US President Trump Signs Contentious Tax and Spending Bill into Law
US President Donald Trump has signed a major tax-cut and spending bill into law. Described by the president as "big, beautiful," the legislation has drawn fierce criticism for its potential economic impact. Opponents, including former ally Elon Musk, argue the bill will dangerously expand the national deficit from $2 trillion to $2.5 trillion. The signing of the bill has created a significant political rift, prompting Musk to launch a new political party in protest of the fiscal policy.
Unpacked:
The bill includes significant tax reductions, especially for high-income earners, and increases federal spending, particularly on defense and immigration. It is projected to add roughly $3.8 to $4 trillion to the federal deficit over the next decade, while raising some revenue through tariffs and implementing some spending cuts. However, it is widely seen as favoring the ultra-wealthy, with those earning less potentially facing tax increases in the future.
Elon Musk opposes the bill due to its projected expansion of the national deficit and perceived favoritism toward wealthy individuals. By launching a new political party, Musk likely seeks to promote fiscal responsibility, deficit reduction, and policies more favorable to middle- and lower-income Americans, contrasting with the current bill's priorities.
Starting in 2029, Americans making $30,000 or less are projected to face tax increases, while the wealthiest 0.1 percent would benefit significantly. This shift could worsen income inequality and reduce disposable income for lower earners, increasing criticism of the bill's fairness and long-term social impact.
Expanding the national deficit by $3.8 to $4 trillion could lead to higher government borrowing costs, potential cuts to public services, and increased risk of inflation. While proponents argue the bill could boost GDP slightly, most analyses warn that long-term fiscal health may be jeopardized, with negative consequences for economic stability.