On July 4 the US Congress passed Donald Trump’s One Big Beautiful Bill Act—or BBB for short. The mainstream media and economists have mostly been reporting the details of the tax cuts contained in the bill—that is, which taxes got cut, how much accrued to businesses and the wealthy as opposed to the rest of us, what the impact is on GDP, and maybe even on government deficits and debt. All interesting facts. But not the most important. They purposely ignore the cuts in historical perspective and the bigger picture they represent.

That bigger picture is the looming fiscal crisis driven by the growing convergence of runaway tax cutting since 2001, chronic escalating defence and war spending, more frequent, deeper crashes of the economy with slower economic growth between, and, since 2022, accelerating trillion dollar annual interest costs on the US national debt.

The US national debt is on track to reach $38 trillion by year-end 2025. Interest payments to bondholders are already exceeding $1 trillion a year. The Congressional Budget Office, the research arm of Congress, estimates the national debt will reach $56 trillion by 2034 with interest payments of $1.7 trillion—and all that before Trump’s just-passed $5 trillion tax cuts.

Moreover, the US elite today show no sign of addressing the coming fiscal crash. Congress continues to cut taxes by trillions of dollars on corporations, investors and the wealthiest one percent households; to raise spending on the Pentagon, wars and other ‘defence’; to allow the health insurance industry and Big Pharma to gouge the US Treasury; and to pay holders of US securities—foreign and US—trillions of dollars more every year.

Multiple studies show that, historically, 60 percent of the US budget deficits and thus national debt are due to insufficient tax revenues—from chronic tax cutting, slow economic growth, legal avoidance and fraud. Here are some interesting facts about cumulative tax cuts by both political parties together since 2001.

Cumulative tax cutting, 2001–2025

George W. Bush’s tax cuts in 2001–03 amounted to $3.8 trillion over the decade 2001–10. Estimates are that roughly 80 percent accrued to corporations, businesses, and wealthy individuals by focusing overwhelmingly on individual income tax rates, corporate capital gains and dividends, and the estate tax affecting the wealthiest one percent of households. Bush then cut taxes in the spring of 2008 by another $180 billion as the economy began to slide into recession and the great crash of 2008–09.

When Obama took over in 2009 his American Rescue Plan stimulus for the economy provided for another $325 billion in tax cuts. His entire stimulus plan was $787 billion; another $280 billion of the remaining $487 billion went to the states which then hoarded most of it. So less than $200 billion went to stimulate consumption which immediately proved too little to reboot the US economy. He had to add another $25 billion for “cash for clunkers” and another $25 billion for “first-time home buyers” later that year. Most of the latter, moreover, didn’t go to home buyers but to mortgage lenders as incentive to approve more mortgages.

When Bush’s tax cuts came up for renewal in 2010, Obama extended them for another two years through 2012. That amounted to another $803 billion in tax cuts, again mostly to the wealthy and corporations.

In August 2011, in an agreement with the Republican Congress, Obama cut social program spending by $1.5 trillion in a new ‘austerity’ plan. $1 trillion was cut in just education and other social programs; $0.5 trillion was supposed to be cut for defence spending but was kicked down the road and never applied. Social program cuts always follow crisis bailouts. They did in 2011 after the 2009–10 bailouts. They’re occurring again today after the 2020–21 COVID bailouts—more on that shortly.

The 2012 Obama tax cuts made the Bush tax cuts permanent. They cost another $5 trillion. They were supposed to avoid what the media and lobbyists called the pending ‘fiscal cliff.’ They were supposed to boost the economy. They didn’t. US economic growth in GDP terms for the rest of the Obama term averaged only 60 percent of what was historically average during recovery periods from the earlier ten US recessions since 1948.

Obama ultimately cut taxes on the wealthy and corporations more than Bush did. While Bush’s tax cuts totaled $4 trillion—including $3.8 trillion from 2001–03 and $180 billion in 2008—Obama’s amounted to $6.1 trillion: $325 billion in 2009, $803 billion from 2010–11, and $5 trillion in 2012. Trump later followed with $4.5 trillion in tax cuts in 2018.

Trump promised during the 2016 election to cut taxes by $5 trillion. And he roughly did. The 2018 tax cut over the next decade cost $4.5 trillion.

His administration, with the media and professional economist class in tow, estimated the $4.5 trillion at only $1.9 trillion. Trump’s Treasury Secretary at the time, Steve Mnuchin, even publicly declared the Trump tax cut would “pay for itself.” By that he meant the tax cuts would boost US GDP and the economy so much that economic growth would result in a rise in so much more tax revenues over the decade that it would offset the $1.9 trillion.

Proof that the Trump 2018 tax cuts were $4.5 trillion—not $1.9 trillion—was reflected in the Trump administration’s budget forecast and a US federal deficit reduction of $4.6 trillion over the decade 2018–28. An even more convincing later piece of evidence was the US Congressional Budget Office, which estimated in 2025 that the cost of the 2018 tax cuts were at least $4 trillion total.

For several years in debates with professional mainstream economists like Robert Reich and Paul Krugman this writer kept showing the Trump tax cuts weren’t $1.9 trillion but actually $4.5 trillion. Here’s how.

First, the $1.9 trillion official estimate was based on the assumption that the US economy would grow over the next ten years, 2018–28, by three to three and a half percent annually—a forecast that proved grossly inaccurate.

After a modest growth in 2018–19, the US economy crashed in 2020 as the government ordered a partial economic shutdown in response to the COVID-19 pandemic. The economy haltingly reopened and recovered in stages in 2021. Thereafter it grew only moderately from 2022–24.

That modest three-year GDP recovery followed the massive $10.7 trillion fiscal and monetary stimulus by Congress and the Federal Reserve during the years 2020–22: $6.7 trillion in fiscal stimulus and another $4 trillion in monetary stimulus by the Federal Reserve. In other words, a mountain of stimulus brought forth a molehill of GDP.

Second, the 2018 tax cut estimate grossly underestimated and failed to account for the magnitude of tax cuts that accrued to US multinational corporations offshore.

The largest US Fortune 500 corporations with offshore subsidiaries had accumulated $2.6 trillion in their corporate offshore accounts they weren’t returning to the US in order to avoid paying the then 35 percent corporate tax rate. Estimates of unrepatriated hoarded profits from the offshore operations of US multinationals were as high as $4 to $5 trillion. Trump’s 2018 tax cuts allowed them to bring back those profits and pay only ten percent. That’s a 25 percent tax saving on at least $4 trillion. The US Commerce Department estimated in 2020 that US multinationals brought back only $750 billion in 2018 and another $250 billion in 2019. They thus paid 10 percent or $100 billion instead of 35 percent or $350 billion. They pocketed the other $900 billion of the $1 trillion repatriated. Unfortunately, no government records were kept after 2019.

What did they do with the $900 billion they did repatriate? As the Wall Street Journal reported on January 28, 2020: “Much of what firms retrieved went to buybacks.” After averaging about $125 billion per quarter in 2017, S&P 500 stock buybacks surged to $200 billion per quarter in 2018 and 2019.

And what happened to the other roughly $3 to $4 trillion plus US corporations never repatriated? They hoarded the remaining profits in their offshore subsidiaries to avoid taxes. Another loophole allowed them to convert their cash profits from overseas operations into short-term financial securities held offshore, on which they didn’t have to pay any tax.

And there was another way they avoided taxes: they manipulated their internal pricing (what US-located operations charged or paid their foreign subsidiaries). They paid their foreign subsidiaries inflated prices for components or final products, shifting profits offshore to benefit from lower tax rates—while simultaneously raising costs in the US, which reduced domestic profits and the taxes owed at the higher US rate.

The 2018 Trump tax act also raised the amount US multinationals paid to foreign countries that they could then deduct from their US taxes owed.

The point is that offshore rules and loopholes reduced total tax payments by at least $2 trillion over the 2018–28 period—savings that were either vastly underestimated or completely excluded from the Trump administration’s official $1.9 trillion tax cut estimate.

In summary, unrealistic assumptions about future GDP growth, reduced taxes on repatriated profits, and numerous offshore loopholes meant that the tax cuts received by US multinational corporations were far larger than reported. Taken together, these factors pushed the true cost of the 2018 cuts to $4.5 trillion—well above the ‘official’ $1.9 trillion estimate.

This was followed by the 2020 COVID fiscal stimulus during Trump’s final year in office, which included $950 billion in tax cuts under the CARES Act passed by Congress in March. As the US economy faltered again later that year, an additional $260 billion in tax cuts was enacted through the emergency Consolidated Appropriations Act in December. Biden’s subsequent “American Rescue Plan” fiscal stimulus cut taxes by a further $640 billion.

In 2022, Biden shifted some of the unspent relief for social programs in his Rescue Plan and redirected the funds to a new round of three business investment stimulus programs costing $1.7 trillion: the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the misnamed Inflation Reduction Act, which was mostly tax cuts and subsidies to energy companies, both alternative and fossil fuel. Those three 2022 business investment acts together cut taxes by another roughly $500 billion.

Adding all the tax cuts from 2001 through 2024, both parties—two Republican and two Democrat administrations—together cut taxes by almost $17 trillion.

It should come as no surprise, then, that Trump’s 2025 plan includes another $5 trillion in tax cuts—once again largely benefiting businesses, investors, and the wealthiest households. This continues a quarter-century trend of massive tax cutting that began in 2001, though its roots arguably trace back to Reagan’s 1981 and 1986 tax cuts and Clinton’s in 1997–98.

This has all been part of the long-term neoliberal fiscal policy, in place since 1979: slash taxes for the wealthy and their corporations, partially offset the cost with cuts to social programs, ramp up spending on defense and wars, and disregard the resulting budget deficits and ballooning national debt—which now drive annual interest payments to US bondholders to $1 trillion.

Decades of data make it clear: tax cuts—combined with reduced revenues from slow economic growth, fraud, and legal loopholes—account for about 60 percent of all US budget deficits.

But they’re not the only drivers. Since 2001, an additional $9 trillion has gone toward foreign wars, while three major bailouts—2008–09 ($787 billion), 2020 ($3.1 trillion), and 2021 ($1.9 trillion)—have added another $5.8 trillion.

Meanwhile, rampant price gouging by health and insurance corporations has steadily driven up the cost of federal healthcare programs like Medicare, Medicaid, and the Affordable Care Act.

Add in rising interest payments on the national debt, and the result is a fiscal hole that now totals $36.2 trillion.

In short, a slow-moving fiscal train wreck has been gathering speed for the past 25 years—and Trump’s new $5 trillion tax cut, alongside trillions more in defence spending, is about to push it into overdrive.

Future consequences

US budget deficits have been averaging $2 trillion annually and rising since 2016. They are projected to rise another $2 trillion in 2025 even before Trump’s tax cuts take effect this year.

The national debt is just the accumulation of annual budget deficits. In 2000 the US national debt was $5.6 trillion. After eight more years it nearly doubled to $10.7 trillion. It then did double under Obama to $20 trillion by end of 2016. Trump added $7.8 trillion in the four years of his first term and Biden added another $8.5 trillion in just four years more. By the end of Biden’s term in December 2024, the national debt had risen to $36.2 trillion. As that rises to $38 trillion by year-end 2025 and $56 trillion by 2034, it does not include the Federal Reserve’s balance sheet debt (now $8 trillion) or state and local governments’ debt load of several trillions more.

It is ironic that Trump has chosen to call his tax cuts and defence spending hikes proposal the BBB. For in the world of business finance, BBB refers to the worst-run corporations that are overloaded with high-risk debt (triple B grade). Triple B rating makes them the most financially fragile and at greatest risk of default and bankruptcy.

It is not likely the US federal government can ever go bankrupt or even default on its annual payments of $1.7 trillion to bondholders of the national debt. All it needs to do is ‘print’ more money, either by adding accounts to the Federal Reserve electronically—or perhaps in the near future by creating digital currency. But while that may not mean bankruptcy, it could very well mean a collapse of the value of the US dollar globally. That in turn could result in the abandonment of the dollar as the global reserve and trading currency. And that in a collapse of the recycling of US dollars back to the US by foreign holders of excess dollars. In such case, the US annual budget can’t be financed, requiring massive spending cuts and tax hikes. In other words, the end of the US global empire.

Trump’s tax cuts and spending bill is just another iteration of neoliberal fiscal policy, this time on steroids. But neoliberal fiscal policy is broken. That is, it does not produce the same stimulus to the real economy, real investment, and GDP growth that it had in decades past. Increasing magnitudes of fiscal stimulus are required in order to generate the same, or even smaller, real GDP growth.

Today, fiscal policy increasingly fuels financial asset markets both in the US and globally, driving up prices of stocks, bonds, derivatives, and other financial instruments. Meanwhile, multinational corporations often redirect their tax cuts toward offshore investments and operations, effectively subsidizing the expansion of US capital abroad. These trends of financialization and globalization define the 21st century capitalist economy. Similarly, much of the Federal Reserve’s monetary injections are funnelled into financial markets and offshore activities rather than the broader economy.

Perhaps the best evidence of this is the $10.7 trillion in fiscal and monetary stimulus injected by Congress and the Federal Reserve in 2020–22. It should have produced a massive GDP growth expansion in 2022–24. It produced a mere historical average of barely two percent.

All the talk from the media, economists, and government officials about Trump’s tax cuts stimulating the real economy—boosting wages, jobs, and investment—is simply economic hype. The 2018 cuts didn’t deliver, just like those under Obama and Bush before him. Trump’s current bill won’t be any different.

Fiscal and monetary policy in the late neoliberal era are failing. Nevertheless, America’s elite are doubling down on their tax cutting for the rich and their wars of defence of empire.

Dr. Jack Rasmus is the author of several books on the United States and the global economy, including The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump (2020), Systemic Fragility in the Global Economy (2016), and The Twilight of American Imperialism (forthcoming later this year form Clarity Press). He is a host for the radio show Alternative Visions on the Progressive Radio Network, a journalist, a playwright, and a former professor of economics at St. Mary’s College (retired). He worked for 20 years for various tech start-ups and global companies, prior to which he served for 15 years as an organizer and local union president with several American unions.