President Trump notched a big win when the Republican-controlled Congresspassed his "big, beautiful" tax bill on July 3, right on Trump's own deadline. Trump muscled Republican detractors into line and demonstrated dominance of his own party that most presidents can only envy. The new tax law gives Trump several bragging points. Itfulfills campaign promises, such as eliminating the income tax on tips and overtime pay, up to certain limits. It averts a "tax cliff" that would have occurred if temporary individual tax cuts enacted in 2017 expired on schedule at the end of this year. There will be no standoff this year over raising the US borrowing limit, since the lawboosted the debt ceiling by $5 trillion. Businesses now have more certainty about tax rates and a few other factors for the foreseeable future. Read more:What is the US debt ceiling, and how does it impact you? But the bill is still a risky gambit for Trump. There's a lot that could go wrong, even in the short term leading up to the 2026 midterm elections. Here are three of the biggest risks for Trump: The bill's critics turn out to be right about the economic damage it causes.The tax bill willadd at least $4 trillion to the national debtduring the next decade, on top of$22 trillion in added debt that is coming from plain old deficit spending. There has to be a breaking point, and when we hit it, the mimimum effect will be higher interest rates than we'd otherwise have. Wemay have arrived there already, and it could get a lot worse. Financial markets could malfunction, causing sharp stock market sell-offs and unpredictable knock-on shocks. Democratic economists Laura Tyson and Lenny Mendoncawrote recentlythat "Trump has wrecked the US economy." They argue that Trump's tax bill is "horrendous legislation" that will make the poor poorer, revoke health insurance for millions, and take food aid from several million needy Americans. "A good economy that Trump turned bad is about to get a lot worse," they said. Not everybody thinks the sky is falling. Economists in general think the economy will grow more slowly this year and next than it did in 2024. That isn't a recession call. But slower growth means fewer jobs, weaker income growth, and less prosperity. Some Americans who feel like the Trump tax cuts are doing nothing for them will start to think that Trump's critics are right. And there will be no shortage of critics eager to persuade them. The Trump healthcare cuts hit home.To reduce the budgetary cost of the tax cuts in the Trump bill, Congress cut healthcare benefits by $1 trillion over the next decade — thebiggest rollback in federal health benefits ever. Most of the cutbacks come from Medicaid, the healthcare program for the poor. There are also reductions in subsidies for people buying insurance through Obamacare. Overall, the number of uninsured Americans couldrise by 16 million by 2034. Drop Rick Newman a note, take hisweekly economy quiz, orsign up for his newsletter. Will anybody notice? Oh yes, they will. Republicans arealready worried about voters losing coverage in their states and districts. Rural hospitals in swing states such as Pennsylvania, Minnesota, and Michigan are in danger of closing for lack of funding. White House economist Kevin Hassettaddressed these concerns recentlyby saying "the best way to get insurance is to get a job," even though only54% of companies offer healthcare benefits and just 54% of workers are covered by an employer plan. There are many gaps in the employer coverage system, including exemptions for small firms and part-time workers, plus coverage that's too expensive for some workers to afford. Democrats arealready running adsin 35 congressional districts blaming the Republican bill for jeopardizing rural healthcare. The availability of healthcare has faded as a top campaign issue in recent years asmore people have gotten coverageand the uninsured rate has declined. But Republican cutbacks could make it an issue again, and "get a job" is a pretty lousy pitch to voters who can't afford healthcare. The bill becomes a blame magnet.Most voters will never know all the details of what's in the Trump tax cut bill. They will know that it made some pretty big changes affecting incomes and healthcare. So when people notice those types of changes in their own lives, many will conclude Trump's tax bill is the cause. Joe Biden had this problem with the $2 trillion stimulus bill he signed just a few months into his presidential term. That went over fine until inflation started spiking a year or so later. The Biden bill was just one of four COVID-era stimulus bills that pumped roughly $6 trillion into the economy. Trump signed the first three, yet voters blamed Biden for overstimulating and single-handedly causing inflation. Biden's mistake, in retrospect, was giving voters a fat legislative target to blame for everything that went wrong later in his presidency. The Trump tax bill could end up as the same sort of albatross for Republicans. The bill is already unpopular, withopinion running nearly 2 to 1 against. That's a worse start than Trump's 2017 tax cut law, which was mildly unpopular when Congress passed it. The problem with that bill was that many Americans felt it favored businesses and the wealthy too much. The 2025 version is even more skewed because of the healthcare cuts, which will disproportionately affect lower earners. Republicans thought voters would love their 2017 tax law and reward them at the polls. They guessed wrong. Democrats enjoyed a wave election in the 2018 midterm elections and retook control of the House of Representatives. Will it be different this time around? Trump seems unworried. Yet he just signed a bill with many provisions Americans don't want, and one way or another, there will be consequences. Rick Newman is a senior columnist forYahoo Finance. Follow him onBlueskyandX: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. Read the latest financial and business news from Yahoo Finance
