The True Price of Beauty: An Economic Analysis of the Big Beautiful Bill
Illustration by Jina Kim
Behind the Makeup: What is the Big Beautiful Bill?
The bill recently passed through the House of Commons by a single vote and was signed into law on June 4, 2025. The bill adds another piece to the already complicated puzzle of the US President’s economic policy. Donald Trump’s presidential campaign emphasized reducing taxes and making life in the USA more affordable for its citizens. But when looking at the bill through an economic lens, it becomes clear that the changes passed in the bill will add substantially to the national debt for years to come, and the possible short-term increases to employment are heavily outweighed by the long-term impact on the cost of living.
The BBB addresses a wide variety of topics, with changes in a number of different branches of government. However, some changes proposed by the bill will have a significant impact on the future of the American economy, with the goal of working towards the president's view of a great America, specifically:
Implementing additional requirements required to maintain eligibility for Medicaid, the USA’s government-provided health coverage program. Able-bodied Americans must log 80 hours of “Community Engagement” per month in the form of employment, volunteer work, or education.
Increasing the age limit for work requirements to access the government-funded Supplemental Nutrition Assistance program (SNAP) from 55 to 64.
Reducing clean energy tax incentives introduced in Biden's 2022 Inflation Reduction Act. Specifically addressing carbon capture, electric vehicles, and alternative power.
These changes outlined in the BBB will affect the short-term labour market and long-term impacts on the cost of living through energy prices within the USA. \
Who's Paying the Bill?
Trump’s BBB makes several changes to the operation of the US government. The bill, which is now made into law, will increase congressional spending and is estimated to add 10.8 trillion USD to the U.S debt in the next 30 years.
Increasing interest rates
The Budget Lab at Yale University predicts that the BBB’s impact on national debt will increase effective interest rates by 0.6 percentage points in the next 30 years (Figure 1).
Figure 1: Effective Interest Rates on Federal Debt
The increased federal spending authorized by the BBB, when financed through borrowing, raises the national debt and leads to higher interest obligations. This can crowd out private investment by driving up interest rates and increasing competition for capital. Over time, this dynamic may shift a growing fiscal burden onto taxpayers, who ultimately finance interest payments through taxes or reduced public services.
When does the U.S. debt become unsustainable?
In 2023, the Wharton School of Business estimated that with favourable assumptions, the USA could maintain a maximum Debt-GDP ratio of 200 percent. In January of 2025 (before the BBB was introduced), the Congressional Budget Office estimated that by 2055, the USA was expected to have a debt-GDP ratio of 156 percent (Figure 2), well within sustainable levels.
The signing of the BBB will add to the federal debt for many years to come. Yale’s Budget Lab estimates that it will increase the Debt-GDP ratio as follows:
The BBB will add significantly to the USA’s federal debt. Although projections remain within technically sustainable levels, the margin is narrowing, and increased interest burdens may crowd out future spending. Americans will pay the price through higher federal interest rates as the government copes with the new debt load, but the increases are within sustainable levels, suggesting that, barring any major changes impacting debt projections, Trump’s BBB does not warrant any corrective action to manage the government's ledger.
Trump's “Big, Beautiful Bill” will cost Americans, but do the supposed economic benefits warrant the sizable cost?
Making America Work Again: Short Term Impacts on The Labour Market
The BBB makes changes to government assistance programs and tax collection to support Trump’s idea of the American dream. He has publicly stated his vision of an economy where Americans buy products manufactured in America, produced by American companies. This Americentric economic dream raises a structural challenge: the U.S. currently lacks the labour force capacity to meet increased manufacturing demand without immigration support. As the president cracks down on border crossings, the growth of the manufacturing industry will have to be powered by incentivized American citizens.
Immigration in the Workforce
Immigration control has always been a cornerstone of Donald Trump’s platform, and in 2025, it has been a major point of contention. As the president’s crusade against immigration forces out an important part of the labour force, labour-intensive work such as manufacturing is becoming harder to source. A study conducted by Pew Research Center found that undocumented immigrants gravitate to three major industries: services, construction, and production. Immigrants working in these three industries make up 62 percent of undocumented immigrants in the USA, or about 5 million workers.
Meeting New Demand
The president is vocal about his plan to expand American manufacturing. At the World Economic Forum’s annual meeting, Trump addressed a room full of industry leaders, saying, “Come make your product in America and we will give you among the lowest taxes of any nation on Earth”.
Increasing the manufacturing capacity of the USA means building new factories and filling them with workers. Historically, those jobs have been filled by the USA’s immigrant population. However, with Trump’s crackdown on immigration, America’s manufacturing expansion will need to be sourced elsewhere.
The BBB introduced new work requirements for government assistance programs, specifically Medicaid and SNAP. These changes are made to incentivize work for lower-income Americans who rely on government assistance, aligning with the president's push to grow the USA’s manufacturing industry. However, historical studies show that implementing work requirements has minimal impact on overall employment levels. Research shows that the low-wage labour market that SNAP recipients work in is much more volatile than the labour market for the middle class, making it difficult for recipients to work enough hours to meet work requirements.
But with the president's goal of expanding the manufacturing industry, several new jobs will be made available for low-income Americans to replace the immigrants who have previously filled those roles.
In the short term, as demand for construction and manufacturing jobs rises due to the government's international economic policy, and the immigrant workforce deteriorates, previously unemployed, able-bodied Americans who rely on government assistance will be incentivized to meet the growing demand for labour.
The Price of Power: Long Term Impacts on the Cost Living
Trump's BBB also makes massive cuts to clean energy tax incentives imposed by his predecessor Joe Biden, through the IRA in 2022. These changes will decrease the USA's electricity production capacity amidst rising demand, hindering the country's ability to cut ties with coal and natural gas. These changes will make powering life in America more expensive for everyone.
Reduced Electricity Production Capacity
The rise of AI has surged energy demand in recent years. The International Energy Agency estimates that data centers in the USA are projected to consume as much electricity as the entire country of Japan in 2026 (>100 Terawatt-Hours). As AI development continues to progress, electricity production will need to improve to meet the growing demand and keep the market in equilibrium.
The IRA incentivized electricity production; estimates suggested that the tax credits would increase energy production to about 180 gigawatts per year in 2033. However, projections after the cuts made by the president Trump show that that capacity would be slashed to a third (60 gigawatts per year) in the same time frame (See figure 3).
Figure 3: Annual US Electricity Capacity Additions
If electricity production falls to levels projected with the changes introduced by the BBB, the demand driven by AI and big data will drastically increase the price of electricity across the USA.
Coal and Natural Gas Dependence
The IRA’s energy tax incentives also assist in the push towards a country powered by clean energy. However, President Trump stands on the other side of the struggle, promoting the use of ‘clean coal’ as a pillar of the bill’s energy strategy, “I call it beautiful, clean coal. I told my people, never use the word coal unless you put beautiful, clean before it”, the BBB’s rollback of those incentives represents a strategic regression from a sustainable energy powered economy. The energy incentive cuts will have a long-term impact on the transition to a green economy, by deepening the country’s reliance on coal and natural gas.
The IRA tax incentive cuts that the BBB introduces are a major blow to alternative energy solutions in natural gas dominated industries. Estimates indicate that the repeal of these incentives will drive increasing demand for natural gas by about 30 percent by 2035 (See figure 4).
The continued dependence on natural gas will cost Americans in the long run, because of long term volatility in pricing and supply. Oxford estimates that having a decarbonized energy system by 2050 will save the global economy at least 12 trillion dollars, compared to current fossil fuel usage. The repeal of the IRA’S clean energy incentives forfeits global leadership in clean energy and locks the USA into outdated infrastructure with rising energy costs for the future.
The Real Cost of ‘Great Again’
The Big Beautiful Bill is presented as a catalyst for American revitalization, but beneath its political appeal lie serious long-term risks. While it promises economic growth and a return to domestic manufacturing, it relies heavily on assumptions that may not hold, particularly around workforce availability, debt sustainability, and energy investment. By reducing incentives for clean energy, increasing barriers to immigrant labor, and potentially undermining fiscal discipline, the bill may burden the very working-class Americans it claims to uplift. If the United States fails to prepare for the economic consequences of these changes, this legislation could represent not a turning point, but a step backward in the pursuit of equitable and sustainable progress.