One Big Beautiful Bill

Context: The US Senate narrowly advanced President Trump’s “One Big Beautiful Bill”, a sweeping tax and spending package estimated to add $3.3 trillion to federal debt.

About One Big Beautiful Bill:

• It is a 940-page legislative packagecombining tax reforms, spending cuts, and policy changes, including:

• Tax Cuts – Extends Trump’s 2017 tax cuts for the wealthy, eliminates taxes on tips/overtime pay, and raises SALT deduction limits. Spending Cuts – Slashes Medicaid and SNAP (food aid) while increasing defence spending ($158B) and border security ($170B). Debt Ceiling Hike – Proposes raising the limit by $5 trillion to prevent a US default.

• Tax Cuts – Extends Trump’s 2017 tax cuts for the wealthy, eliminates taxes on tips/overtime pay, and raises SALT deduction limits.

• Spending Cuts – Slashes Medicaid and SNAP (food aid) while increasing defence spending ($158B) and border security ($170B).

• Debt Ceiling Hike – Proposes raising the limit by $5 trillion to prevent a US default.

• Key Impacts:

• Fiscal Deficit: Could add $3.3 trillion to US debt over a decade (CBO estimate). Social Welfare Cuts: Stricter work requirements for Medicaid and food aid beneficiaries. Political Divide: Faces opposition over tax breaks for the rich and deep spending cuts.

• Fiscal Deficit: Could add $3.3 trillion to US debt over a decade (CBO estimate).

• Social Welfare Cuts: Stricter work requirements for Medicaid and food aid beneficiaries.

• Political Divide: Faces opposition over tax breaks for the rich and deep spending cuts.

Relevance in UPSC Exam Syllabus:

• International Relations (GS-II):

• Global Economic Governance: US fiscal policies influence IMF, World Bank, and trade agreements, affecting developing economies like India. Dollar Hegemony: Debt ceiling crises impact global financial stability and India’s forex reserves due to dollar dependency.

• Global Economic Governance: US fiscal policies influence IMF, World Bank, and trade agreements, affecting developing economies like India.

• Dollar Hegemony: Debt ceiling crises impact global financial stability and India’s forex reserves due to dollar dependency.

• Economics (GS-III):

• Fiscal Policy & Budgeting: US tax cuts vs. deficit spending debate mirrors India’s challenges in balancing growth and fiscal prudence.

• Fiscal Policy & Budgeting: US tax cuts vs. deficit spending debate mirrors India’s challenges in balancing growth and fiscal prudence.