MEMO: The One Big Beautiful Bill Improves the Fiscal Trajectory
6/7/2025
Action Summary
- Overall Objective: Improve the nation’s fiscal trajectory by enacting the One Big Beautiful Bill Act (OBBB), which delivers historic mandatory savings and economic growth through tax policy changes.
- Mandatory Savings: Incorporates $1.7 trillion in permanent mandatory savings—the highest in U.S. history—surpassing previous deficit reduction measures (e.g., Deficit Reduction Act of 2005, Balanced Budget Act of 1997).
- Deficit Reduction Impact:
- The OBBB alone reduces the deficit by over $1.4 trillion over 10 years.
- Net figures show a deficit effect of ($1,407) billion, factoring in border/defense spending, tax cuts, non-tax revenues, and changes in debt service.
- Complementary Trump Policies: The OBBB is part of a broader strategy including tariff increases, discretionary spending cuts, and regulatory changes that together could reduce deficits by approximately $6.7 trillion over the next decade.
- Economic Growth Assumptions: Anticipated higher economic growth from low taxes, regulatory relief, increased trade, and energy policy changes, potentially exceeding Congressional Budget Office projections.
- Key Trade-Offs: While the bill increases one-time spending (e.g., securing the border and adjustments to tax code loopholes), these are largely offset by permanent savings and deficit reduction measures.
Risks & Considerations
- The One Big Beautiful Bill (OBBB) aims to significantly reduce the national deficit through mandatory savings and tax policies. However, the focus on deficit reduction could lead to cuts in federal funding for education and research, which may impact Vanderbilt University’s reliance on federal grants.
- The bill’s emphasis on tax cuts and regulatory changes could alter the economic landscape, potentially affecting the availability of federal funds for higher education institutions. This may necessitate strategic adjustments in Vanderbilt’s funding and financial planning.
- With the potential for increased tariffs and discretionary spending cuts, there could be broader economic implications that affect the university’s operations, particularly in areas reliant on international collaboration and funding.
- The reduction in welfare benefits and regulatory changes could impact the socio-economic diversity of the student body, as students from lower-income backgrounds may face additional financial challenges.
Impacted Programs
- Vanderbilt’s Financial Aid Office may need to reassess its strategies to support students who could be affected by changes in federal funding and welfare benefits.
- The Office of Research might experience shifts in funding opportunities, requiring adjustments in grant application strategies and partnerships to align with new federal priorities.
- International Programs could be impacted by changes in tariffs and trade policies, affecting collaborations and exchanges with foreign institutions.
- The Peabody College of Education and Human Development may need to explore new research avenues related to the economic and social impacts of the OBBB and related policies.
Financial Impact
- The potential reduction in federal funding for education and research could necessitate increased reliance on private grants and alternative funding sources to maintain Vanderbilt’s programs and initiatives.
- Changes in tax policies and economic growth projections could influence the university’s financial planning and budgeting, requiring careful analysis and adaptation to new fiscal realities.
- Vanderbilt may need to explore opportunities for securing funding through collaborations with federal agencies focused on economic growth and regulatory relief.
- The potential impact on student demographics and financial aid needs could affect tuition revenue and the distribution of financial resources within the university.
Relevance Score: 4 (The bill presents a need for potential major changes or transformations of programs and financial strategies.)
Key Actions
- Vanderbilt’s Financial Planning Office should assess the potential impact of the One Big Beautiful Bill (OBBB) on federal funding for education and research. Understanding the implications of mandatory savings and discretionary spending cuts will be crucial for anticipating changes in federal support.
- The Office of Federal Relations should engage with policymakers to advocate for the preservation of funding streams that support higher education and research. By actively participating in discussions about the OBBB, Vanderbilt can help shape policies that align with its strategic priorities.
- Vanderbilt’s Research Administration should explore alternative funding sources to mitigate potential reductions in federal research grants. Diversifying funding through private grants and partnerships will be essential to sustain research initiatives.
- The Department of Economics should conduct research on the broader economic impacts of the OBBB, including the effects of tax policies and deficit reduction strategies. This research can provide valuable insights into how these policies might influence the higher education sector and the broader economy.
- Vanderbilt’s Community Engagement Office should consider hosting forums and discussions to educate the university community about the potential impacts of the OBBB. Facilitating dialogue on these issues can enhance understanding and foster informed decision-making.
Opportunities
- The emphasis on economic growth and tax policies presents an opportunity for Vanderbilt’s Owen Graduate School of Management to develop programs and research initiatives focused on fiscal policy and economic development. By leveraging its expertise, the school can contribute to the national conversation on economic policy.
- Vanderbilt can capitalize on the focus on regulatory relief by exploring partnerships with industries affected by these changes. Engaging with businesses and policymakers can enhance Vanderbilt’s role as a thought leader in regulatory policy and economic growth.
- The potential for increased tariff revenues offers an opportunity for Vanderbilt’s International Business Program to study the effects of trade policies on global markets. This research can provide valuable insights into the implications of trade policies for the U.S. economy and international relations.
Relevance Score: 4 (The OBBB presents potential for major process changes required for Vanderbilt’s programs due to impacts on federal funding and economic policies.)
Timeline for Implementation
N/A – No specific deadline or implementation timeline is provided; only that actions will commence upon enactment.
Relevance Score: 1
Impacted Government Organizations
- Office of Management and Budget (OMB): As the originating office of the memo, OMB is central to planning, analyzing, and communicating the fiscal policies and deficit reduction measures outlined in the bill.
- White House Communications Staff: The memo is addressed to this group, making them responsible for how the fiscal narrative and policy impacts are communicated both internally and externally.
- Congressional Budget Office (CBO): Referenced for its deficit and tax policy estimates, the CBO’s analyses provide the benchmark for assessing the bill’s fiscal impact.
- Department of Health and Human Services (HHS): Under HHS, agencies like the Centers for Medicare & Medicaid Services are impacted by regulatory changes affecting Medicaid, Medicare drug pricing, and Medicare Advantage plans.
- Department of Homeland Security (DHS): Although not mentioned by name, DHS is inherently implicated due to the one-time spending on border security measures described in the memo.
- Department of the Treasury/IRS: The continued implementation of favorable tax policies and adjustments to tax regulations imply direct involvement from Treasury and its operational arm, the IRS.
Relevance Score: 3 (Multiple key agencies in fiscal management, health care regulation, border security, and tax policy are affected.)
Responsible Officials
- N/A – The memo is an informational communication outlining fiscal impacts and does not designate any specific officials to implement directives.
Relevance Score: 1 (The text only serves to inform without directing implementation at any organizational level.)