OBBB

 

The One Big Beautiful Bill (OBBB)

Subject: Review of the "One Big Beautiful Bill's Impact" and related sources, outlining main themes, key ideas, and significant facts.

Summary

The "One Big Beautiful Bill" (OBBB), signed into law by President Donald Trump on July 4, 2025, is a sweeping piece of legislation encompassing significant changes to tax policy, social security programs, and clean energy incentives. While proponents, primarily Republicans, argue it will unleash "massive economic growth" and curb "waste, fraud and abuse," Opposing Democrats contend it disproportionately benefits the wealthy at the expense of healthcare, food security, and environmental initiatives. The bill has also sparked debate regarding its impact on national debt, and introduced a new excise tax on foreign remittances, particularly impacting the Indian diaspora in the U.S.

Main Themes and Key Impacts

1. Tax Policy Changes and Economic Growth Claims

• Permanent Tax Cuts: The OBBB makes permanent President Trump’s 2017 tax cuts across various income brackets, including a reduction for the highest income bracket from 39.6% to 37%. This "would translate to lowered tax liability" for all earners, with higher earners benefiting significantly as their liability across all brackets is reduced.
• Targeted Benefits for Working Class: The legislation enhances the standard deduction ($1,000 for individuals, $1,500 for heads of households, $2,000 for married couples) until 2028. Additionally, it allows individual taxpayers to forgo up to $25,000 in tips and $12,500 in overtime pay, provided income does not exceed $150,000. These provisions are "suggested to particularly benefit the working class."
• Concerns about Debt and Income Inequality: The Yale School of Management estimates the bill will "add $3 trillion in debt between 2025 and 2034," approximately 0.84% of the GDP." Furthermore, their analysis predicts the "lowest quartile’s income would decrease by 2.5% in contrast to the higher quartile witnessing a 2.4% growth." This highlights concerns about widening income disparity and increasing national debt.

2. Social Security Program Alterations (Medicaid & SNAP)

• Stricter Medicaid Eligibility: The OBBB introduces an "eighty-hour work requirement to be eligible for the programme," and mandates re-enrolments every six months instead of annually. The White House claims this will "strengthen Medicaid for those who rely on it" and "eliminate 'waste, fraud and abuse'."
• Contradictory Evidence on Work Requirements: A 2023 KFF study found that "64% of adults below 65 years enrolled in Medicaid were either working full or part-time," and 8% were retired or unable to find work, with others not working due to caregiving, illness, disability, or school. This suggests the work requirement would disproportionately affect individuals already facing barriers to employment. The CBO estimates this amendment "would leave 11.8 million people without insurance in 2034."
• SNAP Funding Conditionalities: The bill links continued federal support to states for the Supplemental Nutrition Assistance Program (SNAP) to "error rates... being below 6%." States exceeding this threshold would have to "bear 5-15% of their costs." The Center for Budget and Policy Priorities notes that most errors are "unintentional mistakes by state agencies or families" and that "error rates fluctuate, sometimes significantly, from year to year." This raises fears of reduced spending and support for low-income families.

3. Clean Energy Disincentives

• Reduction in Tax Credits: The OBBB significantly reduces access to the former President Joe Biden era's 30% tax credit for wind and solar projects, requiring projects to be operational before 2028 to qualify.
• Industry Warnings: Lena Moffitt of Evergreen Action believes the legislation could lead to the "collapse of planned clean energy projects." Abigail Ross Hopper of SEIA adds, "Now many of the brand-new factories will be forced to shut down and lay off thousands of workers, gutting communities that were finally seeing the kind of industrial revival rural America needs and handing an untimely and strategic victory to China."
• White House Justification: The White House refutes these claims, stating the legislation "unleashes American energy, refills the Strategic Petroleum Reserve, and repeals the Green New Scam policies" to lower the cost of living.
• End of EV Tax Breaks: The bill also ends taxpayer breaks of up to $7,500 on clean energy vehicles, a point of disagreement between President Trump and Tesla CEO Elon Musk.

4. Debt Ceiling and Political Fallout

• Increased Borrowing Limit: The OBBB seeks to increase the government’s borrowing limit by another $5 trillion from its projected $36.1 trillion. The CBO estimates this would "increase deficits by $3.4 trillion between 2025 and 2034."
• Elon Musk's Opposition: Elon Musk has publicly criticized the rising debt ceiling, questioning, "What’s the point of a debt ceiling if we keep raising it?" He has even threatened to form a new "America Party" if the bill passed, advocating to not "bankrupt America."
• Trump's Retort to Musk: President Trump attributed Musk's opposition primarily to the termination of EV mandates, stating, "Elon would probably have to close up shop and head back home to South Africa." He also suggested an investigation into Musk by his Dept of Government Efficiency.

5. Impact on Foreign Remittances, Particularly India

• 1% Excise Tax on Remittances: The final version of the OBBB introduces a "1% excise tax on all remittance transfers." This rate was reduced from an initial 5% and then 3.5%.
• Significance for India: The U.S. accounted for "27.7% in 2023-24" of overall remittances to India. Indian migrants in the U.S., primarily in white-collar jobs, are noted for their "higher remittances notwithstanding the smaller diaspora."
• Expert Analysis: Ajay Srivastava of the Global Trade Research Initiative believes the 1% rate might be seen as an "inevitable tax." However, he views the tax as "morally reprehensible" because "Indian diaspora pay all taxes like U.S. citizens pay." He also suggests the U.S. is "trying to scrap the last dollar from everywhere it can... to make a small dent in their deficit, debt."