The Big Beautiful Bill Passes

By Todd Sheets, Author of 2008: What Really Happened

President Trump and House Speaker Mike Johnson achieved a milestone accomplishment with the passage of legislation that will preserve the tax cuts from Trump 1.0. The Senate will now take up the bill, with a goal of delivering a final version for Trump’s signature this summer. Combined with the preliminary Geneva agreement on Chinese tariffs and his successful trip to the Middle East, this announcement helps build momentum for the Trump agenda of reinvigorating growth through reduced taxes, deregulation, trade, energy independence, and efficiency.

The recent increase in Treasury bond yields reflects the fact that there is still important work to do on the spending side of the equation, but the best chance to work our way out of our serious financial problems is through economic growth, and avoiding a draconian tax increase is critical in this regard. 

The underlying cause of the long-delayed ratings downgrade announced by Moody’s this week was the enormous expansion in debt that resulted from the Obama administration’s failed attempt to spend our way out of the Great Financial Crisis. Deficits averaged 7.5% of GDP during the first five years under Obama and, by the time he left office, the federal debt had ballooned from a very manageable 39% of GDP to a dangerously high 76%. This is why Standard Poor’s reduced their ratings back in 2011.  Furthermore, the post-Obama debt left little room for the emergency borrowing later needed to address the COVID shutdown. These problems were only magnified when the Biden administration then pushed "non-emergency" post-COVID spending up to 23.5% of GDP. 

And what do we have to show for all of this spending? - Chronic peacetime deficits, dangerous debt, a bout of the worst inflation since the 1970s, and anemic growth; all of which is why America re-elected President. Trump. Obviously, there is much work left here, and my hope is that in addition to reigniting growth, the administration and Congress will also turn their attention to reigning in spending. Nevertheless, passage of the Big Beautiful Bill is an important and critical step in unleashing the American economy’s unmatched potential to deliver upward mobility, peace through strength, and to ensure the viability of our social welfare commitments.