If you've been following the headlines, you've likely heard rumblings about the new version of the “Big Beautiful Bill,” a sweeping legislative package that touches everything from tax policy and AI to infrastructure and small business programs. Despite the name, the implications of this budget bill are real and complex.
With anything political, it can be challenging to separate fact from fiction and message from the medium. However, there are real stakes associated to any future changes in the law. And as a business owner, you might be wondering: How will this affect my costs, my access to capital, and my long-term growth strategy?
In order to make your own informed decision, let’s break down what’s in the budget bill. We will use a few academic economic frameworks to think critically about what it means for your business and the U.S. economy overall.
What is the Status of the Budget Bill?
The House passed bill, dubbed the “Big Beautiful Bill” by the Trump administration, is now facing major hurdles in Congress as it enters Senate debate. Despite being framed as a path to $1.7 trillion savings, the bill has sparked deep division over its true deficit impact estimate. The CBO projects a $2.4 trillion increase over the next decade. The bill includes sweeping changes to Medicaid, triggering concern across the nation about millions of citizens potentially losing coverage. Controversial provisions in the judiciary section, along with rollbacks to clean energy credits and proposed SNAP reforms, have also drawn opposition from both environmental groups and fiscal conservatives. Prominent critics, including Elon Musk, argue the legislation undermines long-term fiscal health. As Congress races toward the July 4 deadline, the bill's survival will likely depend on whether the Senate can reconcile internal GOP disagreements over mandatory savings, health care policy, and overall economic impact.
But First, What’s Actually in the Budget Bill?
While the final text of the legislation is still evolving, here’s what the current version includes:
- Tax adjustments: A $4.5 trillion increase in the deficit from tax cuts over the next decade so long as spending is cut by $1.7 trillion. If spending is not cut by $1.7 trillion, the cap on tax cuts will be reduced dollar-for-dollar. Steeper penalties for offshoring profits.
- Incentives for U.S. manufacturing: Subsidies for domestic production and reshoring.
- Cuts to federal discretionary spending: The steepest cuts will come to environmental regulation, workforce development, and MBE funding.
- Increased military and border spending: Billions are being redirected toward defense and security.
- Simplified small business loan programs: SBA modernization efforts, but with reduced total funding.
- Rollback of select pandemic-era safety nets: Including some child tax credits and emergency grant programs.
So, how do economists make sense of these moves, and what can you, as a business owner, know to be informed about the future?
Keynesianism vs. Austerity: Spending Today, or Saving for Tomorrow?
From a Keynesian economics perspective, government spending can be a powerful tool to stimulate demand, especially during economic downturns or when recovery is uneven. Cutting discretionary programs and small business grants—especially if those programs serve under-resourced entrepreneurs—can contract demand in local economies and shrink the money circulating in the hands of consumers and small firms.
By contrast, the bill leans more toward a neoclassical or austerity framework, assuming that long-term growth requires reduced deficits and reining in public spending. Proponents argue that controlling inflation and balancing the federal budget will create a more stable environment for private-sector investment. Critics, however, point to historical evidence (e.g., Europe’s post-2008 austerity push) that shows how cuts can deepen inequality and even stunt our economic recovery.
What to watch: If your business relies on government contracts, community funding programs, or low-cost SBA loans, these proposed cuts could tighten your belt. If you operate in defense, security, or reshoring-friendly manufacturing (meaning you manufacture inside the U.S.), you might see a windfall.
Ricardian Equivalence: Will Consumers Spend or Save?
Here’s a classic economic idea: Ricardian equivalence suggests that when governments increase spending without raising taxes, rational consumers expect future tax hikes and will start saving more now instead of spending.
The bill increases targeted spending in some areas (like defense and tax cuts) while reducing in others. If consumers and small business owners anticipate future deficit consequences—like interest rate spikes or inflation—they might pull back, undercutting the bill’s intended economic stimulus.
Why it matters: If you’re in a consumer-facing industry, especially B2C retail, hospitality, or discretionary services, the shifts in consumer confidence tied to this bill may hit revenue harder than you expect.
Supply-Side Economics: Incentives for Production
This bill is classic supply-side economics in many ways. Tax incentives for domestic production and manufacturing, penalties for outsourcing, and deregulation in key sectors are all meant to stimulate the supply side of the economy.
Supporters of the bill argue this will boost GDP by encouraging private investment and productivity. Critics of the bill say these benefits tend to accrue to larger firms, and that the cuts to workforce development programs could leave smaller employers scrambling for skilled labor.
Look closely at:
- Whether your business qualifies for reshoring or tax credits.
- If your supply chain relies on low-cost imports that may now be penalized.
- How changes to workforce development programs might affect your hiring.
Modern Monetary Theory (MMT): Is the Deficit Really a Problem?
Supporters of Modern Monetary Theory argue that governments like the U.S., which issue their own currency, can afford to run deficits as long as inflation is under control. In other words, the federal budget doesn’t need to be balanced like a household budget.
The "Big Beautiful Bill" doesn’t go this far. In fact, it attempts to curb certain types of spending to manage the deficit. But MMT advocates might argue that cutting investment in entrepreneurs, workforce development, or infrastructure is self-defeating especially in a time when growth is still uneven across regions and sectors.
For you, this means: Don't assume that every “cost-cutting” measure is good for business. Oftentimes, a public investment in the ecosystem (infrastructure, capital access, upskilling) is what gives small firms a fighting chance to compete.
Key Takeaways for Business Owners
- Follow the funding shifts. Defense, domestic manufacturing, and infrastructure-adjacent sectors may benefit. Service industries, MWBEs, and grant-dependent organizations will feel the pinch.
- Plan for tighter credit. With SBA programs potentially scaling back, you may need to rely more on private capital, fintech platforms, or partnerships to access working capital.
- Watch consumer sentiment. Policy decisions that spark fears of inflation or tax hikes could reduce spending, particularly in consumer-driven sectors.
- Think regionally. This budget bill will have uneven impact. States with high military spending or manufacturing hubs may see growth; others could face retrenchment.
- Stay nimble. The political landscape in 2025 is volatile. Policies may shift again before year’s end, especially if administrative funding battles intensify.
Final Thought
As always, legislative moves like the “Big Beautiful Bill” are about trade-offs. Some industries will gain; others will need to recalibrate. For business owners particularly with centrist views, the goal isn’t to cheer or condemn, it’s to adapt strategically.
The economy doesn’t stop evolving because of one bill. Strong small business owners know how to weather every political and economic cycle. But understanding the theories behind it—and the real-world mechanisms at play—helps you lead your business with clarity.