What Trump’s ‘Big Beautiful Bill’ Means For US Economy As Debt Hits $37 Trillion

The gross national debt of the United States government soared past $37 trillion in the second week of August, despite several measures taken by the Trump Administration and the proposed bold cost-cutting plans. Amid a record rise in overall debt burden, experts have raised concerns over President Trump’s ‘One Big Beautiful Bill Act’ (OBBBA), allowing the addition of a few trillion dollars more to the existing borrowings that could pose challenges to fiscal sustainability.

Many reports also raised an alarm over the national debt surpassing $37 trillion years ahead of the previously anticipated 2030 timeline.

On July 4, Trump signed the One Big Beautiful Bill Act (OBBBA), raising the debt ceiling by $5 trillion. This move is aimed at avoiding a potential default by the US government on its debt obligations.

While the new Act prevents the looming crisis over debt obligations for now, it raises concerns over pile-up of more borrowings in the coming years.

Economists suggest that much of the surge stems from massive pandemic spending. But this emergency spending is now catching up, with the national debt growing by $1 trillion every five months, according to Michael A Peterson, CEO of the Peter G Peterson Foundation, a Fortune report mentioned. The foundation, focussed on addressing America’s long-term fiscal challenges, warns that without serious reform, the US is heading toward an unsustainable fiscal future.

Peterson said that at this pace, the US will run through the recent $5 trillion debt limit increase in just two years. “We are no longer in a Great Recession or a global pandemic, but our fiscal policy keeps acting like we are,” Peterson was quoted as saying by Fortune.

For context, the US debt-to-GDP ratio surpassed 100% in 2013 when both debt and GDP were about $16.7 trillion, according to the US government data. In fiscal 2024, the debt-to-GDP ratio stood at 123%, signalling a red flag for long-term fiscal stability.

While recent efforts (like DOGE’s actions on “unnecessary” spending) have brought in some savings for the US, debt per capita still exceeds $108,000. Even as Trump’s tariffs have generated strong returns, tripling from about $7 billion last year to around $25 billion by late July, it is not enough. The $25 billion still covers less than 0.07% of the national debt and at this pace, it would take nearly 120 years of tariff revenue to pay off the debt entirely, the Fortune report added.

Global risk and financial advisory solutions firm, Kroll, suggested that while the OBBBA may boost the US economic growth over the next decade, this growth will come at significant costs. It cited the Tax Foundation to outline that with higher debt levels, the US risks accruing higher interest rates and further cuts to programmes like social security and healthcare.

“The yields on US Treasuries are still considered the proxy for global risk-free rate and represent a key benchmark for pricing securities in both the US and international markets. But the search for alternative safe-haven assets may result in volatility in long-term US interest rates. Global investors may demand a higher premium to invest in US Treasuries, keeping long-term rates at a higher level and increasing the cost of capital for businesses,” the think tank noted.

It further said that while there are hopes that the OBBBA’s impact could be partially offset by Trump-imposed tariffs, steep tariffs risk slowing long-term GDP growth. This could mean that “the larger the magnitude of tariffs, the bigger the negative effect is on long-term US GDP growth, thereby diminishing the benefits from the OBBBA.”