Washington: QNB announced that the One Big, Beautiful Bill (OBBB) act could serve as a crucial legislative measure that paves the way for comprehensive tax initiatives, spending programs, and structural reforms that may bear significant long-term economic consequences for the United States. In its weekly report, QNB highlighted that while the bill promises substantial economic enhancement, it also comes with the caveat of accelerating the national debt trajectory and major income distribution shifts.
According to Qatar News Agency, QNB emphasized that the OBBB will be historically regarded as one of the most transformative and impactful undertakings of President Trump's second term. The comprehensive, nearly 900-page bill emerged from months of rigorous negotiations and political strategizing in Congress, ultimately passing by narrow margins-51 to 50 in the Senate and 218 to 214 in the House-before being signed into law by President Trump on July 4, coinciding with US Independence Day.
The report elaborates that the legislation introduces sweeping changes to the US tax code by extending tax cuts for high-income individuals and corporations, while reducing funding for social safety net programs and reprioritizing government spending. These reforms have incited considerable debate concerning their distributive impacts and long-term viability, given the bill's extensive reach and scope, which carry broad macroeconomic implications.
QNB's analysis of the legislation centers on three major aspects. Firstly, the bill is projected to have an expansionary effect on the US economy over the next decade. The Congressional Budget Office (CBO) forecasts that real GDP will rise by an average of 0.5% from 2025 to 2034 in comparison to a scenario without the bill-a notable uplift considering the average annual growth rate in the US over the past 20 years has been 2.2%.
In the immediate term, the economic impact is anticipated to be even greater, with GDP expected to grow by 0.9% in 2026. This initial boost is largely attributed to increased aggregate demand driven by higher disposable income among affluent households and investment-promoting measures. Following 2026, the reduction in tax rates is expected to enhance labor incentives, boosting workforce participation and working hours, thereby further fueling growth. Overall, the bill is poised to provide a significant and positive economic thrust through multiple growth channels.
The second aspect involves the bill's considerable impact on the US federal budget deficit and debt trajectory. The legislation incorporates several provisions that exert pressure on public finances, such as the extension of tax cuts, reduction in corporate tax revenue, and expansion of deductions. Although it also includes some spending reductions, primarily targeting entitlement programs and social safety nets, these cuts are relatively modest.
Consequently, QNB concludes that the substantial increase in US Treasury debt issuance will test the global market's capacity and appetite, predicting a likely rise in interest rates as the increased supply of Treasuries could lead to lower bond prices and higher yields.
The third aspect pertains to income redistribution. Through various channels, the net distributional impact of the OBBB is regressive, benefiting high-income households while diminishing support for low-income ones. Specifically, families in the bottom 20% of the income distribution are anticipated to lose approximately $560 per year, equivalent to roughly 2.3% of their after-tax income. These losses primarily stem from cuts to medical assistance programs and safety nets such as the Supplemental Nutrition Assistance Program (SNAP).
Conversely, higher-income households will experience minimal impact from cuts to welfare and healthcare, but will gain significantly from the continuation of provisions in the Tax Cuts and Jobs Act (TCJA), which includes lower tax rates, and increased deductions and exemptions.