On America’s 249th birthday on 4 July 2025 President Donald Trump signed his signature bill that he called One Big Beautiful Bill (OBBB or OBBA) into law with an ideological focus on a sweeping scale to make it the most consequential legislative package globally with impact on economic, environmental, healthcare, geopolitical, defence, energy and technology spheres. In my opinion, it is a shrewd masterstroke of Trump to lock in his second-term domestic agenda in a single stroke. Instead of bringing in several smaller laws for different departments, he brought this “All in One” law to stop what we call in India “freebies”.
This Act will not only impact the US but will have far-reaching global consequences, including India. Today, we live in a global village and hence, are interdependent when we talk of international markets, financial markets, and investments. This bill may likely decrease investments in India and reduce money flow in R&D, dip in exports and employment, impacting India’s revenues. How much the impact will be is difficult to gauge at the moment. But looking at India’s moves in the economic sphere, experts feel that it would be marginal or not very critical to Indian economic growth.
Salient features of the OBBB are presented for the understanding of a common reader.
Economic growth: Trump is in a hurry to attract investments to America that will reduce the trade deficit. His Gold Card scheme is one example where he tried to attract wealthy foreign investors by offering a direct gateway to permanent residency and citizenship for a hefty US$5 million fee. Under this act, all tax cuts that Trump offered to attract investors during his earlier tenure in 2017 will become permanent. For the middle class, there will be no tax on tips and overtime, there will be a larger child tax credit, and special breaks for seniors and US-built car purchases to boost the local auto industry. For small businesses, there will be deductions and bonus write-offs to entice domestic production. The White House is bringing policies that will increase jobs with an income boost of US$11,600 per annum for a typical worker with no tax on bonuses. He argues that if the per capita income of a worker is increased, then there is no reason to pay them freebies.
Tax Policy: Under the new tax policy, all tax cuts offered by Trump in the earlier term in 2017 will stay. People earning overtime up to US$12,500 for annual income up to US$150 is exempted from tax, no tax on tipped income, and loans on US assembled autos to revive the auto industry. Earlier, tax cuts for electric vehicles were discontinued, the bone of contention between Trump and Elon Musk. Trump is reviving his “Drill Baby Drill” policy, encouraging local petrol and diesel car manufacturers. Of course, there are a few additional deductions like child tax up to US$2,200, security income, and state and local taxes cap is raised to US$40,000 (temporary). A tax cut that will benefit immigrants is the reduction of tax on remittances that is reduced from 5% to 1%.
Government Cuts: There will be big changes in federal government spending, affecting several cuts to rationalise expenses, i) US$930 billion to the Medicaid program and other social programmes, triggering new work requirements, ii) Reduce SNAP (Supplemental Nutrition Assistance Program) spending by US$186 billion. SNAP provides financial assistance to help low-income individuals and families purchase food and is a federal program administered by state agencies it through local offices. It is like Indian Rationing system to purchase groceries at authorized retailers, including grocery stores, farmers’ markets, and some online retailers, iii) Student loan reform programs consolidations by merging different programs to mop up about US$307 billion, iv) Revoking several income driven repayments expansions and repealing smaller grant programs, v) Overseas funding, vi) Phase out clean-energy tax incentives, vii) Roll back provisions from the inflation Reduction Act, viii) End Medicaid funding for gender transition procedures for minors and vii) Block Planned Parenthood funding for one year.
Government Spending on Border Security and Defence: i) US$170 billion for the border, $46.5 billion for additional wall segments, plus funds for 10,000 new ICE (Immigration and Customs Enforcement) officers, 3000 Border Patrol agents, 100,000 detention beds and advanced surveillance tech, ii) Higher immigration-fee structure and asylum reforms aimed at deterring unauthorised crossings, iii) Additional US$150 billion defence and another US$150 billion for immigration enforcement, iv) ICE funds boosts to more than US$100 billion through 2029 and v) An extra US$150 billion to Pentagon for ship building, missile defence (Golden Dome system) munitions, AI driven drones and Indo-Pacific force posture.
Impact: The current debt of the US stands at US$36.22 trillion. This bill will likely add another US$5 trillion to this debt, raising it to a whopping debt of US$40 trillion! The opponents argue that this Act will affect 4.8 million Medicaid beneficiaries who will lose coverage, and deficits will still rise, so it is an anti-poor bill.
Criticism: The Congressional Budget Office (CBO) projects a US$2.4-2.8 trillion to the national debt over the next decade. It could cause over 8 million Americans to lose health coverage. The bill would likely increase the largest rich-poor gap and cause great economic harm to the US clean energy sectors; Texas alone could lose over 120,000 jobs and US$87 billion in activity.
In conclusion, the OBBA is the single most landmark decision of President Trump that is viewed differently by his followers and opponents. While the followers feel that the bill fulfils the aspirations of the middle class with tax relief, America will have a secure border, a stronger military, and leaner and fairer government, all in One Big, Beautiful Bill. On the contrary, his opponent sees it as a deficit-ballooning giveaway that slashes social safety nets. They feel that Trump wants to cement his economic and security agenda in a single, fast-track package before the 2026 midterm elections that will play a pivotal role in determining the political landscape of the country for the second half of the presidential term. The midterm elections are critical for shaping the makeup of the House of Representatives, the Senate, and numerous state and local offices in the US. Let us wait and see the impact of Trump’s OBBA.
