Fiscal Implications of the One Big Beautiful Bill Act
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On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA) aka the Big Brutal Tax Act, one of the most significant fiscal measures in recent years. The law extends many provisions from the 2017 Tax Cuts and Jobs Act (TCJA), which were set to expire at year-end.
Watch Georgia’s video to understand staggering social impact of the bill and the actions we can take to resist.
We also expect to see lower government revenue and higher projected deficits. For investors, a new question becomes what rising debt might mean for the economy and financial markets.
bigger deficits ahead
The Bipartisan Policy Center estimates that OBBBA will add about $3.4 trillion to deficits over the next decade. That figure reflects three changes:
Reduced tax revenue: Roughly $4.5 trillion less, due to extending tax cuts and adding new ones.
Increased spending: About $325 billion more, largely for defense and immigration.
Reduced spending elsewhere: Roughly $1.4 trillion less, mostly through changes to Medicaid, food assistance, and student loans.
When interest payments on this additional debt are included, the projected cost rises to over $4.1 trillion. If temporary provisions are later made permanent, the total could reach $5 trillion.
Debt Projections
Even before OBBBA, U.S. debt was on the rise. In January, the Congressional Budget Office projected that debt held by the public would grow from $29 trillion (98% of GDP) to $52 trillion (118% of GDP) by 2035. Updated forecasts that account for OBBBA now expect debt closer to $53 trillion (120% of GDP) by then.
For perspective, the highest debt level in U.S. history was 106% of GDP during World War II. Current trends suggest the U.S. will exceed that record within the next decade. Some scenarios point to debt reaching 134% of GDP by 2035, depending on tax policy, tariffs, and interest rates.
Why Investors Should Care
Rising government debt can create challenges:
• Higher borrowing costs if investors demand greater returns on U.S. bonds.
• Potential future tax increases to help reduce deficits.
• Less flexibility for the government to respond to economic downturns.
• Reduced investment in long-term priorities like infrastructure or education.
That said, debt does not automatically spell trouble for markets. Other developed nations, such as Japan, have operated with much higher debt-to-GDP ratios for decades without experiencing financial collapse. And research shows there isn’t a clear link between high government debt and weaker stock market returns.
Staying Grounded
The passage of OBBBA will shape fiscal policy for years, but its long-term impact on markets remains uncertain. For investors, the key takeaway is not to react to alarming headlines about deficits or debt levels. Markets tend to adapt to fiscal changes over time, and disciplined strategies usually outperform short-term reactions.
The most effective way to manage this uncertainty is through broad diversification, a long-term perspective, and a financial plan tailored to your goals. Working with an advisor ensures your portfolio remains resilient—regardless of how the debt story unfolds in Washington.
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