President Donald Trump’s key legislation, often referred to as the “big beautiful bill,” has encountered significant pushback from Democrats and some Republicans alike. This has led to intense discussions concerning its fiscal implications and potential cuts to various US welfare programs. Notably, Elon Musk has chimed in, reiterating his threats to launch a new political party if what he describes as an “insane spending bill” is approved.

BBC Verify has delved into the claims surrounding the bill’s potential effects on three critical areas: US national finances, healthcare coverage, and taxation.

Cost Implications of the Bill
The White House asserts that the bill would “reduce deficits by over $2 trillion”; however, senior Democrats argue that it may actually result in a trillions-long increase. Independent studies analyzed by BBC Verify, along with interviews with six tax professionals, support the notion that the bill would inflate the national deficit. The national deficit occurs when the government spends beyond its tax revenue and other income sources.

Musk has criticized lawmakers who “voted for the biggest debt increase in history” during the bill’s passage through the Senate. The national debt represents the total amount the government owes, which is essentially built up from previous budget deficits. To manage this debt, the government must borrow funds and pay interest on it.

Concerns About the National Debt
As it stands, the US national debt is roughly $36 trillion (£26 trillion), with about $29 trillion owed to international investors. Rising deficits and an increasing debt could potentially lead to higher interest rates. Investors may become more concerned about the government’s ability to meet its obligations, prompting them to seek higher returns on their loans.

This situation could translate into increased interest rates for consumers, making essential purchases—such as homes and vehicles—less affordable. It can also stifle business investments, which in turn may hinder productivity and job creation.

Current projections indicate that the latest version of the bill may add about $3.3 trillion (£2.4 trillion) to the US deficit over the next decade, despite an initial economic uptick, according to estimates from the Congressional Budget Office (CBO), an independent agency that evaluates government spending.

The Congressional Budget Office (CBO) noted that the proposed spending cuts in the bill would be eclipsed by the tax reductions. An examination from the Tax Foundation pointed out that the legislation “would boost economic output but exacerbate deficits.” It estimates that the bill could lift US GDP by approximately 1% over a decade, compared to projected levels, yet would also increase the deficit by $3.6 trillion (£2.6 trillion) in that period. Some financial institutions, including the American Bankers Association, expressed their support for the bill, stating in an open letter to lawmakers that it offers “much needed tax relief” which could invigorate the economy. However, experts consulted by BBC Verify warned that while there might be some economic growth, the overall costs would outweigh those benefits. Bobby Kogan, a federal budget analyst at the Center for American Progress, highlighted that most analyses suggest the bill would generate only a small, fleeting uptick in growth, ultimately becoming a hindrance to the economy. Similarly, economist Mark Zandi of Moody’s Analytics remarked, “It will lead to ongoing significant budget deficits and an increasing debt burden.”

Regarding the potential implications for Medicaid, Trump asserted at a recent event, “We’re cutting $1.7 trillion in this bill and you’re not gonna feel any of it. Your Medicaid is left alone. It’s left the same.” Nonetheless, multiple studies indicate that the bill may lead to substantial cuts to Medicaid, which offers healthcare coverage to around 71 million low-income individuals, including adults, children, pregnant women, seniors, and those with disabilities. An analysis by the Kaiser Family Foundation (KFF) determined that the legislation could slash $1 trillion (£729 billion) from future Medicaid allocations over the next decade. The White House defended the bill, claiming it “removes illegal aliens, enforces work requirements, and protects Medicaid for the truly vulnerable.” According to the CBO, nearly 12 million Americans could lose their health insurance by 2034 under the Senate proposal, with just 1.4 million of those being individuals “without verified citizenship, nationality, or satisfactory immigration status.” Kogan noted, “The largest Medicaid cut in American history occurred in President Reagan’s first year… These cuts would be at least four times that size.”

As for tax implications, Trump has consistently argued that failing to pass the bill would result in significant tax increases for Americans, particularly as the tax cuts from his first term are set to expire at the end of the year. “If it’s not approved, your taxes will go up by 68%,” the president stated last week. When we inquired with the White House about the basis for Trump’s assertion, they stated that the bill “prevents the…”

largest tax hike in history” but didn’t answer our question on where the specific figure comes from.

The Tax Policy Center estimates that if the tax cuts introduced under Trump in 2017 are not extended, taxpayers could face an average increase of 7.5%. According to their findings, nearly 60% of taxpayers would see their contributions rise if these cuts expire.

Elena Patel, a tax policy expert and assistant professor at the University of Utah’s business school, commented, “The 68% figure is incorrect… It could be roughly drawn from a count of taxpayers that would see an increase in taxes, as opposed to an estimate of the actual tax increase.”

The analysis indicates that the proposed tax changes in the bill would disproportionately favor wealthier Americans compared to those with lower incomes. In fact, approximately 60% of the benefits are expected to go to individuals earning over $217,000 (£158,000). Ms. Patel articulated strong concern, stating, “There is no question that this bill will result in a massive redistribution from the poorest to the richest.”