Update 889 – OBBB Policy and Politics:
Bill’s Impact, Polling, Recess Messaging
President Trump signed the One Big “Beautiful” Bill Act (OBBB) into law on July 4, solidifying much of his economic policy agenda for his second term. The massive package, which was passed through the partisan reconciliation process with no Democratic support, includes tax cuts that favor the wealthy and spending cuts to key federal assistance programs like Medicaid and SNAP. With members in state or district during the August recess, messaging takes center stage. Controlling the narrative around the bill could be crucial to success in next year’s midterms.
Democrats have a polling edge but have struggled to gain voters’ trust on economic policy issues in recent years. Republicans, while able to point to some popular tax provisions included in the OBBB, must answer to an electorate increasingly angry over unpopular cuts to federal assistance programs and tax giveaways for the rich. Today, we review components of the OBBB, correct the record on the bill’s fiscal and distributional impact, and examine how each party is dealing with public reaction.
Good weekends, all…
Best,
Dana
On July 4, Trump signed into law the One Big Beautiful Bill Act (OBBB, P.L. 119-21), carrying much of the economic policy agenda for his second term. The OBBB was passed through a partisan reconciliation process, which allows certain legislation to circumvent the 60-vote threshold required to break a Senate filibuster and pass under a simple majority vote. As reconciliation rules obviated the need for the minority’s input or support, the resulting law is partisan and extreme – pairing $1 trillion of cuts to federal assistance, mostly in Medicaid and SNAP, with trillions of dollars in tax cuts skewed towards the ultra wealthy.
Now, both parties face the task of messaging the bill to their bases and, more importantly, to undecided voters who could determine the outcome of next year’s elections. Democrats have polling on their side, but Republicans hold greater trust on economic issues crucial to the messaging of the OBBB. Democratic success in this messaging fight could very well ensure they regain control of the House next year – a crucial lever of power for holding the Trump administration accountable. But to do so, they must take messaging beyond the harms of the OBBB and present an affirmative agenda that presents a better alternative for voters.
What the OBBB Does
Much of this year’s reconciliation battle played out behind closed doors, with constant changes, additions, and subtractions that made it difficult for the general public – or even members of Congress themselves – to gain a full understanding of the OBBB’s contents before final passage. Below, we outline some of the major provisions included in the OBBB. An itemized list of the provisions and their cost can be found here, and we will comment on the specific mechanics of provisions in future updates.
Taxes
The OBBB was largely centered around tax cuts, given that individual and estate provisions of the Tax Cuts and Jobs Act (TCJA) – passed in 2017 during Trump’s first term – were scheduled to expire at the end of this year.
- TCJA Extensions – Through the OBBB, Republicans permanently extended many of the TCJA’s expiring provisions, including individual income tax brackets and rates, a heightened standard deduction paired with limitations on personal expensing, and the 199A deduction for pass-through partnership and small business income. The law also permanently extended and expanded the Child Tax Credit (though it did nothing to address the millions of children left off the credit because their family’s income is too low and introduced red tape for claiming the credit), extended and increased the estate tax exemption, and extended the cap on the State and Local Tax (SALT) deduction with a temporary boost from $10,000 to $40,000 through 2029.
- Trump Campaign Promises – The OBBB also enacted new tax provisions, including Trump’s “no tax on…” proposals. Instead of fully exempting tip income and overtime income as promised, the law offers limited deductions for each that expire after 2028. Trump’s proposal to eliminate taxes on Social Security didn’t make the final cut despite being the most popular of these proposals, but a small boost to the standard deduction and a separate $6,000 deduction for those over age 65 was included. Another Trump proposal, “Trump/MAGA accounts” – investment accounts for children seeded with $1,000 from the government, with annual contribution limits of up to $5,000 from parents and individuals and $2,500 from employers – was also included in the final law, but in much less generous amounts than were originally promised.
- Business Provisions – On the business side, the OBBB permanently reinstates 100 percent bonus depreciation, restores full expensing for research and development costs, and loosens the limit on the business interest deduction, all of which were cut back as “pay fors” by the TCJA. Additionally, the bill allows for the immediate expensing of qualified factory construction and improvement costs for projects that begin before 2029 – a provision separate from bonus depreciation, which generally does not apply to factories.
These tax cuts, and the many more that were included in the OBBB, come at a hefty price tag of just above $5 trillion over 10 years.
Spending
To help pay for the more than $5 trillion in tax cuts, the OBBB enacts significant spending cuts that target federal assistance programs crucial for millions of low- and middle-income Americans:
- Healthcare – The main target of Republicans was Medicaid, where eligibility restrictions, expanded work requirements, and limits on provider taxes are expected to cut the program by almost $1 trillion over the next 10 years. CBO projects that this will lead to almost 8 million Americans losing Medicaid coverage. Additionally, Republicans chose not to extend the Biden Affordable Care Act premium tax credits, set to expire at the end of this year. If they expire, 5.6 million Americans will lose their health insurance, as noted in this Congressional Research Service report.
- Food Assistance – Food assistance was also targeted by the Republicans, who, through the OBBB, cut the Supplemental Nutrition Assistance Program (SNAP) by almost $200 billion over 10 years. According to the CBO, 5 million Americans, mostly children and the elderly, would lose their modest SNAP benefits due to these cuts.
- Other Spending Changes – Beyond Medicaid and SNAP, the OBBB enacted deep cuts to education programs and housing assistance. Additionally, the OBBB secures significant savings by rolling back green energy tax credits passed through the Inflation Reduction Act (IRA) of 2021, but added over $300 billion in spending for immigration enforcement and defense.
Notably, many of the spending reductions are phased in over several years, intensifying in the second half of the 10-year budget window. This was a strategic choice by Republicans, who also front-loaded the benefits of many of the tax cuts outlined above, as staggered and delayed implementation will help obscure the OBBB’s harmful effects.
Together, these spending cuts, paired with massive tax breaks, shift resources away from lower-income Americans and towards the ultra-wealthy, exacerbating economic inequality and worsening our fiscal health.
Fiscal Impact, Distributional Consequences of OBBB
Republicans have made sweeping promises about the OBBB, with Trump claiming after its passage that “our country is going to be a rocket ship, economically.” However, Republicans and the Administration have justified these claims with growth projections from the Council of Economic Advisers (CEA) that are at odds with analyses from the CBO and budget watchdogs on both sides of the aisle:
Source: CRFB
While we are still waiting on final growth projections from the CBO, the consensus view among experts is that the economic growth resulting from the OBBB will be modest at best in the short term, with the high deficit impact crowding out growth over the medium to long term – a direct contradiction to the administration’s claims that the law will drive historic growth and pay for itself that way.
Not only are the administration and Republicans relying on rosy growth assumptions, but they seem determined to bury their heads in the sand on the overall cost of the bill, even going as far as to obscure the cost of TCJA extensions with a current policy budget baseline gimmick during the budget reconciliation process. Independent analyses tell a different story: the CBO projects that the OBBB will add $3.4 trillion to the deficit over the next ten years, increasing to $4.1 trillion when including over $700 billion in added debt-service costs resulting from the additional borrowing.
And what does all this debt secure for Americans in terms of tax cuts? This depends on how much money you make. The benefits of the OBBB’s tax cuts are overwhelmingly skewed towards the wealthiest Americans:
Source: CBPP
The distribution of tax cuts doesn’t tell the whole story. These tax breaks are financed in part by over $1.1 trillion in cuts to Medicaid and SNAP, federal assistance programs that generally serve low-income Americans. CBO projected that the OBBB would cause over 10 million Americans to lose their healthcare coverage and almost 5 million Americans to lose their SNAP benefits, costs that need to be taken into account when discussing the law’s full impact. When all the bill’s provisions are considered – including both tax and spending changes – composite distributional analyses show that net household resources fall for those on the lower end of the income spectrum in both the short- and long-term:
Source: CBO
Source: CBPP
Based on non-partisan projections, the OBBB will add over $4 trillion to the national debt over the next 10 years to pay for tax cuts that overwhelmingly benefit the wealthiest Americans, while funding cuts mean millions face losses in healthcare and food assistance that make the bill a net-negative.
Initial Polling and Reactions
No matter how hard the administration and Republicans try to push fanciful claims that the OBBB will spur massive economic growth/pay for itself, or that it will be a boon for working-class Americans, voters don’t seem to be convinced. In a Wall Street Journal poll conducted last month, 70 percent of respondents said the OBBB will help the wealthy, and more than half “said the legislation would harm poor people, the working class, Social Security beneficiaries, the U.S. economy, Medicaid recipients, nutrition-assistance recipients and the federal budget deficit.” More generally, the poll found that a minority of respondents – 42 percent – support the OBBB while a majority, 52 percent, oppose it, including 52 percent of Democrats, 52 percent of independents, and 12 percent of Republicans.
While Democrats and Republicans seem much more solidified in their opinion of the OBBB, other polling suggests that independents may be more open to persuasion. A slightly older poll conducted by Quinnipiac in June found that 57 percent of independents oppose the OBBB while only 20 percent support it. More notably, the poll found that 23 percent of independent voters were still undecided about the bill, a gap that likely still exists given the short time since the bill’s passage.
On the issues, opposition seems most focused on the OBBB’s healthcare cuts, with voters showing greater concern over potential cuts to local hospitals than issues like work requirements. A KFF poll published in June found that a majority of Republicans, and even self-identified MAGA supporters, opposed the measure after hearing that it cuts funding to local hospitals.
Given that opposition towards the bill tends to grow when the issues, like cuts to local hospitals, are outlined in greater detail, both parties now face the task of “selling” the final product to their constituencies. Gaining ground with undecided voters, especially independents, may be crucial to the results of next year’s midterm elections – a fact that has not been lost on members of both parties.
The (Messaging) Race Is On
With members of Congress back in their home districts and states for the August recess, we’re getting an early look at how each party plans to message the OBBB to win and retain voters ahead of next year’s crucial elections.
At this point, Democrats appear to have an edge in the messaging fight, thanks to the fiscal realities and broad public opposition to the bill. They’re focusing on the tangible consequences like cuts to healthcare and food assistance, and increased inequality driven by giveaways to wealthy taxpayers. They are also linking the spending cuts and tax breaks directly, noting that Republicans have chosen to essentially give funding for federal assistance to the wealthy in the form of lower taxes. A majority of voters don’t support cuts to Medicaid and believe that the wealthiest Americans don’t pay their fair share in taxes, making these arguments effective on their face.
However, Democrats face challenges that may be hard to overcome. For one, Republicans strategically set implementation and expiration dates of the OBBB’s underlying provisions, making the most appealing parts of the bill – like Trump’s “no tax on…” provisions – take effect immediately while the largest cuts to federal assistance are delayed towards the second half of the 10-year budget window. This means that many of the bill’s harms will have to be given hypothetical explanations, while tax cuts will be visible next filing season.
Republicans, meanwhile, have leaned heavily into misinformation, touting the bill’s tax cuts as a boon for working- and middle-class Americans, even as evidence (outlined above) shows some of these voters will actually end up worse off under the reconciliation framework. For example, Republicans have stated that the OBBB ends the taxation of tip income, despite the final product only offering a temporary, $25,000 deduction for tips. They have also stated that rightfully eligible Medicaid and SNAP recipients will be held harmless, while the CBO and numerous independent organizations have found the opposite to be true.
There are early signs that voters are not buying Republican talking points. Earlier this year, Republicans were encouraged to stop holding town halls by the NRCC amid extreme pushback from constituents. The ones who have held in-person events, like Representative Mike Flood (R-NE) did earlier this month, have been met with tenacious questions related to the OBBB’s devastating cuts to healthcare and its tax giveaways to the wealthiest Americans. In response, they have argued that working Americans will not lose their healthcare and that the OBBB includes provisions like “No Tax On Tips” that benefit working Americans, answers that have not been sufficient for swarms of angry constituents in attendance.
Whether or not these simplified, misleading arguments will eventually be effective remains to be seen, but there is already growing frustration within the Republican party that they have not fully capitalized on messaging opportunities related to the OBBB. Vice President JD Vance has been advocating for the bill across the country since its passage, making stops in Ohio, Pennsylvania, and, yesterday, Georgia – key swing states. But similar to issues facing Democrats, many of the bill’s “benefits” will not be felt immediately, leaving voters questioning who to trust amid strong pushback from Democrats.
Ultimately, how these messaging battles unfold over the coming months could shape the political landscape going into the 2026 midterm elections. Winning over undecided and independent voters, who account for a sizable enough share of the electorate to sway next year’s elections, remains the most critical task for both parties.
Democrats Need an Affirmative Economic Agenda
While the actual effects of the Republican mega bill remain to be seen, one thing is clear: The bill is big, but far from beautiful. Following underperformance in the 2024 elections, this extreme and partisan law offers a clear opportunity for Democrats to gain some ground in the midterms. The Senate is likely a long shot for Democrats, but winning back control of the House may be enough to put the brakes on Trump’s extreme agenda.
In order to succeed in the messaging battle, Democrats must not only highlight the harm that the OBBB and broader Republican agenda will do, but also offer an affirmative agenda for working- and middle-class Americans concerned about the rising cost-of-living. As the harms and benefits of the law remain hypothetical, awaiting implementation, winning or losing the messaging fight may very well come down to who the voters trust more on economic issues. For Democrats, who have an extreme deficit of trust on economic issues that defined the results of last year’s election, offering an affirmative agenda for putting money back in Americans’ pockets will be especially crucial.
Millions of lower-income Americans do not have to lose their federal assistance to secure tax cuts for working Americans; the wealthy certainly do not have to take home trillions in tax relief for lower-income groups to benefit. Talking about the harm Republicans have inflicted on voters is an important piece of the puzzle, but showing an alternative path forward could be the missing piece that helps Democrats have success next November and in 2028.