Trump's 'Big, Beautiful' $3.8 Trillion Bill Squeaks Through House: Expert Says It Will 'Boost The Economy In The Short Term,' But Worsen Deficits

The U.S. House of Representatives narrowly passed President Donald Trump‘s $3.8 trillion tax-and-spending package on Thursday by a 215-214 margin, sending shockwaves through bond markets as 30-year Treasury yields spiked to 5.15% — the highest level since October 2023.

What Happened: The legislation, which Trump called his “big, beautiful” tax bill, now heads to the Senate for approval before the July 4 recess. While the package promises immediate economic stimulus through broad tax cuts and increased defense spending, market analysts warn of significant long-term fiscal consequences.

“It reduces taxes for lots of people, it increases spending, especially on defense,” said Jed Ellerbroek, portfolio manager at Argent Capital Management, in a CNBC interview. “Simply put, it will boost the economy in the short term.” However, Ellerbroek cautioned that the bill will likely burden America with higher fiscal deficits as tax cuts reduce government revenue while defense spending increases expenses.

Why It Matters: The Congressional Budget Office and Committee for a Responsible Federal Budget estimate the legislation could increase national debt by $2.3 trillion to $5.7 trillion by 2034, depending on whether key tax provisions are extended. With federal debt already at a record $36.2 trillion, this trajectory raises concerns about debt sustainability.

Bond market volatility reflects investor uncertainty about lending to the government at current rates. The 10-year Treasury yield fell to 4.53% on Thursday after touching higher levels, while elevated yields compared to earlier this year suggest investors demand higher compensation for fiscal risk.

Stock markets showed mixed reactions, with the S&P 500, tracked by SPDR S&P 500 SPY and Dow Jones Industrial Average, tracked by SPDR Dow Jones Industrial Average ETF DIA, closing mostly flat.