Big Beautiful Bill: A Non-Political Look

The House of Representatives has now cleared President Trump’s “One Big Beautiful Bill Act”. Will this generally increase liquidity? How might it affect investments? After an all-night session, it squeezed through by just four votes with every Democrat opposed and Republicans struggling to flip their remaining nays.

The bill makes the 2017 tax cuts permanent, includes new breaks for overtime pay, tips and research spending, and funnels tens of billions into border security, the military and a new semiconductor incentive fund. Offsets, often deemed as the negatives by opponents, arrive later: Tighter eligibility rules for Medicaid and food stamps, and the rollback of lots of clean-energy subsidies. The whole bundle will add roughly 3.3 trillion dollars to the deficit over ten years. Simply put, it is front-loading stimulus today while postponing the pain.

Financial markets took the House vote as a green light for more dollars sloshing through the system. Within minutes, risk assets in New York edged higher, a move that rolled into Asian trading hours and was still visible by market close:

For the gold, silver and Bitcoin crowds, this is potentially good news since it means more liquidity. It also means, in debt terms, a quick solution that makes the long-term worse. The combination of stimulus with fears of debasement provides more reason for the cautious to hedge.

Once the tax office (Internal Revenue Service) updates payroll tables, which is usually a six-week job, take-home pay will rise for millions of workers, lifting everyday bank balances. Agencies such as the Pentagon and Customs and Border Protection will use their new funding almost as soon as the President’s ink is dry, pushing cash to contractors by the end of the September quarter. Even though the Treasury may briefly rebuild its cash buffer (a step that can drain reserves), the larger deficit ultimately means more net financial assets in the private sector, partly counteracting the Federal Reserve’s ongoing balance-sheet runoff.

For now, Wall Street is focusing on that near-term tide of money. Whether the bill shows lasting effects will depend on how quickly Washington’s borrowing costs rise and on whether future Congresses keep the promised savings.