Historic Wealth-Boosting Act: Proposed Law for Unprecedented Wealth and Debt Lowering
The One Big Beautiful Bill (OBBB) Act, passed by the House of Representatives on May 22, 2025, is projected to have significant long-term economic and fiscal impacts over a ten-year budget window.
Job Creation and GDP Growth: According to the Congressional Budget Office (CBO), the bill is expected to create around 938,000 full-time equivalent jobs nationally, with variations across states (e.g., about 132,000 jobs in California and 81,000 in Texas) [1]. This job creation is primarily attributed to the bill's middle-class tax cuts, such as no tax on tips, overtime, and Social Security, along with expanded child tax credits and incentives for small businesses.
However, these benefits are not evenly distributed across sectors and income groups. Some sectors, like fossil fuels and defense, may experience short-term growth, while clean energy, healthcare, and consumer sectors could face setbacks due to the bill's aggressive tariff and subsidy rollbacks, potentially leading to sectoral shocks and trade turbulence [2].
Fiscal Impact and Deficit: The OBBB is estimated to increase federal deficits by approximately $3.4 trillion over the next decade [3]. This increase is primarily due to a net tax revenue reduction of around $4.5 trillion, primarily from extending the 2017 Tax Cuts and Jobs Act provisions and adding new tax cuts [3][5]. Despite significant spending cuts, mainly focused on Medicaid, SNAP, and student loans, the long-term impact is a significant addition to the national debt, raising concerns among economists and analysts about fiscal stability and the long-term economic risks [2].
Distributional Effects: The economic gains are unevenly distributed: while middle-class taxpayers are projected to receive average federal tax cuts of around $3,752, lower-income households (bottom 10%) are expected to experience a 7% average reduction in after-tax-and-transfer incomes, whereas the top 10% see a 1.5% income increase, underscoring regressive benefits overall [1][4].
Summary Table of Long-Term Impacts (10-Year Window):
| Impact Area | Estimate / Effect | Notes | |--------------------------|--------------------------------------------------------|---------------------------------------------------------------------------------------------| | Job Creation | ~938,000 full-time equivalent jobs | Mainly from middle-class tax cuts, varies by state | | Federal Deficit Increase | +$3.4 trillion | Driven by $4.5 trillion in net tax cuts, partially offset by $1.4 trillion in spending cuts | | GDP Growth | Implied improvement from tax cuts and investment | Sector-specific disruptions and trade tensions may reduce net benefits | | Income Distribution | Bottom 10%: ~7% income reduction; Top 10%: +1.5% income | Benefits regressive, middle class gains moderate tax relief |
In summary, the OBBB Act delivers substantial job creation and middle-class tax relief leading to some economic growth but does so at the cost of significantly increased federal deficits and uneven income effects, raising concerns about fiscal sustainability and broader economic resilience over the decade following its implementation [1][2][3][4][5]. The paper also looks at the permanent extension and enhancement of Opportunity Zones (OZ) incentives in distressed areas.
[1] Congressional Budget Office (CBO) - OBBB Economic and Budgetary Analysis [2] Joint Committee on Taxation (JCT) - OBBB Analysis [3] White House Council of Economic Advisers (CEA) - OBBB Economic Impact Analysis [4] Tax Policy Center - OBBB Distribution Analysis [5] Internal Revenue Service (IRS) - OBBB Tax Provisions Summary
- The passage of The One Big Beautiful Bill (OBBB) Act in May 2025 is projected to have a significant impact on businesses and finance, with expected job creation of around 938,000 full-time equivalent jobs across various sectors.
- The bill is anticipated to result in a considerable increase in federal deficits by approximately $3.4 trillion over a ten-year budget window, primarily due to a net tax revenue reduction.
- The economic benefits and tax cuts provided by the OBBB Act are not evenly distributed, with middle-class taxpayers receiving moderate tax relief while lower-income households could experience a 7% average reduction in after-tax-and-transfer incomes, underscoring a regressive distribution of benefits.
