign buyers, usually states, to reduce the purchasing of the U.S. bonds. Also, the shock market will probably witness the short-term volatility.
At international level, the dollar-dependent countries or the ones with higher dollar reserves can suffer from the currency fluctuations, higher cost of repaying dollar-dominated debts, particularly under IMF driven SAPs, and reverse devaluation crisis. The growing skepticism about the U.S. fiscal discipline, referred from section 899, and coupled with the rippling of the global bond market, can boost de-dollarization and alterative options for international trade in local or regional currencies i.e. BRICS currency.
Another issue in this regard is that of whether this bill is directed towards market liberation (Hayekian) or sets precedence of excessive market regulation (Keynesian). A careful comparative analysis, combining theoretical underpinnings and the postulates of the document, is required in this regard.
Massive tax cuts in the labor, financial and environmental sectors showcase the second case: The Hayekian shift in the U.S. economy. Furthermore, the removal of bureaucratic hurdles, cap limit to corporate taxes and free flow of capital further reinforce the similar idea. But, on the other hand, massive state spending on the public work ($400 Billion), artificial attempt to increase the effective demand (via tariffs and non-tariff barriers), deficit spending without crisis situation (directed at creating a multiplier effect), and above all, the state intervention into the market predicts Keynesianism.
In short, one can say that this bill forecasts an inconsistence ideological turn in the U.S. economy, with populist fusion of economic-nationalism and neoliberal deregulations. Above all, it is politically motivated and follows Trump’s Make America Great Again mantra. But, it is unsustainable given the opposing viewpoints within the political sphere of the United States. Also, as said by David Harvey, the central economic planning within the U.S. economy will gradually spillover into political realm: making America an authoritarian state in a long-run given that these type of decisions, inflicted by the rule of thumb, do not take market trends into consideration and also needs complete submission by the masses for the effective implementation.
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