Trump’s ‘Big Beautiful Bill’ is a debt bomb. Can the ‘Pennsylvania Plan’ defuse it?
New framework offers recommendations to reduce foreign holdings of US debt – a sum estimated to grow by trillions if spending bill is passed
With the US Senate voting to move an updated version of US President Donald Trump’s sweeping budget legislation – the “One Big, Beautiful Bill Act” – forward in the legislative process, the controversial bill now comes closer to becoming law.
It has also brought the country’s mounting debt back into the spotlight. Rife with spending increases, tax cuts and no additional revenue sources to compensate, the bill has been estimated to add US$3.3 trillion to the nation’s debt over the next decade; a deficit that stands at about US$36.2 trillion.
In response to renewed concerns over US debt, a nascent framework on how to rebalance deficits away from foreign holders – the “Pennsylvania Plan” – has also received attention.
Here, we provide an update on the latest developments in the saga of the “One Big, Beautiful Bill” and its relationship to the recommendations made in the “Pennsylvania Plan”.
What is the bill, and how close is it to passage?
The US Senate agreed to hear debate on the bill in a narrow 51–49 decision after a long weekend session, following another close party-line approval from the House of Representatives last month.
The bill primarily focuses on tax cuts and spending reductions. It extends the corporate and individual tax cuts from Trump’s first presidential term, provides new tax exemptions for tips and car loans, increases defence spending as well as funding for the border patrol. It also ends numerous green energy tax credits early, makes deep cuts to welfare and aid programmes and bans state-level regulation on artificial intelligence for 10 years.