Core Points - The "Great and Beautiful Act" signed by President Trump on July 4, 2025, represents a significant legislative shift, extending previous tax cuts and spending controls while drastically reducing social welfare and government spending initiated during the Biden administration [1][2] - The act includes a $4 trillion tax cut over the next decade, a minimum $1.5 trillion spending cut, and a one-time increase of the federal debt ceiling by $5 trillion, which is unprecedented [1][6] - The act is seen as a redistribution of wealth, benefiting the wealthy while exacerbating the plight of the poor, reflecting a deep political divide between the Republican and Democratic parties [1][5] Legislative Process - The act passed through a contentious political process, with a tie-breaking vote from the Vice President, showcasing the intense partisan divide [2][3] - The final vote in the House was narrowly won, indicating significant opposition from Democrats and some Republicans concerned about the implications for national debt [2][3] Political Implications - Trump's push for the act aligns with his "America First" agenda, aiming to fulfill promises to his voter base by reducing taxes and supporting traditional industries [3][4] - The act's provisions, such as cutting clean energy subsidies and increasing defense spending, cater to Republican supporters and solidify political support in key states [4][5] Economic Consequences - The act is projected to create a $2.5 trillion deficit over the next decade, which will necessitate increased borrowing and exacerbate the national debt crisis [6][8] - The increase in the debt ceiling from approximately $36 trillion to $41 trillion is expected to add over $3.4 trillion in new debt, raising concerns about long-term fiscal sustainability [6][8] Future Outlook - The act does not address the underlying issues of income inequality, fiscal deficits, and social security gaps, potentially worsening these problems in the long run [5][7] - The U.S. may face a prolonged period of high inflation as a means to manage debt, which could undermine the dollar's status as a global reserve currency [10][14] - The reliance on inflation to dilute debt burdens poses risks to long-term economic stability and could lead to increased financial volatility [12][14]