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Sagartirtha Chakraborty

July 1st, 2025

Trump’s ‘One Big Beautiful Bill’ claims to deliver growth but may deepen inequality

0 comments | 63 shares

Estimated reading time: 7 minutes

Sagartirtha Chakraborty

July 1st, 2025

Trump’s ‘One Big Beautiful Bill’ claims to deliver growth but may deepen inequality

0 comments | 63 shares

Estimated reading time: 7 minutes

As President Donald Trump’s ‘One Big Beautiful Bill’ makes its way through Congress, Sagartirtha Chakraborty discusses its theoretical and political contradictions. He writes that the measure promises sweeping tax cuts, welfare reforms, and immigration crackdowns under the guise of a populist policy agenda but ultimately may lead to greater inequality in the US. 

In May 2025, the US House of Representatives narrowly passed what President Donald Trump termed as the ‘One Big Beautiful Bill.’ It is now being debated in the Senate ahead of a vote. While supporters hail it as a reshaping of the American tax, welfare, and defence landscape, critics term it a regressive fiscal juggernaut that masks inequality and pushes vulnerability.

Incentivizing savings, families and work 

At first glance, the bill strikes a populist chord with the creation of ‘Trump Accounts’ – a tax-advantaged savings vehicle for babies born between 2025 and 2028. These accounts promise a $1,000 government seed grant while also allowing parents to contribute up to $5000 annually for securing their children’s future, with partial withdrawals allowed at age 18.

In theory, this is a classic behavioural nudge, encouraging long-term planning and investment among the lower-middle-income families. But if we scratch the surface, families struggling to meet daily expenses are unlikely to benefit from a scheme that hinges on their ability to save. Those who can afford to contribute are likely to reap most of the rewards, turning a seemingly egalitarian policy into a regressive one.

The bill also boosts the Child Tax Credit (which provides tax relief per child) by $500 per child, a welcome support for more than 40 million working-class families. Additionally, its provision to exempt tip and overtime income from federal taxation delivers a rare, targeted relief for service and gig workers. These measures reflect aspects of supply-side economics (which focuses on deregulation and tax cuts), aiming to stimulate labour force participation by reducing marginal tax burdens.

The welfare cuts 

This beautiful bill however, has a not-so-beautiful side too. The most consequential blow of it lands on the country’s safety net. The bill proposes a $1 trillion cut to Medicaid and SNAP – two welfare programs that currently support over 113 million Americans. The likely outcome? An estimated 21 million individuals standing on the verge of losing health coverage and food-purchasing support, especially in states like California, New York, and Alaska, where the reliance on this type of federal aid is high. This is why the bill has raised serious concerns even from the President’s own Republican party.

From a Rawlsian justice lens – which argues that people should have equal rights to basic liberties – the proposed shift violates the ‘difference principle’ which allows for inequalities only if they benefit those who are the least advantaged. In this case, inequality rests on a dubious premise that strict welfare eligibility and work requirements will somehow lead to sustained employment. Empirical evidence shows that many of these beneficiaries are either already working or are facing structural barriers to employment like disability, or caregiving responsibilities.

“P20250626GK-0202” by is United States government work

Tax cuts and rising fiscal debt 

A core component of the bill is the extension of the 2017 Trump tax cuts, which stemmed from the supply-side economic model aiming to foster growth via deregulation and lower taxes that once benefited corporations and the wealthy. Critics estimate that the latest proposed tax cuts would allow the top one percent of earners to gain $63,000, whereas the bottom 20 percent are projected to lose $800 by 2027. Far from flattening inequality, the bill rather reinforces it by ballooning the national debt by $3.8 trillion over the next decade.

Proponents invoke the Laffer curve to defend these cuts, arguing that lower taxes will catalyse business investment and job creation – a familiar premise from the Reagan-era playbook. But empirical evidence of such tax cuts even during the era of President Reagan has been found to have minimal trickle-down effects. If anything, Ricardian equivalence suggests that attempts to stimulate an economy by increasing debt-financed government spending and tax cuts motivate the households to save, rather than spend, in anticipation of future tax hikes. The net result? Dampened demand and a weakened multiplier effect.

The long-term implications are even more worrying. If the rising debt and increased tax cuts are not offset by productivity gains, they are likely to be financed by future generations through higher taxes or inflation, as suggested by the Generational Accounting Model. At a time when US productivity growth is stagnating and annual interest payments on debt are touching the $1 trillion mark, it may set up a fiscal cliff in the coming years.

The border wall 

The bill’s $50 billion allocation for border wall expansion and staffing of Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP), with an asylum processing fee of at least $1000 – align with the ideas of security contained in political realism.

But such symbolism may not always translate into smart policy, as border walls have always shown mixed efficacy offering limited deterrent effects. With the US labour market deeply reliant on migrant workers, particularly in healthcare, agriculture, and construction sectors, a crackdown on immigration could shrink US GDP by two percent.

The great green reversal 

The bill rolls back on green energy tax credits and is effectively a partial repeal of the Inflation Reduction Act, removing the earlier measure’s tax credits for EVs and residential energy products, which are expensive and ineffective. At a time when climate change is reshaping global trade, security, and labour markets, this rollback could be a self-defeating move with strategic myopia.

This is because, the proposed shift contradicts the Porter hypothesis, which suggests that robust environmental regulation fosters innovation and competitiveness. Moreover, the existing subsidies internalized the positive externalities of clean energy. Removing them is likely to distort the US market once again in favour of fossil fuels. Worse, this pivot may hinder US competitiveness in clean tech vis-à-vis China and the EU.

A populist façade? 

Politically, the proposed bill is a mixture of Trump-era populism, Reaganite tax orthodoxy, and Tea Party austerity. It basically offers family savings carrots while wielding welfare sticks; and gives to the wealthy in the name of growth while trimming off the ladder for the poor. Here, the ‘populist’ label appears more performative than substantive – a strategy to secure solid vote base ahead of the 2026 midterms rather than to redistribute power.

President Trump’s ‘One Big Beautiful Bill’ is massive in scope. But beauty, as they say, lies in the eye of the beholder. If passed in its entirety, it may serve as a test case of modern populist governance, having a bold vision that garners headlines while potentially having a substantial negative impact on many Americans.


About the author

Sagartirtha Chakraborty

Sagartirtha Chakraborty is a Ph.D. Research Scholar and Teaching Associate in the Department of Economics at Cotton University, India. He previously worked as a Research Associate at the University of Texas at Arlington Research Institute. His work focuses on the areas of international relations, entrepreneurial ecosystems, and contemporary policy narratives on gender and development. He has co-authored a book on research methodology, and his articles have been published in LSE Business Review, Space & Culture, State-specific Statistical Atlas, and over 15 edited volumes.

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