The 'Big Beautiful Bill' And The High Cost Of Short-Sighted Fiscal Policy

Forbes

3 days ago

The Real Waste: Undermining Programs That Work, The Long-Term Costs of Short-Term Budgeting
The recent passage of the 'Big Beautiful Bill' has been heralded by its supporters as a triumph for economic growth and a step toward a more efficient government. Yet, a closer look at the numbers and the structure of the legislation reveals a far more troubling reality: the bill's combination of deep cuts to the social safety net and permanent tax reductions for the wealthy is poised to add trillions to the deficit, exacerbate racial and economic disparities and ultimately undermine the very efficiency its backers claim to champion.
WASHINGTON, DC - JULY 01: Storm clouds hover over the U.S. Capitol shortly after the Senate passed ... More its version of the One, Big, Beautiful Bill Act on July 01, 2025 in Washington, DC. Republicans in the House of Representatives began their work on the legislation less than two hours after the Senate passed its version. (Photo by)
First, consider the bill's fiscal impact. According to the Congressional Budget Office (CBO), the legislation is projected to increase the federal deficit by $3.3 trillion over the next ten years, primarily due to the extension and expansion of tax cuts originally enacted in 2017. This is a staggering figure, especially at a time when the U.S. already faces mounting interest payments and long-term fiscal challenges. While some argue that tax cuts can, under certain conditions, spur economic activity and broaden the tax base, the evidence from the past decade suggests that these particular cuts have failed to deliver on its supporters' promises. Research from the Center on Budget and Policy Priorities indicates that GDP growth stalled, while consumer spending, housing investment, and business investment all slowed. The only thing that did grow? Government spending.The current bill's architects have argued that the spending reductions — chiefly, cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) — will offset the cost of the tax cuts and streamline government. In practice, however, these cuts are not only insufficient to balance the budgetary scales, but they also threaten to impose significant downstream costs on society. Nearly 17 million Americans could lose Medicaid coverage under the bill and the coming changes to the Affordable Care Act, and several million could lose access to SNAP. These programs are not mere handouts; they are essential investments in public health and human capital. Medicaid, for example, covers nearly half of all births in the United States and provides critical preventative care for low-income children, seniors, and people with disabilities. SNAP, meanwhile, is widely recognized as one of the most effective anti-poverty programs, reducing food insecurity and improving long-term outcomes for children.Cutting these programs is penny-wise and pound-foolish. Research from the Urban Institute found that states that expanded Medicaid under the Affordable Care Act saw significant reductions in uncompensated care costs and improvements in health outcomes, particularly among communities of color. When people lose access to preventative care, they are more likely to delay treatment, develop chronic conditions, and ultimately require more expensive emergency care, costs that are often shifted to hospitals, states, and ultimately, taxpayers. Similarly, reductions in SNAP benefits are associated with higher rates of food insecurity, poorer educational outcomes for children, and greater reliance on costly emergency food programs.The regressive nature of the bill's tax provisions compounds these problems. Analysis by the Yale Budget Lab shows that the bottom 20% of earners would see an average annual income reduction of about $700, or nearly 3% of their income, due to the loss of benefits. By contrast, the top 1% of households would enjoy an average annual tax cut of nearly $30,000, and the top 5% would receive about one-third of the total tax benefits. For the ultra-wealthy, the average tax cut in 2026 is expected to be approximately $300,000. This is not a recipe for broad-based economic growth; it is a transfer of resources from those who need them most to those who need them least.The racial disparities embedded in these changes are particularly troubling. Black Americans, who make up about 14% of the U.S. population, account for 20% of Medicaid enrollees and 27% of SNAP recipients. Latino and Indigenous communities are similarly overrepresented among beneficiaries. Cuts to these programs will disproportionately harm families of color, exacerbating existing gaps in health, education, and economic opportunity.This bill was marketed as a measure to root out waste, fraud, and abuse, but the data suggest that the real waste lies in sacrificing programs with proven long-term benefits for short-term revenue reductions that overwhelmingly favor the wealthy. In response to the bill's passage, the nonpartisan Committee for a Responsible Federal Budget warned that: 'The level of blatant disregard we just witnessed for our nation's fiscal condition and budget process is a failure of responsible governing.' This is not a matter of party over policy, as several House Republicans are also threatening to delay a procedural vote to advance the bill because of concerns over the massive deficit it will create.In the end, the 'Big Beautiful Bill' is a misnomer. Its legacy is instead set to be the creation of a larger deficit, greater inequality, and higher long-term costs for American society. If the goal is a more efficient and effective government, the real path forward lies in preserving—and strengthening—investments in health, nutrition, and opportunities for all Americans, not just the fortunate few.