Treasury Secretary Scott Bessent delivered a stark warning to Congress today: failing to pass the One Big Beautiful Bill Act (OBBB) would trigger the “largest tax hike in history,” plunging the U.S. economy into a “cataclysmic” crisis.
Testifying before the congressional committeeBessent championed the bill as a lifeline for working families and small businesses, urging lawmakers to act swiftly to make the 2017 tax cuts permanent and avert disaster.
The OBBB, a cornerstone of President Trump’s economic agenda, promises no federal tax on tips or overtime for workers earning under $160,000, tax cuts for seniors, a doubled child tax credit, and a temporary increase in the standard deduction.
It also offers 100% expensing for new and expanding U.S. factories to revitalize manufacturing and repeals federal excise taxes on gun silencers and tanning services.
Bessent cited recent IRS success—tax receipts up 9.5% in April and 14.7% in May compared to last year, alongside $2 billion in savings from modernization—as evidence of the administration’s fiscal competence.
Failure to Pass One Big Beautiful Bill Could Trigger Economic “Sudden Stop,” Warns Treasury Secretary Bessent
A “Sudden Stop” for Main Street
If the OBBB fails to pass, Bessent warned of a “sudden stop” that would devastate Main Street and working Americans. “It would be the largest tax hike in history,” he told Representative Kelly (R).
“It would be a disaster for businesses, for working Americans, and for our status in the world.”
As the 2017 tax cuts expire, families could face tax increases of thousands of dollars, eroding take-home pay estimated by the Council of Economic Advisers to rise by $7,800–$13,300 for a family of four under the bill.
Workers, particularly those relying on tips or overtime, would lose critical tax relief, deepening the affordability crisis inherited from the Biden administration.
Small businesses, averaging nine employees and often family-owned, would bear the brunt. Bessent emphasized that these Main Street enterprises, many operating as pass-through entities, would face crippling tax hikes, halting hiring and expansion.
“This would be cataclysmic for them,” he said, noting that businesses are already delaying capital expenditures awaiting the bill’s certainty.
Vice Chairman Buchanan (R) called the OBBB’s 100% expensing “jet fuel” for small businesses, warning that without it, job creation would stall.
Manufacturing, employing just 9% of Americans, would also falter. Bessent highlighted that wage growth is stronger in manufacturing than in services, and without the OBBB’s incentives, a sector resurgence would be unattainable.
“It’s time for this country to start building things again,” he urged, warning that failure would choke investment in new factories and erode America’s industrial edge.
The unemployment rate, currently low with 500,000 private sector jobs added since January, could spike as businesses contract.
Bessent cautioned that the U.S.’s global economic standing would suffer, weakening leverage in trade negotiations with countries like China.
The bill’s provisions to counter foreign discriminatory taxes, such as the UTPR, would also lapse, potentially draining hundreds of billions in corporate revenues to foreign treasuries.
Economic Stakes and Projections
Bessent argued the OBBB would cement a “golden age economy,” pointing to inflation at its slowest since 2020 and strong consumer confidence. He insisted the U.S. faces a spending problem, not a revenue problem, with revenues at 17–18% of GDP.
When pressed on debt concerns, he cited economist Art Laffer’s claim that the bill won’t add to the deficit, though critics question Laffer’s independence.
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However, the Congressional Budget Office (CBO) projects the OBBB would add $2.4 trillion to the federal deficit over a decade, with the Joint Committee on Taxation estimating a modest 0.4% GDP increase over ten years.
Critics’ Concerns: Debt and Trade-Offs
Democratic lawmakers raised alarms about the bill’s costs. Ranking Member Neal (D) argued it favors the wealthy, claiming millionaires would gain $84,000 in tax relief while those earning under $50,000 get just $1 per day.
The CBO estimates 16 million Americans could lose health insurance and 11 million could lose nutrition benefits due to over $850 billion in cuts to Medicaid, CHIP, and other programs.
Representative Thompson (D) cited projections from Yale and the Tax Foundation, warning of trillions in added debt and potential job losses.
Bessent countered that the bill prioritizes working families, not the elite. “The waitress keeping more from no tax on tips or the lineman with no tax on overtime would be surprised to learn Democrats consider them wealthy,” Chairman Smith (R) quipped.
Bessent also dismissed debt fears, noting U.S. 10-year bond yields are lower than on January 1, unlike German and Japanese yields, despite Moody’s recent credit downgrade.
A Defining Choice
The OBBB stands at a crossroads. Passage could lock in tax relief, spur manufacturing, and sustain economic momentum, with inflation decelerating and jobs growing.
Failure, however, risks a historic tax hike that could unravel these gains, crush small businesses, and dim prospects for working Americans.
As Bessent told Congress, “Certainty and permanence will lead a Main Street resurgence.” With the Senate’s vote looming, lawmakers face a defining choice: avert an economic “sudden stop” or brace for its fallout.
Failure to Pass One Big Beautiful Bill Could Trigger Economic “Sudden Stop,” Warns Treasury Secretary Bessent
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