Banks Cheer Trump’s “Big Beautiful Bill” Even as Deficit Alarms Ring

Sweeping tax reforms win Wall Street praise, while economists warn of longer-term fiscal strain

A fresh wave of optimism is pulsing through America’s financial sector — not from a strong jobs report or a stock market rally, but from a bill with a name as flashy as its implications: the “One Big Beautiful Bill Act.”

Advanced by a slim 51-49 Senate vote over the weekend, the legislation — dubbed by President Donald Trump as his “big, beautiful bill” — is now barreling toward the Oval Office. At its core, the bill is a blend of tax cuts, targeted incentives, and fiscal stimuli, designed to prolong the economic momentum Trump has campaigned on. Banks are loving it. Credit agencies? Not so much.

Wall Street’s Thumbs-Up: Relief, Not Worry

The American Bankers Association didn’t hesitate to plant a flag in support.

In a letter published Sunday, the group said it “strongly supports” many of the bill’s key provisions, especially those promising “much needed tax relief.” They praised incentives that could ease credit pressure on small businesses, reward capital investment, and stave off a looming tax hike that’s scheduled to hit in 2026 unless current laws change.

Nomura’s chief economist David Seif was just as blunt. “I think the OBBB would almost unquestionably be good for the U.S. economy over the next couple of years compared to passing nothing,” he said. He pointed out that doing nothing would essentially slam the brakes on household and corporate spending next year, as several tax provisions from Trump’s 2017 Tax Cuts and Jobs Act expire.

That looming threat — a so-called fiscal cliff — has become a quiet obsession for bankers.

Averting the 2026 Tax Squeeze

Time’s running out on several consumer- and business-friendly tax measures passed under Trump’s first term. Unless Congress extends them or replaces them, they vanish by December 2025. And that’s the crux of the banks’ cheerleading.

Economists warn that without some kind of buffer, Americans would face:

Higher income tax rates across all brackets
Reduced child tax credits
The end of generous bonus depreciation rules for businesses
Shrinking standard deductions for most families

That’s a cocktail of contraction, as analysts like to say.

So while the One Big Beautiful Bill might stoke short-term growth — or at least preserve it — it’s not just about economic ambition. It’s damage control.

What’s Inside the “Big Beautiful” Package?

Trump’s camp hasn’t released a full public breakdown of the bill’s latest text, but key features known so far include:

Provision	Impact
Income tax extension	Prevents hikes for middle- and upper-income earners
Business expensing rules	Keeps bonus depreciation alive
Small business tax incentives	Lower rates and deduction simplifications
Infrastructure investment credits	Targets private-sector infrastructure involvement
Child and family tax boosts	Extends expanded child tax credits

The bill also includes a bundle of transportation and energy infrastructure incentives, which Republicans say will support supply chain resilience and rural economic development.

But it’s the tax side — not roads or bridges — that’s making Wall Street giddy.

The Deficit Elephant in the Room

And yet, this glee comes with a giant asterisk. The Congressional Budget Office has already flagged that the OBBB could balloon the federal deficit by over $2 trillion over the next decade.

That number isn’t just a rounding error.

Moody’s and Fitch have hinted that further deterioration of America’s fiscal position — especially if growth doesn’t catch up with outlays — could eventually lead to a downgrade of U.S. creditworthiness. In fact, Fitch already stripped the U.S. of its triple-A rating last year.

One veteran D.C. analyst put it this way: “Wall Street wants the sugar rush, but Main Street might get the bill.”

Political Theater, Economic Crossroads

The bill’s passage comes during a feverish election year climate, with Trump leaning hard on the economy as a reelection linchpin. Democrats have blasted the bill as a “corporate giveaway,” with Senator Elizabeth Warren calling it “irresponsible and inflationary.”

But Republicans see an opening.

They argue the bill fills a looming policy vacuum. With 2026 tax hikes ticking closer, the idea is to either extend or revise before they bite — and do it in a way that stimulates spending now.

Still, economists say the whole discussion reflects a bigger identity crisis in U.S. fiscal policy. Should Washington embrace temporary growth even if it digs a bigger hole long-term? Or play the long game and risk a recession-lite slump in the meantime?

One sentence sums it up: nobody wants to be the adult in the room right now.

Markets React, Quietly — For Now

So far, markets haven’t panicked. The S&P 500 held steady on Monday, with modest gains in bank stocks like JPMorgan and Bank of America. Treasuries saw a mild dip, suggesting bond investors are beginning to price in the possibility of wider deficits — but not radically so.

That’s largely because, despite the drama, the economic fundamentals remain steady: