House Republicans passed their “One Big Beautiful Bill Act” early Thursday morning in defiance of several warnings that it would have big negative consequences for the United States.
The “biggest” thing about the bill (beyond its 1,118-page length) is the more than $3 trillion that the Committee for a Responsible Federal Budget estimates it would add to budget deficits over the next decade. That figure would swell to more than $5 trillion if the nominally temporary policies within it are made permanent, as leading Republicans have made clear they intend. No matter which measurement is used, this bill would be — by far — the biggest deficit increase in a partisan bill passed through the budget reconciliation process in U.S. history.
The timing could hardly be worse. Just last week, Moody’s became the final major credit-rating agency to downgrade U.S. government debt, following similar actions by S&P in 2011 and Fitch in 2023. Their rationale was clear: Washington’s failure to “reverse the trend of large annual fiscal deficits and growing interest costs” has eroded confidence in America’s long-term fiscal trajectory and they “do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
When a credit-rating agency downgrades a government’s debt, it signals to global markets that lending to that government is riskier, leading investors to demand higher yields — effectively higher interest rates — for purchasing it. Interest rates on U.S. debt have already risen rapidly over the past several years thanks to stubborn inflation, growing debt levels, and — most recently — the Trump administration’s chaotic economic policies. But the Moody’s downgrade adds even more fuel to this fire. Since the announcement, yields on 20- and 30-year Treasury bonds even reached 5% – a threshold rarely seen over the past few decades.
Rising yields have big consequences for the federal budget. Already, the federal government spends more on interest payments than on Defense or Medicare, making it the second-biggest line item in the budget after Social Security. If interest rates rise, the government must pay even more to service its debt. Interest spending today is bigger both in nominal dollars and as a percent of economic output than it has been at any other point in American history. If the “One Big Beautiful Bill” becomes law and interest rates remain where they currently are, then interest costs over the next decade could be roughly $2.7 trillion bigger than the official scorekeepers at the Congressional Budget Office currently project. Within 30 years, not only would interest costs more than double as a percentage of gross domestic product, but debt would grow so large that CBO’s economic forecasting model could no longer function.
Republicans have responded to these warnings by placing blame for the downgrade solely on the Biden administration and arguing that passing their bill would actually improve the country’s fiscal trajectory by supercharging economic growth. Both of these claims are wrong. Although the Biden administration was hardly a paragon of fiscal responsibility, an analysis I published earlier this month meticulously documented the many ways in which Republicans now are doubling down on the very mistakes they criticized Democrats for making during the Biden administration. Meanwhile, independent analyses from the Congressional Budget Office, Penn-Wharton Budget Model, Yale Budget Lab, and EY’s Quantitative Economics and Statistics all show that the “big beautiful bill” would add so much debt that it would actually reduce economic growth rather than increase it.
But the effects on federal finances aren’t the only things that are “big” about this bill. The bill’s main offsets come from big cuts to spending on anti-poverty programs, such as Medicaid and SNAP. Earlier this week, the Congressional Budget Office published an analysis showing the bill would increase after-tax incomes for people in the top 10% by roughly the same proportion as it would cut after-tax incomes for people in the bottom 10%. An analysis by the Center for American Progress concludes: “If enacted, this would be the largest transfer of wealth from the poor to the rich in a single law in U.S. history.”
There is no doubt that the “One Big Beautiful Bill” is certainly big: it would lead to bigger budget deficits, bigger borrowing costs, and bigger regressive wealth transfers than any other partisan reconciliation bill in history. Whether those traits are “beautiful” is up to voters to decide.
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