Yesterday, the House passed the senate version of the One Big Beautiful Bill Act (OBBBA). The Senate version broadly follows the same lines we’ve described before, but is even bigger. Rather than the initial estimate of $3.3 trillion added to federal debt over the next ten years, the bill now adds about $4.1 trillion to debt as written, $5.5 trillion if made permanent. The latter is a likely outcome, as the OBBBA is itself a law to make the 2017 TCJA tax cuts permanent. That is important, because it means that large parts of this bill should not be viewed as much as fiscal stimulus, but rather a lack of fiscal contraction, providing no further boost to the current economy. Half a trillion of the increase in the Senate version comes from reviving the TCJA business provisions, such as 100% bonus depreciation for equipment and domestic R&E expensing, which were already being phased out since 2022.
