Big Suicide Bill

Donald Trump’s “big beautiful bill” is a social and economic disaster

The new budget law in the US provides for billions in spending on Trump’s racist immigration policy and huge cuts in social spending. In addition, the national debt is expected to rise to levels that are dangerous for the US economy.

By Ernst Lohoff

[This article posted on 7/7/2025 is translated from the German on the Internet, https://jungle.world/artikel/2025/29/trump-medicaid-big-suicide-bill.]

Protests are still ongoing in the land of Trumpism. Rally against Trump’s “big beautiful bill” in Washington, D.C., on July 4.

The extensive tax cuts with which US President Donald Trump had delighted himself and his fellow billionaires during his first term in office would have expired at the end of the year. The tax and spending bill, which Trump christened with the curious name “big beautiful bill” and which came into force on July 4, now makes these cuts permanent and adds a few improvements. For example, inheritance tax will only apply to estates worth more than $30 million per married couple from 2026.

No wonder that even the Zeit, not exactly known for radical social criticism, describes the new federal law as a “law for the richest of the rich.” Sandra Navidi, head of the New York-based financial advisory firm Beyond Global, stated in an interview with the N-TV broadcaster that this was “the largest upward redistribution in human history.”

The bottom third of US society would have every reason to protest against the law. But the protests have been decidedly lukewarm.

Very few Trump voters are among the winners of this redistribution. The US president, a Robin Hood of a different kind, knows how to make this monstrous project halfway palatable to his MAGA supporters. For one thing, the law contains a few sweeteners for “ordinary people”: as promised during the election campaign, overtime and tips will no longer be taxable until the end of Trump’s term in office.

In addition, the state is setting up a stock portfolio worth $1,000 for newborns, named after the president, which they will be able to access in part from the age of 18 and in full from the age of 30. According to Republican Senator Ted Cruz, “this will make every child a capitalist.” It goes without saying that investments may only be made in US stocks – so that only the domestic financial markets benefit.

On the other hand, the exclusionary fervor of MAGA supporters is also being catered to across the board. In keeping with the motto “go big or go home,” the law provides for extensive spending on racist persecution. Over $170 billion alone will go toward building the border wall with Mexico and improving surveillance technology at the borders. Funding for the Immigration and Customs Enforcement agency and its human hunting squads is to be increased by $75 billion, after all, enough personnel and deportation camp capacity must be available to meet the target of 3,000 deportations per day.

Tax cuts and additional spending

Almost half a billion dollars a year has been earmarked for the new “Alligator Alcatraz” immigration detention center in the middle of the Florida swamps, with its dangerous reptiles. And that is likely to be one of the cheaper facilities, because Mother Nature will do most of the work of preventing escape. And the military and arms industry will not have to go without either. Annual defense spending has exceeded the trillion-dollar mark for the first time.

However, the Trump administration is not only aiming for tax cuts and increased spending, it also wants to save money. Trumpism includes a commitment to promoting fossil fuels, and so the extensive investment program for renewable energies that was part of the Inflation Reduction Act introduced by Trump’s predecessor Joe Biden is being scrapped. Furthermore, “America first” means drastic cuts in development aid and funding for international organizations.

However, by far the most important item in the financing of the tax breaks is the slashing of social spending. Medicaid, the health insurance program for low-income earners, is to be cut by almost $800 billion over the next ten years on the grounds that it is rife with “waste, fraud, and abuse.”

Currently, Medicaid still provides access to healthcare for over 78 million poor Americans. According to estimates by the non-partisan Congressional Budget Office, more than 11 million people are likely to lose it by 2034. People of working age who do not work at least 80 hours a month or are in training will be kicked out of the Medicaid system and will no longer be entitled to any state social benefits.

“People will die. Tens of thousands, perhaps year after year.” Hakeem Jeffries, Democratic leader in the House of Representatives

The SNAP food assistance program, which currently provides 42 million poor Americans with subsidies to buy food, is also set to lose $290 billion in federal funding over the next ten years. The consequences of such cuts are obvious: “People will die. Tens of thousands, perhaps year after year,” as the Democratic leader in the House of Representatives, Hakeem Jeffries, indignantly stated in the debate on the future of Medicaid. This law is a “crime scene.”

The bottom third of US society would have every reason to protest vehemently. However, given the social atrocities it contains, the protests have been decidedly lukewarm. Criticism from completely different quarters is much louder. Economists and financial market experts around the world, such as Wirtschaftswoche, are warning of a “big disaster bill” because the law is likely to dramatically increase the US’s already huge budget deficit. There are fears that US government debt is heading toward a point where investors will shun US government bonds and the dollar. If the flight from both, which has already begun, accelerates further, there is a threat of a global financial market crisis that would be far greater than the previous one in 2008.

According to estimates by the Congressional Budget Office, Trump’s latest tax cuts will require at least $3.3 trillion in additional borrowing over the next ten years. The US is already sitting on a rapidly growing mountain of debt.

Fiscal suicide law

In 2019, it stood at just under $23 trillion, five years later it was already $36 trillion, and now comes the new fiscal suicide law.

The budget deficit amounted to $1.8 trillion in 2024, which corresponds to 6.4 percent of gross domestic product (GDP); with Trump’s law, the budget deficit is expected to rise to at least nine percent of GDP.

As a result of this development, the research department of KfW (Kreditanstalt für Wiederaufbau) expects US government debt to rise from its current level of 120 percent of GDP to 170 percent over the next ten years. This is high, but would not necessarily be a cause for crisis in itself. Japan, for example, already has a higher level of government debt at 235 percent of GDP.

However, what makes the situation threatening and, in the opinion of the Swiss business newspaper Handelszeitung, brings a “debt meltdown” within the realm of possibility is the dependence on foreign creditors. For many decades, US government bonds were considered a safe haven in times of crisis, but financial investors are now increasingly treating them as risky investments. They can now only find buyers at corresponding interest rate premiums. When the US issues ten-year government bonds, it currently has to pay 4.3 percent interest, compared with 3.4 percent for Greek bonds and 2.7 percent for German bonds. Accordingly, interest payments now account for the largest item in the US budget, at $1.1 trillion.

The United States’ dependence on foreign capital inflows is the Achilles’ heel of the US economy, which is why this is where the main danger for Trump’s system lies.

While debt servicing accounts for two percent of the federal budget in Germany, it currently accounts for 13 to 14 percent in the US. And the situation is likely to worsen: This year alone, government bonds worth over $7 trillion will mature, which could still be sold at low interest rates and will have to be replaced by new, far more expensive ones.

The United States’ dependence on foreign money capital inflows is the Achilles heel of the US economy, which is why this is where the main danger for the Trump system lies. With its erratic economic policy, the US government is well on the way to destroying the attractiveness of the US as an investment location and cutting off the state and the economy from the inflow of fresh money capital. The Trump administration may be able to use the National Guard to crush social protests. But no amount of repression can stop the flight of private capital.