An Economic Reform that Divides America Anew

In the summer of 2025, former President Donald Trump signed a new expansion of the 2017 tax law, sparking economic and political controversy. This dramatic move continues the trajectory of the “Tax Cuts and Jobs Act,” introducing a series of additional tax benefits. However, the fiscal implications of this new reform raise significant concerns, even among conservative economists, and prompt questions about how the United States plans to manage its financial commitments over the coming decade.

According to the CBO: The Law Will Lead to a Deficit of Over $3.4 Trillion

The Congressional Budget Office (CBO) estimates that implementing the law will result in an increase of approximately $3.4 trillion in the national deficit by 2034. This is an extraordinary and nearly unprecedented figure in historical terms, roughly equivalent to the total annual federal budget. Some unofficial estimates even suggest the range could reach up to $4.5 trillion if balancing measures are not implemented.

Extension of the 2017 Tax Law: Continuing the Trend

The new legislation extends key components of Trump’s original tax law. It maintains the reduced corporate tax rates (21% compared to 35% in previous decades), offers relief for households with children, provides tax breaks for seniors, and increases the cap on state and local tax deductions (SALT) to $40,000.

Child Tax Credit and Senior Rebates

At the heart of the new law is an expanded child tax credit – $2,200 per child – continuing a measure initiated during Trump’s first term. Simultaneously, the new rebate for individuals aged 75 and over grants them a tax return of up to $6,000, a substantial amount for many retirees. These steps have been supported by both conservative and liberal constituencies, though criticism remains regarding their sources of funding.

Cuts to Social Programs: Millions May Lose Health Coverage

Alongside the benefits, the law includes broad cuts to welfare programs. Medicaid is expected to undergo reforms, including stricter work requirements, cost shifts to individual states, and budget reductions. According to the CBO, the impact could lead to the loss of health insurance for around 10 million Americans.

The SNAP program, more commonly known as food stamps, is also expected to face significant reductions. Many families, especially single-parent households, may be left without access to nutritional support – a development drawing sharp criticism from advocacy groups and social activists.

Green Energy and EVs: Incentive Rollbacks and Slowdown in Development

The new law eliminates federal credits and grants previously available for purchasing electric vehicles, installing solar panels, and launching renewable energy projects. The direct consequence is a slowdown in sector investment, decreased consumer incentives, and a projected rise in residential energy costs in the medium term. The U.S. green energy industry is already feeling the effects, with projects canceled and future initiatives placed on hold.

Public Criticism: Who Truly Benefits from This Law?

Critics argue the reform primarily serves high-income earners and corporations. The organization “Patriotic Millionaires,” which comprises liberal millionaires, released a statement saying “This law transfers wealth from the general public to the elite, while harming basic services.” Independent research groups like the Center on Budget and Fiscal Responsibility note that the majority of benefits will go to the top 10% of earners.

Will Growth Offset the Deficit?

Proponents of the reform, including former Trump administration officials, argue that the economic growth resulting from tax cuts will compensate for the fiscal loss. However, objective analyses suggest that even with an annual growth rate of 2%–2.5%, only about 20% of the deficit could be offset by increased tax revenues.

Consequently, forecasts indicate that the U.S. national debt may surpass $40 trillion by the end of the decade. Interest payments alone could exceed $1 trillion annually, limiting the government’s ability to respond to future crises.

Impact on Stock Markets and Investments

In the short term, the law may provide a boost to the stock market. Sectors such as real estate, technology, and capital-intensive manufacturing are already seeing increased demand. However, over the long term, the growing federal debt and declining public investment may introduce market volatility and even erode returns.

Savvy investors are already diversifying into assets less sensitive to interest rate fluctuations, seeking safety in digital currencies, commodities, and gold. Sectors that benefitted from current tax breaks may face challenges when future cuts are required to balance the budget.

Conclusion: A Reform Demanding Fiscal Reflection

Trump’s tax law reflects a clear economic ideology: growth through reduced taxation and decreased government involvement. But its consequences are much broader – from ballooning the federal deficit and national debt, through undermining welfare programs and environmental initiatives, to fears of a looming economic crisis.

If the U.S. chooses to continue on this path, painful trade-offs may lie ahead. The open question remains: Is the American public prepared to pay the price – or is this simply a “beautiful tax bill” with a hefty future cost?