The Big Beautiful Bill Has Been Passed

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What $3 Trillion Means for Your Portfolio

Oh my goodness, the big beautiful bill has passed. It's a massive $3 trillion spending and tax cut package, and I only have five minutes to break this down for you.

Over the next five minutes, I'm going to give you the highlights and then, of course, I want to talk to you about where we are going to see this particular package have impact on us as humans, as well as us as investors. In other words, what's going to happen to your portfolio as a result of this.

There are people who can cover this bill a lot more in depth than I can in five minutes, but I want to always make sure that we are talking about how this matters in the work that I'm doing with you.

The Numbers That Matter

First of all, there are numbers that matter. Government analysts are saying that this bill is going to add $3.4 trillion to the government debt over the next 10 years. And this bill actually allows the government to increase their borrowing limit.

Think of it almost like if your credit was extended and you had more access to credit. So they raised that credit limit or borrowing limit by another $5 trillion so that the government can keep paying its bills.

Here's the thing: without changes, debt like this could reach 150% of our economy by 2050. And I'm not convinced any more than anybody else is convinced that we're going to find legislators that are going to fix this problem. So now the question is, how do we move forward? And what does this mean?

The White House vs. Experts Disagreement

There's this huge disagreement going on between the White House and experts. The White House is basically saying that this bill somehow saves $1.6 trillion by boosting economic growth. That's basically saying, "I'm going to spend money to save money." So I kind of feel like that's fuzzy math personally.

And experts—I'm not one of them, but I'm telling you, there's a lot of experts out there saying that those estimates are way too optimistic.

The Republicans say that keeping tax rates the way they are—in other words, a big part of this bill was keeping the tax cuts from the previous Trump administration—they're basically saying that isn't new spending. So that's where all the spin and the disagreement is primarily.

The Healthcare and Medicaid Changes

The second area of spin and disagreement is really about the whole issue of healthcare and Medicaid. There's been a new restriction added by this bill to the tune of $850 billion over the next 10 years.

We're somewhere in the ballpark of 16 million people could lose their Medicaid coverage by 2034, as well as food stamp recipients are now required to work in order to keep their benefits. So that's where all the spin and the disagreement has been, which I'm not going to get into because I want to talk to you about where the money is going and how that's going to impact your portfolio and your investments.

The Big Winner: Military and Defense Companies

The big winner as far as the big budget is concerned is going to be military and defense companies. Now, regardless of how you feel about military and defense, there are companies that you own in your portfolio, if I manage your money, that are going to be impacted by this.

Let's dial this in: $29 billion is being allocated to build Navy ships. Another $25 billion for missile defense systems. There's another $15 billion to upgrade our nuclear weapons and $5 billion to expand weapons manufacturing facilities.

What does that mean? That means that companies like Lockheed Martin and Raytheon and General Dynamics—those type of companies are going to be receiving huge dollars or huge contracts. And that's, of course, going to have or should have a big impact on their performance as a publicly traded company.

Infrastructure Gets a Major Boost in Big Beautiful Bill

Another big area that got a lot of money in the budget was infrastructure. When you think of infrastructure, think of things like air traffic control systems that make airports more efficient, or Coast Guard ships and equipment. And of course, the border wall—the border wall with technologies and border agents. That had a huge allocation in this bill.

From an investment angle, what we're looking at is companies like Honeywell, which is a producer of big aviation technology, and large construction firms are going to be receiving these huge infusions and these huge contracts to go and build.

When we talk about this kind of government spending, the idea behind that is the big S—stimulus. The government is basically hiring companies to do its business.

Energy Sector Changes

The other sector that we're probably going to see some changes as a result of this new policy is the area of energy. Think of Exxon and Chevron, companies like that, because more oil and gas drilling permits have been issued or will be issued with lower fees.

And then also we're looking at that $10,000 tax break if people go out and buy American-made cars with loans. So we're looking for some shifts in those type of companies.

The Bottom Line

Bottom line, the big, beautiful bill—it passed, regardless of how you feel about it or what you think about it. It's a thing that's real, and it's the thing I'm really going to be monitoring as I manage your money.

The opinions contained herein are not necessarily that of Private Client Services LLC and should not be construed as investment advice. Neither this information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.