Trump's Big Beautiful Bill: A Financial Burden for American Families
Trump's Ambitious Bill Passes in Senate
On July 4, President Donald Trump's ambitious legislation, dubbed the Big Beautiful Bill, successfully passed in the Senate. The implementation of this bill is projected to cost approximately $3.4 trillion, which is expected to increase the fiscal deficit of the United States. While Trump praises the bill, it faces significant opposition within the country. Economists are expressing concerns that if not curtailed, it could lead to severe challenges for American families and the global economic system.
Debt Burden on American Families
Currently, the average debt burden on American families stands at around $230,000. By 2025, the national debt is anticipated to equal nearly 100% of the country's GDP, which is about six times greater than the government's annual revenue. Consequently, prominent investors have labeled Trump's Big Beautiful Bill as a Big Burden.
Warnings from Notable Investors
Ray Dalio, the founder of Bridgewater Associates, has issued a serious warning regarding the new budget bill. He stated that if the current budget framework continues, the U.S. will not only face an economic crisis but will also impact the global economy. Dalio estimates that the U.S. will spend around $7 trillion annually while generating only about $5 trillion in revenue, leading to an annual deficit of $2 trillion. This deficit will significantly escalate the national debt in the future.
Projected Debt Per Family
At present, the national debt is six times the total government revenue and equals 100% of the GDP, translating to an average of $230,000 (approximately ₹1.96 crore) per American family. If conditions do not improve, this debt could rise to 7.5 times the income and 130% of GDP over the next decade, with each family facing a debt of $425,000 (around ₹3.63 crore).
Rising Interest Costs
The costs associated with servicing this growing debt will also increase rapidly. Dalio predicts that in the coming years, this burden could reach $18 trillion, with $2 trillion solely allocated for interest payments.
Government's Limited Options
To address this crisis, the U.S. government has three challenging options: cut government spending, significantly raise taxes, or print more money, which would devalue the dollar and lead to inflation while keeping interest rates artificially low. However, the decision to print more money could be disastrous for bondholders, as it would diminish the value of their investments and severely impact the U.S. Treasury market.
Global Implications
Dalio warns that if the U.S. Treasury market, which is the backbone of the global financial system, weakens, the repercussions will not be confined to the U.S. The entire global economy and social structure will be affected, with countries like India also feeling the impact.
Proposed Solutions
Dalio has advised the U.S. government to immediately reduce its budget deficit from 7% of GDP to 3%. Achieving this requires spending cuts, tax reforms, and balanced financial policies. Failing to do so could lead to a deeper and more painful crisis.