The US will be flirting with a possible financial crisis if Congress fails to pass President Trump’s marquee One Big Beautiful Bill Act, Treasury Secretary Scott Bessent grimly warned Wednesday.
Bessent singled out the megabill’s extension of the 2017 Tax Cuts and Jobs Act and warned that a $4 trillion tax hike from a failure to re-up those cuts would devastate the financial system.
“Sir, I think it could set off a financial crisis, the likes of which we have not seen since ’08, ’09,” Bessent told Rep. David Kustoff (R-Tenn.) about the consequences of a failure to pass the megabill during a House Ways and Means Committee hearing Wednesday.
Congressional Republicans hope to send the mammoth legislative bundle to President Trump’s desk by the Fourth of July. The megabill features tax cuts, bolstered border security, enhanced defense spending, energy reform and more.
The House-passed version of the megabill also contains a $4 trillion increase to the debt ceiling, the limit on the nation’s borrowing authority. The US is expected to reach the X-date on the debt ceiling by August or September, according to the latest estimate from the Congressional Budget Office (CBO).
The Treasury secretary acknowledged that failure to raise the debt ceiling would be devastating, something on which virtually all economists agree. But he harped on the Tax Cuts and Jobs Act extension in particular.
“The O triple B, as I call it, contains the debt ceiling raise and extension,” Bessent explained. “That must be raised and extended. And so we will not even talk about the ramifications of that, because it will never happen.
“Two, as I said, it would be an economic sudden stop, where we would see a cataclysmic event for working Americans, for job creation, for the financial system,” Bessent added of the tax component specifically.
“So it’s unthinkable that this could happen. It would be the largest tax increase in history.”
A financial crisis typically refers to a sudden shock in which assets rapidly shed value. It often results in a recession. The 2008 financial crisis involved a dramatic meltdown of the financial system that led to the Great Recession.
The One Big Beautiful Bill Act extends many provisions of the 2017 Tax Cuts and Jobs Act.
Some of the extensions featured in the House version are temporary, including several of the business breaks, such as a beefed-up deduction for business research and development expenditures and a section that allows businesses to write off most of the cost of certain assets in the year after they were purchased rather than spreading it out over time
Senate Republicans have expressed interest in making those temporary provisions permanent, but that comes amid tensions with fiscal hawks in the upper chamber over the megabill’s impact on the deficit.
Bessent also hailed the megabill as an effort to reclaim US fiscal sovereignty.
“The US tax system will stand next to what is called Pillar Two, and other countries are welcome to relinquish their fiscal and tax sovereignty to other nations,” Bessent said during the hearing.
“The United States will not, so this bill will allow us to prevent our corporate revenues from being drained into foreign treasuries, and that is in the hundreds of billions of dollars.”
Bessent previously claimed that the Trump administration helped stave off a financial crisis.
“What I could guarantee is we would have had a financial crisis. I’ve studied it, I’ve taught it, and if we had kept up at these spending levels that — everything was unsustainable,” Bessent told NBC’s “Meet the Press” back in March.
“We are resetting, and we are putting things on a sustainable path.”
The One Big Beautiful Bill Act, as written in the House, is estimated to increase the US deficit by $3 trillion over the next decade, according to the CBO.
