At face value, United States President Donald Trump’s 900-page US$3.4 trillion tax-and-spending package - aka the Big Beautiful Bill Act - which narrowly passed the U.S. House in a 218-214 vote last week - with all but two Republicans supporting it - appears to be serially unpopular.
Given that less than a third (30%) of voters supported the Act in recent polls, Azzet went in search of clues as to why it's on-the-nose with middle-America, here’s what we found.
Unfinished business
After the House narrowly passed the bill last Thursday, Trump told reporters he believed he had “more power” now than in his first term.
Firstly, it’s important to note that the Act represents unfinished business that Trump embarked on during his first term in office.
However as well as adding to the 2017 Tax Cuts and Jobs Act, the latest Act proposes to boost border security, while simultaneously cutting social safety-net spending.
After running a ruler over the proposed changes, there’s a prevailing view among economists that the near-term economic benefit is slight.
They’re predicting gross domestic product (GDP) growth by 2027 of between 1-1.2% over the alternative of simply letting the 2017 tax cuts expire on December 31, 2025 as originally planned.
While 1.2% GDP growth isn’t to be sneezed at, the same economists foresee a gnarly downside including the likelihood of a potential 0.3% smaller economy by 2034.
While a number of temporary [tax] deductions are aimed at boosting disposable income, economists also fear that the main recipients of the deductions will end up worse off when they’re finally turned off.
For example, planned reductions in Medicaid (see below) and food stamp programs effective in 2027, could potentially disqualify millions from benefits.
What economists especially dislike are the longer-term risks resulting from trillion-dollar deficits, with massive debt eclipsing private investment.
Devil’s in the detail
Not unlike 2017, when a third of Trump's total Tax Cuts and Jobs Act went to households with an income of US$460,000 or more, tax cuts this time around also favour the well off.
For example, the top 1% (roughly 2.4 million people) will receive average tax cuts of about US$61,090 by 2025 – higher than any other income group.
By contrast, the middle 60% of earners (78 million people) saw cuts in the range of US$380 to US$1,800.
This time around the privileged few within high-tax states like California or New York will end up receiving some relief through the raising of the state-and-local-tax (SALT) deduction cap from US$10,000 to US$40,000 on incomes under US$500,000 at a cost of US$142 billion.
However, these benefits will be short-lived with the deduction cap reverting to US$10,000 in 2030.
Then there are new tax deductions of up to US$6,000 from 2025 to 2028 for individuals over age 65 earning US$75,000 or less (US$150,000 for married couples), phased out at US$175,000 or US$250,000, respectively.
While the White House expects these measures to drive growth - and expects GDP to be 4.6% cent to 4.9% higher in four years - independent economists aren’t so confident given that the deductions expire after 2028, and risk being offset by spending reductions, like planned cuts to Medicaid.
As of 31 December 2026, Medicaid will impose work requirements of 80 hours per month for able-bodied adults (excluding caregivers of children under 14) while more frequent eligibility checks could potentially disqualify millions from benefits by 2027.
Other key measures included with the Big Beautiful Act
- Tougher times for U.S students: After 1 July, next year, income-contingent repayment plans will be replaced by a standard plan, while also potentially limiting access to higher education.
- Reality check for Electric Vehicle (EV) buyers: The US$7,500 new EV tax credit and $4,000 used EV credit end on September 30, 2025, while the home charging station credit ends on June 30, 2026.
- Tips go under the radar: Workers receiving tips in qualifying professions (to be listed by the Treasury within 90 days) can deduct up to US$25,000 of tips from federal income taxes (not state or payroll taxes) from 2025 to 2028, phasing out above US$150,000 in income.
While this deduction offers immediate relief for service workers and contributes to a near-term GDP boost, these measures are strictly temporary.
When coupled with the full effect of Trump’s tariffs – which threaten to disrupt business investment - economists are fearful that the unwinding of this tax relief for service workers in 2028, could potentially reduce GDP.
Based on Goldman Sachs’ numbers, Trump’s tariffs could reduce U.S. GDP by about 1% in Q1 2026, they also fear that service workers could end up worse off if deficits drive up interest rates.
- Overtime workers: Those earning US$150,000 or less can deduct up to US$12,500 (or US$25,000 for married couples) from federal income taxes from 2025 to 2028 and is expected to boost the income of blue-collar and middle-income earners.
- Business incentives: Allow for the full expensing of business investments, encouraging capital spending in the near term.
- Increased spending: Boosts to defence and border security spending are also expected to stimulate economic activity in 2026.
- Estate tax exemption: Will rise to US$15 million for individuals and US$30 million for married couples.
Muted economic impact
In summary, economists suspect the net economic impact of the Trump Big Beautiful Act could end up being muted due to numerous counteracting forces.
Firstly, by frontloading tax cuts and backloading spending cuts, there’s a potential shift from short-term stimulus to potential fiscal contraction.
Secondly, the bill could add US$4.1 trillion to deficits through to 2034, or US$5.5 trillion if these provisions are made permanent.
The net effect could potentially push U.S. debt to 127% of GDP, raising interest rates and crowding out private investment, which could end up stunting growth.
By 2034 the Penn Wharton Budget Model estimates the economy could be 0.3% smaller due to higher debt.
Over 30 years, GDP could be 4.6% lower, with wages down 3.5%.
According to the Congressional Budget Office (CBO), Trump’s Big Beautiful Act would leave an additional 17 million – of the 71 million people dependent on Medicaid - without health cover in the next decade.
Meantime, while around 40 million Americans currently receive benefits through the Supplemental Nutrition Assistance Program (SNAP) also known as food stamps, the CBO calculates that 4.7 million will lose out over the 2025-2034 period, due to program reductions.
Equity investors should watch for tariff impacts on consumer goods and import-reliant sectors.
While sectors like defence, construction, and border security-related industries may benefit from increased spending, over the longer term, rising deficits and interest rates could pressure valuations, especially for growth stocks sensitive to borrowing costs.
