Why MAGA’s ‘One Big Beautiful Bill’ Repeats Every Economic Mistake Since Reagan

What do you get when you combine 1980s tax myths, 2000s deficits, and 2020s culture war branding? The ‘One Big Beautiful Bill’, a Frankenstein of failed promises wrapped in a stars-and-stripes bow

Introduction

In May 2025, Congress unveiled the "One Big Beautiful Bill," a legislative monolith marrying sweeping tax cuts with ideological dog-whistles dressed as economic reform. With promises of economic rebirth, the bill eliminates federal taxes on tip income and overtime pay, permanently enshrines the 2017 tax cuts, tightens Medicaid eligibility (particularly by excluding undocumented immigrants), pours billions into border security, and prohibits taxpayer-funded gender-affirming procedures for minors. Touted as both a gift to workers and a check on the "woke elite," the bill mirrors a pattern seen many times before: large-scale tax relief for the top, austerity at the bottom, and a public relations campaign that markets regress as revolution.

This analysis explores the economic consequences of each major provision by revisiting similar historical policies from Reagan to Trump. The goal is not to replay old critiques but to highlight what decades of empirical data already demonstrate: growth does not trickle, deficits do not shrink themselves, and economic justice is rarely found in the fine print of sweeping cuts.

Tax Cuts, Revenue, and Inequality: A History of Broken Promises

The bill’s tax provisions carry the familiar perfume of Reaganomics: permanent rate cuts, glorified loopholes, and economic promises as lofty as they are unfulfilled. Reagan's 1981 tax cuts slashed the top income tax rate from 70% to 50% (Wessel, 2017), and by 1986 they were trimmed again to 28%. The result? Revenues fell, deficits soared, and Reagan himself reversed course with subsequent tax hikes in 1982, 1983, 1984, and 1987 (Wessel, 2017).

George W. Bush revived the trend in the early 2000s, cutting taxes in 2001 and 2003. These too bled the Treasury and ballooned the debt. Since 2001, tax cuts from the Bush and Trump eras have added an estimated $10 trillion to the national debt, comprising over half the growth in the debt-to-GDP ratio during that period (Kamin, 2021).

Trump’s 2017 Tax Cuts and Jobs Act (TCJA) promised wage booms and explosive investment. Instead, the CBO found that the law added $1.9 trillion to the deficit, with no sustained growth dividend (Congressional Budget Office [CBO], 2018). GDP briefly ticked up in 2018, then slouched back to trend. By 2023, growth forecasts were no better than pre-TCJA projections (CBO, 2023). One analysis found CEO pay increased 25 cents for every dollar of corporate tax cut (Bivens, 2019). Wages? Not so much.

Widening Inequality: The Real Dividend

When top tax rates fall, inequality rises. A Congressional Research Service study covering 65 years found no link between top-rate cuts and GDP growth but a clear correlation with income concentration among the elite (Hungerford, 2012). The top 0.1% of earners tripled their share of national income after decades of tax cuts.

The TCJA followed this pattern. In 2018, households earning under $25,000 saw about $60 in tax savings. The top 1% pocketed over $51,000 (House Budget Committee Democrats, 2020). The new 2025 bill, by making these cuts permanent, extends the inequality arc.

The U.S. Gini index has climbed from 0.43 in 1990 to nearly 0.49, a 20% surge in income disparity (Pew Research Center, 2020). Real wage growth from 1979 to 2019 tells the same story: the 90th percentile gained 41%, the median just 9%, and the 10th percentile a mere 6.5% (Hungerford, 2012).

“No Tax on Tips” and “No Tax on Overtime”: Sleight of Hand Masquerading as Policy

Exempting tips from taxation sounds like a populist gift to service workers. It isn’t. The Brookings Institution (Gale et al., 2024) calls it "an answer in search of a question." Just 5% of low-wage workers receive tips, and 37% of them already owe no income tax. Meanwhile, higher-earning tipped workers at luxury resorts and casinos would get windfalls. Horizontal equity collapses: two people with identical incomes might pay different taxes based solely on whether their money was labeled a "tip."

The Tax Foundation pegs the ten-year cost at $100 billion (Bipartisan Policy Center, 2023). Employers could lower base wages, reclassify jobs as tipped, and pocket the difference. And if tips are exempt from payroll taxes, workers might find themselves with smaller Social Security benefits later (Gale et al., 2024).

The overtime exemption is similarly misguided. France tried it from 2007 to 2012. The result? No increase in hours worked, but plenty of manipulation: employers and workers reclassified normal hours as overtime to dodge taxes (Carcillo & Cahuc, 2011). Billions lost in revenue. The policy was scrapped.

Immigration and Border Spending: The Illusion of Economic Defense

Billions have been spent "securing the border," with little effect on unauthorized immigration. The Border Patrol’s budget grew from $263 million in 1990 to $4.7 billion by 2019 (American Immigration Council, 2021). Yet, the undocumented population nearly tripled between 1990 and 2007 (Pew Research Center, 2019).

Immigration levels track with economic conditions more than enforcement. When jobs are scarce, immigration declines. When the U.S. economy hums, people come. No wall, drone, or agent has reversed this basic economic gravity (National Academies of Sciences, 2016).

And contrary to MAGA lore, immigrants don’t tank wages. The NAS concluded that immigration has "little to no" negative effect on native-born workers, and may even raise average wages slightly (National Academies of Sciences, 2016).

Kicking undocumented immigrants off Medicaid? That’s already law. The bill doubles down on verification, which might save pennies but risks removing eligible citizens for paperwork errors, as seen post-1996 welfare reform (Health Law Program, 2024).

The cost of covering transgender minors? About $70 million annually in Medicaid — or 0.01% of the program (Health Law Program, 2024). Symbolic austerity, real harm.

Entitlements: Penny-Wise, Pound-Foolish

The bill recycles failed experiments in entitlement restriction. Arkansas's Medicaid work requirement in 2018 removed 18,000 people from coverage, most of whom were already working or exempt (Kaiser Family Foundation [KFF], 2019). It didn’t increase employment. CBO estimated that similar national rules would cut Medicaid rolls by 1.5 million people per year, not because they got jobs, but because of paperwork traps (KFF, 2023).

Welfare reform in 1996 did raise single-mother employment during the 1990s boom, but many families still remained in poverty. When recessions came, those who lost TANF had no safety net (Center on Budget and Policy Priorities, 2023).

The 1983 Social Security reforms worked, raising the retirement age, increasing taxes, and taxing benefits helped stabilize the program. But the One Big Beautiful Bill dodges such hard choices while enacting tax cuts that may make future reform even harder (Wessel, 2017).

Conclusion: A Repackaged History of Economic Folly

Every pillar of the One Big Beautiful Bill leans on historical precedent, and nearly all of them crumble under scrutiny. Massive tax cuts don’t pay for themselves. They never have. They inflate deficits, enrich the wealthy, and barely nudge growth. Enforcement-heavy immigration policy doesn’t deter migration driven by poverty and violence. Stricter entitlement rules often punish the working poor without changing labor dynamics.

What remains is a paradox: a bill promising prosperity while repeating every policy mistake that undercut prosperity in the past. If the goal is to build a fairer, stronger economy, this is the wrong blueprint. If the goal is to write history’s next cautionary tale, it's off to a flawless start.

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References

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2. Bipartisan Policy Center. (2023). The 2025 Tax Debate: The Corporate Tax Rate and Pass-Through Deduction.

3. Bivens, J. (2019). Still terrible at two: The Trump tax act delivered big benefits to the rich and corporations while doing virtually nothing for working families. Economic Policy Institute.

4. Wessel, D. (2017). What we learned from Reagan's tax cuts. Brookings Institution.

5. Carcillo, S., & Cahuc, P. (2011). The “de-taxation” of overtime hours: Lessons from the French experiment. VoxEU/CEPR.

6. Center on Budget and Policy Priorities. (2023). Continued Increases in TANF Benefit Levels Are Critical to Helping Families Meet Basic Needs.

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8. Congressional Budget Office. (2023). The Budget and Economic Outlook: 2023 to 2033.

9. Gale, W., & Berlin, I. (2024). No tax on tips: An answer in search of a question. Brookings Institution.

10. Health Law Program. (2024). Protect Medicaid Funding Issue #7: Access to Sexual and Reproductive Health Services.

11. Hungerford, T. L. (2012). An Analysis of the “Buffett Rule”. Congressional Research Service.

12. Kaiser Family Foundation. (2019). 5 Key Facts About Medicaid Work Requirements.

13. Kaiser Family Foundation. (2023). Medicaid Work Requirements: Current Waiver and Legislative Activity.

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15. National Academies of Sciences, Engineering, and Medicine. (2016). The Economic and Fiscal Consequences of Immigration.

16. Pew Research Center. (2019). U.S. Unauthorized Immigrant Total Dips to Lowest Level in a Decade.

17. Pew Research Center. (2020). What we know about unauthorized immigrants living in the U.S.

18. Wessel, D. (2017). What we learned from Reagan's tax cuts. Brookings Institution.