October 1st marked an unceremonious milestone, as Congress failed to pass a budget with all required appropriations bills by the start of its fiscal year for the 30th consecutive year. This is even though the federal budgetary and appropriations process was spelled out more than 50 years ago in the 1974 Congressional Budget and Impoundment Control Act.
No wonder the U.S. is over $40 trillion in debt.
In addition to long-term mismanagement of the budgetary process by both political parties, we have yet to feel the full effects of the One Big Beautiful Bill Act, passed in July 2025. This is because several provisions of the bill were set to take effect after the midterm elections — an intentional dodge to avoid blowback from voters.
So, in case you forgot about the One Big Beautiful Bill Act, here’s a reminder of what’s coming after the midterms.
Academic and practitioner researchers from across the country — including former U.S. Comptroller General David Walker — gathered in Washington, D.C., recently for the Association for Budgeting and Financial Management’s annual conference. For the past 38 years, this group has brought together hundreds of scholars, including me over the past 25 years, to share our latest research on a wide range of topics aimed at promoting the professional development of budgeting and financial management in the public sector, including the federal government. A major topic of our shared expertise this year was the impending impact of the One Big Beautiful Bill Act on our already-challenged economy and record-breaking federal debt.
The conference isn’t open to the public, but the topics discussed covered everything from the national debt to budget process reform to how state and local governments absorb fiscal risk when federal funding becomes volatile or unpredictable. So allow me to share some takeaways.
While these experts were in our nation’s capital discussing fiscal policy, responsibility, and jurisprudence, President Trump illegally rescinded nearly $1 billion in spending that Congress had previously authorized. Much of this spending had been approved for programs serving undocumented immigrants and unaccompanied children in court, minority health initiatives, special education programs for migrant students and the anti-DEI agenda of the administration.
Was this done to help reduce the U.S. debt? No. Will it help to reduce our debt? Also, no.
The One Big Beautiful Bill Act extended the expiring individual and corporate tax cuts from the 2017 Tax Cuts and Jobs Act, making some of its provisions aimed at reducing taxes permanent. Typically, reducing individual and corporate tax burdens leaves more money in taxpayers’ pockets, allowing for greater consumer spending and business investment, which translates into higher economic productivity, as measured by Gross Domestic Product. The One Big Beautiful Bill Act is no different, as its major tax provisions are estimated to increase long-run GDP, albeit by less than one percent.
At the same time, cutting taxes means the federal government is collecting less revenue each year. This revenue loss can be offset by increasing economic productivity or by reducing spending. If neither occurs, then a deficit — an annual shortfall between revenue and spending — results. Annual deficits accumulated over time add up to our national debt.
As of October 1st, federal spending on the Supplemental Nutrition Assistance Program (SNAP) began to be reduced by about $187 billion through 2034 by shifting 75% of the program’s administrative costs onto states. Medicaid — which provides health coverage to roughly 1 in 5 Americans — will be reduced by about $911 billion, potentially increasing the number of uninsured people by 10 million over the next decade. By next summer, borrowers who take out new student loans will no longer be eligible for deferments due to economic hardship or unemployment.
Although these and other provisions of the One Big Beautiful Bill Act reduce spending by over $1 trillion, this is not enough to cover the tax cuts. The expected economic growth from the tax cuts is also not expected to cover their cost. So, our federal debt is expected to increase by an additional $4.1 trillion over the next decade.
Why does the federal debt matter? The federal debt can be divided into two main categories: intergovernmental holdings — debt the government owes itself, like Social Security — and debt held externally by the public. Debt held by the public accounts for about 80% and represents a shift in resources from the federal government to the Federal Reserve, state and local governments, and private investors. This category of debt is considered the most important measure of U.S. debt because it reflects borrowing from outside lenders, which can crowd out private investment, make it more difficult to respond to economic crises, and increase economic volatility.
These are just a few of the upcoming changes set to affect millions of Americans after the midterm elections. This is not to say that reforming our social programs or bringing federal spending under control is not needed. But adding trillions more to our national debt while American incomes increase by only 0.2% over the next decade is certainly not an approach that most of us experts who gathered in Washington, D.C., recently would consider fiscally responsible.