Market Analysis: Trump's "Big and Beautiful" Tax Reform Bill May Only Provide Short-term Boost to the U.S. Economy

The "big and beautiful" tax reform bill proposed by President Trump passed the House of Representatives on Thursday and has now been submitted to the Senate for review. Jed Elberbrook, portfolio manager at Argent Capital Management, stated in an interview that if the bill is ultimately approved and becomes law, it will "reduce taxes for many groups and increase spending in areas such as defense." He added that, in short, this will boost the economy in the short term. However, in the long run, the bill may exacerbate the U.S. fiscal deficit. Tax cuts mean reduced fiscal revenue, while increased defense spending means expanded government fiscal expenditure. This is a simple arithmetic problem: revenue decreases while expenditure increases. Although U.S. Treasury yields have slightly retreated from Wednesday's surge, they remain high compared to the beginning of the year. This indicates that investors are cautious about lending to the U.S. government, thus demanding higher yields for a safety margin. In the stock market, investors are taking a wait-and-see approach, with the S&P 500 index and the Dow Jones Industrial Average remaining basically flat after the bill's passage. At least one piece of good news emerged on Thursday: the U.S. Supreme Court strongly hinted that Federal Reserve members may enjoy protection from being dismissed by the president, reducing the risk of the Trump administration causing market turmoil again