Who Wins, Who Loses? — A Preliminary Look at the One Big and Beautiful Bill Act

By: A Policy Observer

Introduction

On July 3, 2025, the U.S. House of Representatives narrowly passed the One Big and Beautiful Bill Act (OBBBA) by a vote of 218 to 214. The following day, on Independence Day, the President officially signed it into law. Spanning areas including taxation, social welfare, green energy, and immigration enforcement, the OBBBA represents a significant shift in federal fiscal and labor policy, framed as an effort to ‘rebalance spending structures and re-activate the workforce.’

This article provides an explanatory, nonpartisan overview of the bill’s contents, its implementation mechanisms, the likely winners and losers, and the broader policy logic and controversies involved.

Key Provisions of the Bill

1. Extension and Expansion of the 2017 Tax Cuts (TCJA)

The bill extends the personal income tax reductions originally enacted under the 2017 Tax Cuts and Jobs Act and increases the estate tax exemption to $20.25 million (up from $12.9 million). The corporate tax rate remains at 21%.

According to the Congressional Budget Office (CBO), these provisions will reduce federal revenues by an estimated $3.4 trillion over the next decade. Approximately 60% of these tax benefits will go to households earning over $200,000 per year. In contrast, low- and middle-income families will see limited or no real benefits due to phase-outs and capped deductions.

The disparity stems from the fact that higher-income earners benefit more from marginal tax rate reductions and estate exemptions, while low-income earners already have minimal tax burdens.

2. Reduction in Three Core Social Welfare Programs

• Medicaid: Federal funding for non-elderly low-income groups will be cut, and states will be expected to decide whether to continue coverage using their own budgets. According to the Kaiser Family Foundation, 41 states currently offer expanded Medicaid. These cuts may force some states to roll back coverage, potentially affecting 8 million people.

• SNAP (food stamps): New documentation requirements mandate at least 20 hours of verified work or training per week. Eligibility will also be restricted for most childless college students.

• Housing Assistance: A 22% cut to the HUD budget halts new housing vouchers and imposes work-planning conditions on existing recipients. Analysts estimate that roughly 400,000 low-income families could lose stable housing.

3. Work Requirements Policy

Targeting individuals aged 18–64 who are not caregivers or officially disabled, this provision mandates at least 20 hours of work or training per week. While the goal is to encourage employment, implementation faces major obstacles:

– Many jobs may have formal employers, but due to irregular hours, non-fixed schedules, and flexible payment methods (such as platform-based payouts), workers often struggle to provide the required documentation of work hours;

– Irregular hours, lack of transportation, or parenting duties often result in unintentional disqualification;

– States lack a standardized tracking platform, and eligibility enforcement varies widely.

Studies show that about 65% of low-wage workers have experienced involuntary part-time employment in the past year—wanting more hours but being unable to obtain them.

4. Termination of Green Energy Tax Incentives

• Electric Vehicle (EV) Tax Credit: Starting October 1, 2025, federal credits of up to $7,500 for new EVs and $4,000 for used EVs will be discontinued.

• Residential Solar Installations: The current 30% tax credit will be reduced to 10% in 2026 and phased out entirely by the end of that year. New applications for low-income solar programs will no longer be accepted.

Supporters argue these subsidies disproportionately benefit upper-middle-class households, while critics warn that eliminating them could slow clean energy adoption and limit access in underserved communities.

5. Strengthening of Immigration Enforcement

Funding for ICE and CBP will be increased by $5.8 billion for expanded detention capacity, border wall construction, faster deportations, and tightened asylum procedures. Some provisions grant greater discretionary power to enforcement agents, raising concerns among civil rights groups.

Beneficiaries of the Bill

1. High-Net-Worth Households and Corporations

These groups will see reduced effective tax rates, especially in capital gains and estate transfers. The flat 21% corporate rate also benefits shareholders and profit margins.

2. Fiscal Conservatives

Policymakers and think tanks that advocate for shrinking government functions and promoting market-based solutions view the OBBBA as a significant policy victory. The bill reflects a broader trend in other developed economies, such as the U.K.’s 2022 budget that similarly combined tax cuts and welfare reductions.

Groups Potentially Adversely Affected

1. Low-Income Workers

While the bill aims to encourage employment through conditional aid, many low-wage jobs lack schedule predictability. Gig workers, part-time retail staff, and temp workers often cannot provide consistent time logs and are thus at risk of disqualification.

One often-overlooked phenomenon is the group of individuals who ‘exit the system’—neither formally employed nor receiving benefits. Although counterintuitive, research confirms that such individuals exist and survive through various means:

– Informal employment (e.g., cash jobs, domestic labor, street vending) untracked by formal labor statistics;

– Economic dependency on family or cohabitation with relatives;

– Reliance on food banks, religious organizations, or occasional temporary assistance;

– In extreme cases, homelessness or income from gray-market activities.

Studies by the Urban Institute (2019) and NBER (2022) show that over 30% of former SNAP recipients did not transition into formal employment but instead entered this ‘uncovered’ state. Their situation often stems not from unwillingness to work but from being structurally excluded.

2. Middle-Class Families

Middle-income earners may see modest tax relief but face deteriorating public services (e.g., education, healthcare, public safety). Meanwhile, they receive limited benefit from energy tax credits yet remain exposed to energy price fluctuations.

3. Immigrant Households

Families in precarious legal status—such as DACA recipients or pending asylum applicants—face increased legal uncertainty, particularly in communities with limited access to translation or legal aid.

Policy Logic and Long-Term Questions

The OBBBA reflects a fiscal philosophy that prioritizes incentive-based spending and budgetary restraint. However, this approach raises several long-standing debates:

1. Do welfare cuts lead to higher employment? Empirical studies suggest that while some individuals increase labor participation after losing benefits, many ‘exit the system’ entirely—neither working nor receiving aid. Their status is not a result of laziness but of systemic exclusion.

2. Do tax cuts for the wealthy boost investment or consumption? High-income individuals tend to save rather than spend their windfalls, limiting the stimulative effect. Conversely, cash transfers to low-income families more reliably boost short-term consumer spending and GDP growth.

3. Do social programs burden public budgets? Many housing and healthcare subsidies are preventive in nature. Cutting them may lead to higher emergency care costs, increased policing needs, and greater educational strain—producing long-term costs that outweigh short-term savings.

Thus, whether a work- and market-oriented eligibility model can address the complexities of social need remains an open and vital question.

Conclusion and Reflection

The passage of the OBBBA marks a major redirection in U.S. fiscal and social policy. Its impact will vary widely depending on individuals’ state of residence, employment type, and legal status.

Understanding the structure and logic of the bill helps not only to assess its immediate consequences but also to inform broader discussions on education, climate, taxation, and equity.

Our next article will explore: ‘Does Welfare Discourage Work? Rethinking the Working Poor and Policy Design.’