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U.S. banks and financial institutions are voicing cautious optimism over former President Donald Trump’s sweeping new legislation, officially titled the One Big Beautiful Bill Act (OBBBA). Despite sharp criticism and warnings over its long-term fiscal impact, many on Wall Street say the bill could provide vital economic momentum in the short term.

Advanced by a razor-thin 51-49 Senate vote on Saturday, the bill now inches closer to becoming law. With broad tax incentives and business-focused provisions, the OBBBA is being hailed by supporters as a much-needed measure to shield the U.S. economy from an impending fiscal cliff — but others warn of ballooning debt and administrative headaches.

Banks Applaud the Stimulus Push

The American Bankers Association released a letter Sunday voicing strong support for the legislation, calling it a timely intervention to extend crucial tax relief measures introduced under Trump’s 2017 Tax Cuts and Jobs Act (TCJA). Those tax cuts — including lower personal tax rates, higher child tax credits, and substantial business deductions — are set to expire by the end of 2025 unless Congress intervenes.

Nomura’s Chief Economist for Developed Markets, David Seif, argued the bill could avert a major economic slowdown. “I think the OBBB would almost unquestionably be good for the U.S. economy over the next couple of years compared to doing nothing,” Seif told CNBC.

Citi echoed this sentiment in a research note last week, stating that the bill, coupled with expected trade deals with nations such as the UK, China, and Japan, could serve as a near-term “economic tailwind.” The bank also projected supportive moves by the Federal Reserve, suggesting that “a loosening monetary stance will complement the fiscal expansion.”

Economic Impact and Tax Extensions

A key appeal of the OBBBA lies in its ability to extend most of the TCJA’s expiring tax breaks, thereby preventing a sudden fiscal contraction beginning in 2026. According to analysts, renewing these provisions could help maintain consumer spending and corporate investment during a fragile economic period.

Seif also noted that one specific provision — faster expensing of capital investments — may boost business spending in the next few years. However, he warned that this could shift investment activity from later years into the short term, creating uneven growth.

Critics Raise Red Flags Over Deficit and Complexity

Despite the support from major banks, critics argue the bill’s benefits are short-lived and come at a steep price. The Congressional Budget Office (CBO), a nonpartisan fiscal watchdog, estimates that the legislation could add at least $3 trillion to the federal deficit over the next decade.

Morgan Stanley analysts acknowledged the bill’s potential to lift sectors like industrials, energy, and communication services but highlighted concerns around fiscal sustainability. "Long-term debt dynamics cannot be ignored," the bank stated in a June note.

Erica York, Vice President at the Tax Foundation’s Center for Federal Tax Policy, criticized the bill’s tax structure as “fiscally irresponsible.” She emphasized that many of the tax changes are overly complex and unevenly applied across industries and income groups. “Some workers receive significant relief, while others are left out entirely,” York explained.

In addition, York warned that the Internal Revenue Service (IRS) would face increased strain managing and enforcing the law’s tailored tax codes, requiring updates to tax forms, audits, and guidance during a period when the agency is already under pressure.

Looking Ahead

As the OBBBA heads toward final passage, it has become a symbol of the broader debate between short-term economic stimulus and long-term fiscal responsibility. Supporters say the bill is essential to prevent a sudden slowdown in 2026, while critics argue it mortgages the future for temporary gains.

The final impact will depend not only on how the bill is implemented, but also on how markets, businesses, and consumers respond in a politically volatile and economically uncertain landscape.

For now, what’s clear is that Trump’s “big, beautiful bill” is poised to reshape U.S. fiscal policy — for better or worse.