Wall Street throws weight behind Trump’s massive spending bill for economic upside

Donald Trump’s One Big Beautiful Bill Act (OBBBA) scraped through the US Senate in a tense 51–49 vote late Saturday, pushing the sweeping tax and spending legislation one step closer to his desk.

Despite warnings from credit watchdogs and mounting backlash over the projected cost, some banks are calling it a win for the US economy… at least in the short term.

The bill is expected to inject fresh life into the economy by extending key provisions from Trump’s 2017 tax law. Without it, tax rates would jump in 2026. 

That’s the part Wall Street is watching. The American Bankers Association publicly backed the legislation on Sunday, calling its tax incentives “much needed.” They’re not alone.

Economists say the bill avoids a tax cliff

David Seif, Nomura’s chief economist for developed markets, said the legislation is “almost unquestionably” better for the US economy than doing nothing. With the 2017 tax cuts expiring next year, Seif pointed to the risk of higher taxes shrinking household spending and business investment. He explained that the OBBBA “prevents a major and sudden fiscal contraction” by renewing most of the expiring provisions.

Seif also said the bill allows companies to write off capital investments faster, which may raise business spending in the next few years — although he warned that could come at the cost of future investment. The short-term economic lift is all Wall Street seems to care about for now.

Citi’s market analysts echoed that view in a report last Wednesday. They said that the July passage of Trump’s bill, along with ongoing trade agreements with the UK, China, Japan, and India, could improve investor confidence.

Citi also projected that the Federal Reserve might loosen monetary policy soon and emphasized they “do not see a bond vigilante moment during 2025/2026,” because much of the bill’s funding comes from tariffs, not debt.

Critics warn of fiscal damage and IRS strain

Not everyone’s clapping. The Congressional Budget Office projected that OBBBA will pile at least $3 trillion onto the federal deficit over the next ten years. That estimate sparked more criticism over what some economists see as reckless policy.

Morgan Stanley, while acknowledging that tax changes in the bill could lift sectors like communication services, energy, and industrials, said the longer-term risks to fiscal health are impossible to ignore.

Erica York, vice president at the Tax Foundation’s Center for Federal Tax Policy, didn’t hold back either. She called the bill “fiscally irresponsible,” even when growth effects are considered. York said the way the tax breaks are designed creates confusion and leaves out entire categories of workers. She warned that this kind of selective tax relief is not only unfair but “poorly designed.”

York also pointed to the administrative mess the bill could create. Because of the tightly targeted tax tweaks, she said the IRS will now have to spend time and money updating guidance, reworking forms, and adjusting enforcement tools. All of that will stretch an already overloaded agency even thinner. That’s not a small side effect — it could slow down everything from refunds to audits.

Despite the debt warnings and administrative red flags, Trump and his party are charging ahead. The political timeline is obvious. The 2017 tax cuts start to vanish at the end of 2025, and without this bill, the economy could face a sharp drop-off. Wall Street knows that. That’s why they’re backing OBBBA now — not because it’s perfect, but because they think it keeps the US economy from falling off a cliff.

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