Bank of America Merrill Lynch's brief commentary on Trump's "Big Beautiful" plan: It cannot achieve fiscal balance nor significantly stimulate growth

Bank of America Merrill Lynch's latest warning states that Trump's "Big Beautiful Plan" cannot achieve fiscal balance through growth effects and is unlikely to provide significant growth momentum for the economy.

On June 13, according to news from the Wind Trading Desk, Bank of America Merrill Lynch stated in its latest research report that Trump's "Big Beautiful Plan" cannot achieve fiscal balance. More critically, the plan's stimulus effect on economic growth is very limited, with an average GDP growth rate increase of only 3 basis points over the next 10 years.

The report states that according to the Joint Committee on Taxation (JCT), the total cost of the plan is as high as $2.3 trillion, but it can only generate $102.8 billion in revenue feedback, resulting in a self-financing ratio of only 4.5%.

The self-financing ratio refers to the ratio of revenue generated from the economic growth stimulated by the plan to its expenditures. Bank of America Merrill Lynch claims that to achieve self-financing, GDP needs to grow by 9% before the fiscal year 2034, a target that is nearly impossible to achieve.

Minimal Revenue Feedback Effect

Based on JCT's growth estimates, the "Big Beautiful Plan" can only generate $102.8 billion in new revenue within the 10-year budget window. This figure is insignificant compared to the total cost of $2.3 trillion, covering only 4.5% of the cost.

Bank of America Merrill Lynch states that to achieve self-financing for the plan, GDP needs to increase by about 9% before the fiscal year 2034, a target that is clearly unlikely to be achieved.

Detailed data from the JCT shows that during the period from 2025 to 2029, macroeconomic revenue feedback will be $36.8 billion, and from 2030 to 2034, it will be $66 billion.

Trump's Government Growth Expectations Are Overly Optimistic

The Trump administration has attempted to alleviate market concerns about fiscal conditions by emphasizing economic growth. Kevin Hassett, chairman of the National Economic Council, recently claimed that the plan would drive GDP growth to 3%.

However, JCT's estimates are much more conservative. According to JCT's analysis, changes in tax policy are expected to increase GDP levels by 0.4% in the fiscal year 2034, primarily by stimulating labor supply and consumption through tax rate reductions. This means that the average GDP growth rate over the next 10 years will only increase by 3 basis points.

According to JCT's estimates of the macroeconomic effects of the plan:

• Output level: Increase of 0.4% from 2025 to 2034
• Business capital: Decrease of 0.1% over the entire period
• Labor: Increase of 0.6%
• Consumption: Increase of 0.8%

Bank of America Merrill Lynch states that this data indicates that although the plan has positive effects on consumption and labor, its stimulus effect on business investment is even negative, posing risks to long-term growth prospects.

An earlier article from Wall Street Insight pointed out that the Tax Foundation estimates that the plan will increase long-term GDP growth by 0.8%, with the revenue generated covering only about one-third of its costs The Wharton School of the University of Pennsylvania predicts that GDP growth will be 0.4% in the first decade, equivalent to raising the annual growth rate from 1.8% to 1.85%.

The Yale Budget Lab believes that the bill will push the growth rate from 1.8% to about 2% before 2027, but the drag of federal debt will weaken and reverse this effect thereafter