The U.S. Capitol Building in Washington, DC
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President Donald Trump’s “Big and Beautiful Act” (or formally, it’s a Beautiful Act (OBBBA)) is a controversial legislation, but some banks favor it, saying it’s the arm that the economy needs.
It’s in a Narrow 51-49 votes Late Saturday, in the U.S. Senate, large spending measures were moved near the president’s desk.
The bill is characterized by tax reform and targeted incentives, Predicted to increase federal deficittriggering warnings from credit institutions and Make a criticism.
But some banks say they believe the bill can boost the U.S. economy.
No doubt good’
In a letter posted on Sunday American Bankers Association It “strongly supports” many of the provisions they offer of “especially needed tax breaks.”
“I think OBBB is almost beneficial to the U.S. economy in the coming years,” said David Seif, chief economist at Nomura’s chief developed countries.
The Tax Cuts and Employment Act passed in 2017 includes lower income tax rates, higher child tax credits, and generous deductions from businesses. Without Congress action, many of the bill’s provisions will expire by the end of 2025 – an analyst may narrow down household consumption and business investment, a shift analyst said. They say the short-term appeal of the Big Beautiful Act is its ability to avoid a sharp contraction in 2026.
“The most important thing OBBB does in the next few years is renewing most of the expired tax provisions to prevent significant and sudden fiscal contractions,” Seff told CNBC. He added: “The OBBB’s provisions allow faster business spending capital investments to increase investments in the coming years, although at the expense of the next few years.”
Citi strategists also said in a note issued last Wednesday that the passage of the bill would be a headwind for the economy. “In the short term, the passage of trade agreements (UK, China, eventually Japan, India, Europe, etc.) and the passage of large-scale beauty bills in July (net stimulus) should improve growth sentiment,” they wrote.
Citi also expects the Fed to relax its monetary policy and strengthen growth sentiment, saying: “Since the BBB Delta is largely funded by tariff revenue, we did not see a bond alert moment during 2025/2026.”
shortcoming
However, others have marked serious shortcomings.
Debt load is a central issue for many critics. Non-Party Congressional Budget Office Project BBB will increase at least $3 trillion Over the next decade, the federal deficit.
Although Morgan Stanley noted in early June The bill’s tax provisions for promoting growth could benefit businesses and individuals, as well as key equity, such as communications services, industry and energy, which could raise concerns about fiscal sustainability.
Similarly, Erica York, vice president of federal tax policy at the Tax Foundation’s Federal Tax Policy Center, said: “This is financially irresponsible, and even considering growth, the budget deficit and debt have increased significantly.”
York said many of the tax cuts were complex and poorly designed, and some types of workers were cut and excluded.
Most importantly, since the bill includes many tailored tax rules, internal tax services will require more time and resources to update forms, guidance and enforcement tools, increasing the administrative burden of an already stretched agency.
