The OBBBA: The Great, The Good, and The Disappointing

 As of the time that I am writing this the House appears set to approve the final provisions of the One Big Beautiful Bill Act. President Donald Trump appears set to secure his landmark legislative achievement 164 days since the commencement of his second term. There is no doubt that this piece of legislation will be the centerpiece of his presidency, likely surpassing the Tax Cuts and Jobs Act in his future presidential biographies.

Although I have not been shy in recent days critiquing specific provisions of the bill, I do wholeheartedly believe that on net, the OBBBA will be a positive step for the United States of America and should be applauded.

However, in a 940-page bill, in a Congress with the narrowest of majorities, from a Republican Party that has become a broad coalition of anti-leftist, oftentimes contradicting, interests, that there will be provisions that pass that aren’t ideal. Nevertheless, let’s breakdown the One Big Beautiful Bill Act with the great, the good, and the disappointing.

The Great

The foremost provision of the OBBBA is that it makes the individual provisions of the Tax Cuts and Jobs Act permanent. This is desperately needed as the expiration of these provisions would dramatically increase the effective income tax on millions of American families. A family of four earning $80,000 per year would owe $1,510 in taxes under the TCJA (no additional OBBBA changes), but $3,095 if they expired (105% increase). This is due to three substantive changes that the TCJA made. First, it increased the standard deduction from $16,700 (if they expire) to $30,000 (for 2025). Secondly, it lowered the marginal rate that the vast majority of Americans pay from 15% to 12%. Finally, it doubled the Child Tax Credit from $1,000 to $2,000.

Another core provision of the TCJA that will be made permanent is the new Section 199 Qualified Business Income deduction. This deduction allows pass-through entities, including sole proprietors, partnerships, and independent contractors (small business entities) to deduct 20% of their pass-through income. This provides tremendous relief to entrepreneurs to help them reinvest in their businesses. For example, a pass-through entrepreneur who earns $200,000 in earnings can deduct $40,000 from his or her taxable income, saving them about $8,800 in income taxes.

The One Big Beautiful Bill Act extends many of these core provisions. The Child Tax Credit is increased permanently to $2,200 and indexed to inflation. Assuming a 2% annual inflation rate, this will save parents approximately $4,089.39 in taxes over the next decade per child, or $9,006.43 per year, per child, from newborn to the child’s seventeenth birthday.

The bill also effectively eliminates taxation on the vast majority of social security beneficiaries. While it doesn’t do this directly or explicitly, it achieves the President’s goal through a new above-the-line senior deduction of $6,000. The average social security monthly check in May 2025 was $2,002.39, or $24,028.68 per year. Most Americans have 85% of their Social Security subject to federal income taxes, or based on the estimate above, $20,424.38. The current standard deduction within the OBBBA will be $15,750.00 in 2026, so including the new $6,000.00 senior deduction, the entire social security earning will be eliminated from taxable income consideration. Only seniors with social security payments in excess of $2,132.35 per month will have any of their check effectively taxed.

A personal favorite of mine from the bill is the new TRUMP Accounts for newborns. Americans will be able to establish non-qualified investment accounts for children and contribute up to $5,000 per year. Children born between January 1, 2025, and December 31, 2028, will be eligible for a federal seed contribution of $1,000. The accounts must be invested in American indexed funds. Beginning at age 18, children can withdraw up to 50% for qualified expenses like education, first-time homebuying, or business start-up costs. At age 25, the child can fully access 100% of the funds at long-term capital gains rates.

Why is this such an exciting opportunity for young Americans? Because it puts time behind, rather than against, young people. A child born this year, who receives the $1,000 federal contribution, who has parents who fully take advantage of the annual contribution limit, and who invests in the S&P 500 Index, which has an inflation adjusted compound annual growth rate of 6.47%, will have $315,579 in today’s dollars when they turn 25. The capital gains (about $190,579 adjusting for inflation) would be subject to the 15% long-term capital gains tax, but that still yields an after-tax gain of $161,992.15. Moreover, these young adults could bypass these capital gains taxes, particularly if they are married, if they make smaller distributions over the five-year window to take advantage of the 0% capital gains tax bracket.

Think about how $315,579, in today’s dollars, would fundamentally change a young person’s life. They could outright purchase a home without a mortgage, saving them 20-40% of their monthly income for other financial goals. If they shifted it from the TRUMP accounts to a standard non-qualified vehicle and kept it invested in the market over the course of their careers, then by age 65 they would have $4,169,107 in today’s dollars. This would solidify retirement plans, combat wealth inequality, build generational wealth, and reduce lifetime stress and anxiety for young individuals facing the difficulties of systemically planned inflation.

The TRUMP accounts could be a blueprint for solving many of our budgetary woes, from Social Security, to Medicare, to offering a new strategy in our ongoing War on Poverty.

The OBBBA also makes key adjustments to the corporate income tax that are more aligned with promoting economic growth and less about contributing to stock buy-backs. These include restoring the TCJA’s provisions allowing corporations to deduct the cost of research and depreciation and permitting 100% bonus depreciation in the initial year for capital expenditures. The Tax Foundation, estimates that making these provisions permanent will drive up long-run GDP by an additional 1.2%.

The final great provisions of the One Big Beautiful Bill are on the spending side of the equation. This bill invests nearly $150 billion in border security projects, including completing President Trump’s border wall, expanding the budgets of ICE and the U.S. CBP, and greatly increasing the daily detention capacity to 100,000 occupants. These provisions will help enshrine the Administration premier accomplishment of its first 100 days, which was the dramatic reduction in border crossings, and increase the ongoing removal of criminal illegal aliens.

The bill also invests approximately $150 billion in the Department of Defense for new technologies, like the President’s “Golden Dome” and hypersonic missiles. If the President’s missile defense system proposal becomes a reality as it is currently conceived, it will completely shift the global balance of power in America’s favor. The very notion of deterrence will be fundamentally altered, not only strengthening our capacity to protect our public, but unilaterally bolstering our soft power abroad. Finally, the bill expands the budget for naval shipbuilding, which will help strengthen our position in the South and East China Seas, providing a stricter deterrence against Chinese aggression, particularly relating to Taiwan.

The Good

The One Big Beautiful Bill makes several cost-saving measures aimed at offsetting the additional new provisions of the bill. These include landmark welfare reform, that honestly is three decades overdue. In the spirit of the 1996 bipartisan welfare reform, the OBBBA establishes work requirements for Medicaid and SNAP. For abled-bodied adults under sixty-five that have no dependents, or those that have high-school aged children, they will be required to complete eighty hours of work, volunteer assignments, or education, to remain eligible for the public assistance. This is frankly just common sense. Welfare was never intended to be a permanent state, but rather a transitory step towards financial independence. The fastest way to escape poverty is to work. This bill, like its 1996 predecessor, restructures our means-tested programs to trigger that evolution.

The reason this reform doesn’t rank as “great” is that certain steps were excluded, and certain provisions passed by the House were watered down. First, unlike the 1996 welfare reform, this bill does not include lifetime eligibility limitations. When the Aid to Families with Dependent Children program was restructured as the Temporary Aid to Needy Families, beneficiaries were given a sixty-month lifetime eligibility limit. This incentivized the beneficiary to prioritize their economic mobility with the taxpayer’s incentive to get them out of poverty and become a financially independent member of society.

Secondly, the Senate softened the restrictions on those with children. The House provision applied the work requirement to any parent who has dependent children over seven years old, or basic elementary school age. It is irrelevant whether a child is in elementary school or high school, they are still in a school for a full daily schedule. The parent could still easily fit eighty hours a month for education, employment, or volunteering.

Finally, the bill does establish citizenship requirements for SNAP, while the Medicaid and Affordable Care Act provisions were struck. It should be common sense that only members of the body politic should be part of the public safety net.

The bill also begins to shift the cost of our anti-poverty programs from Washington to the various states. It does this by restricting the provider taxes that states can set, requiring States with high error rates for food stamps to pick up a portion of the tab, and requiring that States that offer Medicaid to illegal aliens pay a greater percentage of the cost. This is directly in line with the Tenth Amendment. We have a federal system of government. The States should have a broader role in financing public initiatives.

The reason these provisions are only “good” rather than “great” is because, again, the Senate watered down much of what the House put forward. Originally, the House required that high error rates for SNAP would dictate a 25% cost sharing by States, the Senate lowered that to 15%. Furthermore, the bill did not shift the standard Federal-State Medicaid cost sharing to the Obamacare extension for those who earn up to 138% of the poverty threshold. States that choose to expand their Medicaid should be paying a standard per capita cost as those who chose not follow suit.

Finally, even though I have routinely criticized the political gimmicks of “No Tax on Tips”, “No Tax on Overtime”, and the deduction for interest payments on auto loans for American made vehicles, they were central promises of the Trump campaign. The fact that they were incorporated into this bill is a positive development. We should applaud when candidates actually fulfill promises to their constituents, even if we disagree with the underlying policy. It is rare that politicians actually keep promises in the first place.

The Disappointing

The biggest disappointment of the bill is that it doesn’t go further on combatting the deficit. The bill does reduce the deficit when you consider that the TCJA were always going to be made permanent. Baseline budgeting is a ridiculous notion predicated on a false belief that economists can accurately predict the future. If you were to look at the actual receipts and expenses that the federal government incurs in any given year, and then go back in the past and look at the ten-year forecast by the Congressional Budget Office, the CBO is almost always wildly wrong.

For example, in its Budget Outlook, 2014 – 2024, published in February 2014, after President Obama and House Republicans brokered a budget agreement which allowed the Bush tax cuts for the top marginal tax bracket to expire (driving the marginal rate from 35% to 39.6%), the CBO forecasted that total federal revenue would be $3.631 trillion in 2017. However, actual revenue ended up being only $3.316 trillion, or $315 billion off.

The reality is that the new tax and spending provisions are less than the proposed cost-saving measures. This bill does reduce the deficit, in reality, over the next ten years. However, it doesn’t go far enough to combat our exploding debt crisis. In fairness, the American people do not have the stomach to confront our budget crisis. We cannot blame Congress or the President if the American people are not willing to do what is necessary to put the United States on a sustainable path. Unfortunately, more could have been done around the edges to at least temper that trajectory.

Overall, while the One Big Beautiful Bill Act is not perfect, as nothing from Washington will ever be, it is a positive collection of policies that will benefit the average American and strengthen the United States moving forward.