Former Treasury Secretary Larry Summers is warning that the newly signed tax and budget legislation—dubbed the One Big, Beautiful Bill Act—poses a significant threat to the long-term fiscal stability of the United States.
Speaking on ABC News, Summers criticized the package, saying it adds unsustainable debt without delivering meaningful economic growth.
"There is no economist without a political agenda who believes this bill will benefit the economy," Summers told George Stephanopoulos. "The overwhelming consensus is that it’s likely to weaken it."
The legislation, signed into law by President Trump on July 4 after clearing the House, aims to boost economic activity through sweeping tax cuts. But even before its passage, leading economists and independent agencies were raising red flags. The Congressional Budget Office projected the bill would increase the federal deficit by several trillion dollars over the next decade.
Summers emphasized the long-term risk this creates for U.S. global leadership. “How long can the world’s greatest debtor remain the world’s greatest power?” he asked. “This is the most debt-heavy tax package—by dollar value—in U.S. history.”
The critiques echo a June 2025 open letter from Nobel Prize-winning economists Paul Krugman, Joseph Stiglitz, and Simon Johnson. Published by the Economic Policy Institute, the letter argued that the bill’s priorities are misaligned with the country’s actual economic challenges.
“The United States faces significant economic headwinds—challenges that demand increased state capacity, not reduced resources through tax cuts,” the economists wrote. “This legislation fails to meaningfully address any of the nation’s core economic issues and, in fact, makes several of them worse.”
Despite concerns from across the economic spectrum, the bill has gained support from industry groups like the American Bankers Association, which praised it for its potential to spur near-term growth.
Still, skepticism remains widespread—even among conservative-leaning institutions. Analysts at the American Enterprise Institute, a center-right think tank, have cast doubt on the bill’s growth potential, aligning more closely with Summers' critique than with the White House’s optimism.
For wealth managers and RIAs, the implications are substantial. The bill may influence everything from equity markets to interest rate expectations and the long-term value of the dollar. Advisors should be prepared to discuss the macroeconomic consequences with clients and may want to re-examine asset allocations in light of potentially higher deficits and the prospect of increased volatility in fixed income markets.
In the near term, clients may benefit from lower individual and corporate tax rates. But Summers’ warning—and the broader economic consensus—suggests those gains could be offset by larger structural risks, including inflationary pressure, rising borrowing costs, and eventual fiscal tightening.
As always, thoughtful scenario planning will be key. Advisors should consider how rising debt levels could impact the long-term investment landscape—and prepare clients for policy reversals should the current trajectory prove unsustainable.
