One Big Beautiful Bill Increases Need for Reduced Government Spending

The One Big Beautiful Bill, championed by President Donald Trump, passed the U.S. Congress and was signed into law on July 4, 2025.

The reconciliation bill incorporates many of President Trump’s domestic policy objectives and represents a major political victory. The bill does a lot of good things for taxpayers at all income levels, including:

• Making the President’s 2017 tax cuts permanent, avoiding a major tax hike in 2026 when they were set to expire.
• Increases the size of both the standard tax deduction and the child tax credit for income tax filers.
• Eliminates income taxes on tips, overtime, and car loan interest on U.S.-made vehicles.

As nice as those things are for taxpayers, they will have costs because the One Big Beautiful Bill didn’t do enough to restrain the U.S. government’s spending. As a result, the U.S. Congress’ Joint Committee on Taxation estimates the reconciliation bill has about $4,452 billion worth of red ink. This figure assumes politicians would let the 2017 tax cuts expire, which was never in the cards in the real world, so take that number with a grain of salt. The waterfall chart below shows the costs of those popular portions of the new law with respect to that implausible scenario.

Regardless of the scenario’s plausibility, because the federal government already has an excessive spending problem, not doing more to restrain spending in the One Big Beautiful Bill means elected officials need to do more to restrain the growth of spending that wasn’t covered by the bill.

As a reconciliation bill, lawmakers could only alter mandatory expenditures, including spending for programs like Medicaid, Medicare, and Social Security, and taxes. Their changes in these areas mostly offset other spending they increased, which didn’t do much to compensate for their big changes for taxpayers in the bill.

What they couldn’t address in the One Big Beautiful Bill is discretionary spending, which includes almost everything else. Lawmakers will need to deal with discretionary spending through the Congress’ regular appropriations process. Or they can deal with previously approved spending through rescission bills, which they don’t do anywhere near often enough.

All of this will soon be put on hold when Congress members go on their annual August holiday. Not that they can afford much time off, because they will need to pass many spending bills before the U.S. government’s 2025 fiscal year ends on September 30.

If they don’t do enough to restrain the government’s discretionary spending, lawmakers will have to re-tackle mandatory spending with a new reconciliation bill. Since mandatory spending outweighs discretionary spending, it’s a safe bet there will be another one. You can also count on it not being as big and beautiful as the last one.