The Controversy of Trump's "Big Beautiful" Plan: How Much Can It Stimulate the U.S. Economy?

As the Republican Party clamors to pass the largest tax bill in history before July 4th, a fierce debate over growth expectations is unfolding between Washington and Wall Street—the question is not whether there will be growth, but how "big" and "beautiful" the economic growth brought by the bill will be.

According to media reports on June 8, Trump's "Great Beautiful Bill" has ignited clashes between the two factions. The White House claims it will replicate the tax-cut boom of 2017, but the Congressional Budget Office (CBO) and models from four major independent think tanks indicate that its economic impetus may be less than one-tenth of what the Republicans promised, and it will trigger a flood of deficits in the U.S.

Republican Fantasy of a Golden Age

Key Republican figures confidently assert that the bill will usher in a golden age.

Trump claimed in a social media post last month that the U.S. annual growth rate will triple or even quintuple the CBO's January forecast of 1.8%.

Senate Finance Committee Chairman Mike Crapo asserted after meeting with Trump: "The economy will explode in terms of capital formation. Jobs will increase, and wages will rise."

The White House Council of Economic Advisers even threw out astonishing predictions: short-term GDP growth of 4.2% to 5.2%, and long-term growth of 2.9% to 3.5%. This prediction is three to four times that estimated by the Tax Foundation.

Stephen Miran, chairman of the Council of Economic Advisers, defended this by stating that the growth after 2017 proves that the Republican formula can work, pointing out that the federal tax revenue as a percentage of GDP has only slightly decreased from 17.3% in fiscal year 2017 to 17.1% in 2024.

Economists Pour Cold Water

However, economists' forecasts are far more cautious than politicians' promises. Reports indicate that predictions from several authoritative institutions show:

• Tax Foundation: Estimates that the bill will result in a long-term GDP growth of 0.8%, with the revenue generated covering only about one-third of its costs.
• Wharton School of the University of Pennsylvania: Predicts a 0.4% GDP growth in the first decade, equivalent to raising the annual growth rate from 1.8% to 1.85%. The model's head, Kent Smetters, bluntly stated: "Basically, I would call it flat."
• Joint Committee on Taxation: Estimates that the revenue generated from the tax provisions of the bill through economic growth will be less than 3% of its costs.
• Yale Budget Lab: Believes that the bill will push the growth rate from 1.8% to about 2% before 2027, but the burden of federal debt will weaken and reverse this effect thereafter.

Trump claims he will boost the CBO's projected annual economic growth rate of 1.8% by "three to five times," but historical data shows that since 2005, the U.S. real GDP growth rate has only exceeded 3% twice—once in 2018 (the effect of the 2017 tax cuts) and once in 2021 (post-pandemic recovery). More critically, the 2017 tax cuts did not "pay for themselves" as promised, with authoritative academic research confirming that the revenue increase fell far short of covering the costs.

Tariff Clouds Loom

Morgan Stanley's global chief economist Seth Carpenter warned that the uncertainty surrounding tariffs complicates business planning and will weaken the incentive effects for capital investment. He stated that even with the new factory cost deductions from the bill, "if there is no certainty about tariffs, I don't think you will be eager to start construction." The Congressional Budget Office clearly estimates that the bill will add $2.4 trillion to the deficit. Former Biden administration economist Kimberly Clausing is concerned that if the Republican plan becomes law, the budget deficit will have a drag effect. She admitted:

If they fail, I actually think that would be the best macroeconomic outcome