The U.S. government’s so-called “Big Beautiful Bill” is certainly big, but isn’t particularly beautiful, according to a report from Desjardins Group.
In a new report, economists at Desjardins take a look at the U.S. budget bill, which runs to over 1,000 pages, and encompasses a long list of tax and spending plans — including an extension of 2017 tax cuts, and additional cuts to the taxes on tips and overtime pay, among a slew of other measures.
However, these tax cuts will come at the expense of a series of curbs to government assistance programs (Medicaid, health insurance subsidies and food stamps), and larger government deficits, it noted.
For instance, the U.S. Congressional Budget Office (CBO) estimated that the bill “would add a total of US$2.4 trillion to the deficit over 10 years, along with an additional US$551 billion in interest on the debt over the same period,” the report noted.
At the same time, the CBO also estimates that 10.9 million Americans will lose their health insurance, and the poorest 10% of households will see their income decline — all to finance tax breaks for wealthy households, which would “exacerbate income and wealth inequality” in the U.S.
The bill could still be revised in the Senate, but as it stands it “does little to address the problems facing the U.S. economy,” the report said.
Prolonging pre-existing tax cuts will have little impact on the overall economy, “even as it dramatically inflates the deficit,” the report said.
“The government also seems completely uninterested in dealing with income inequality, access to health care, the energy transition and international development,” it noted.
Despite the bill’s expected lack of positive impact — on economic growth, or addressing social issues — the big concern is its effect on debt, which is expected to “rise sharply,” the report said.
“This is likely to remain a concern for investors, especially those outside the United States, who already have questions about the resilience of the U.S. economy, the greenback’s safe-haven status, the strength of American institutions and the country’s openness to foreign investment,” it said.