Pawning the Future of the Youth? - The Generational "Wealth Transfer" Triggered by the Trump Tax Bill

1. Introduction

On June 25 at 9 a.m., under the humid summer air covering the Capitol in Washington D.C., the Republican leadership unveiled the Senate's final draft of the "One Big Beautiful Bill (OBBB)." The 1,314-page bill aims to make permanent the Tax Cuts and Jobs Act (TCJA) introduced temporarily in 2017, while packaging new measures such as tax exemptions for tips and overtime pay, an additional $4,000 standard deduction for those over 65, and an expansion of the estate tax exemption to $20 million. Proponents proudly claim it will "save the middle class," but independent think tanks unanimously warn of **"a transfer of wealth from the younger to the older generation."**infomoney.com.br

2. Key Points of the Bill and Benefits in Numbers

• Benefits for the Elderly: Reduction in the taxable amount of Social Security benefits, lowering the medical expense deduction floor from 7.5% to 5%.

• Benefits for the Wealthy: Easing of SALT caps, removal of the expiration for pass-through income deductions, and a $20 million basic estate tax exemption.

• Burden on the Young and Low-Income: Reduction of Medicaid matching rates by up to 7 points, lowering the cap on educational assistance tax credits. According to the Penn Wharton Budget Model, a median-income 40-year-old will lose $7,500 over their lifetime, while a 70-year-old with the same income will gain $17,500. Seventy percent of the burden disparity is attributed to interest rate hikes due to increased national debt issuance.
  reuters.com

3. Fiscal Deficit and the "Old Age Premium"

The federal debt balance is already at $36.2 trillion (135% of GDP). With the enactment of OBBB, it is projected to expand into the $40 trillion range within a decade. Under the CBO's assumed scenario, interest payments in fiscal year 2035 will reach $1.3 trillion, consuming 19% of the federal budget. The market has already reacted, with the 30-year bond yield spiking by 20 basis points immediately after the outline was announced, derisively referred to as "tax cuts secured by the future of the young."washingtonpost.com

4. The Triple Whammy Hitting Young Households

1. Mortgage Interest Rates: Annual repayment for a 30-year-old household buying their first home in 2055 will increase by $4,000 to $6,000.

2. Student Loans: Reduced aid and market-linked interest rates extend repayment periods by 3 years.

3. Childbirth Costs: With reduced Medicaid support, 80,000 cases annually will face increased out-of-pocket expenses. Posts saying "we can't afford to have children" have been reposted over 400,000 times under "#NoFutureDebt."devdiscourse.com

5. The "Hidden Pension" Gained by the Elderly

While AARP outwardly advocates for "intergenerational fairness," it evaluates the situation in member briefings as an "opportunity for a caregiving inflation hedge." A 68-year-old man in New York posted on X about being able to "invest his pension," garnering 40,000 likes. On Truth Social, posts emphasize "tax-free tips as a blue-collar relief," highlighting a divide in opinion more along ideological lines than generational ones.theguardian.com

6. Senate Battle—Is "Deficit Offset by Growth" True?

At the Senate Finance Committee hearing on June 24, Democrat Elizabeth Warren criticized it as "a blank check for the wealthy and elderly." In contrast, Ted Cruz argued it would be offset by a "+1pt real growth rate." However, the CBO estimates the effect on potential growth rate at +0.2pt, leaving a gap of $380 billion. Even the fiscally conservative Republicans remain silent, reportedly due to the "Trump support test" in the upcoming primaries.reuters.com

7. Social Media Reflects Intergenerational Divide

• X (formerly Twitter): "#TrumpTaxScam2" trends at number one. Posts about "grandparents benefit, grandchildren bear the burden" spread by the hundreds of thousands.

• Reddit: A thread titled "Passed by One Vote = Intergenerational War" in /r/politics receives 31,000 upvotes.

• Truth Social: Conservative influencers emphasize "tax-free tips = supporting young people," solidifying support. Journalist Matthew Yglesias points out that if paired with the scrapping of Direct File, young people's losses would further increase. His post garnered 12,000 reposts in an hour.
  theguardian.com

8. Expert Perspectives

• Jessica Riddle (Manhattan Institute): "Reduced consumption by the young will depress stock prices, offsetting the asset effect for the elderly."

• John Ricco (Yale Budget Lab): "Additional mortgage burdens will delay asset formation for middle-class families and accelerate the shortfall in Social Security funding."

• Lars Sargent (University of Chicago): "A system that reverses the generational contract (intergenerational insurance) will long-term erode society's risk distribution function."

9. International Comparison and Implications for Japan

Aging and fiscal deficits are challenges Japan also faces. If pension benefits are maintained without alleviating the regressive nature of the consumption tax, the burden will similarly shift to the younger generation, as with OBBB. The U.S. debate is not just a distant issue but a litmus test asking whether to "escape through growth" or "redesign distribution and burden."

10. Conclusion—Reconstructing Generational Solidarity

If enacted, OBBB will become one of the largest intergenerational redistributions in U.S. history. However, the visible inequity could conversely become an opportunity for dialogue across generations. To balance "investment in the future" for the young and "a stable old age" for the elderly, it is necessary to redesign around growth investments such as education, research and development, and childcare support, rather than mere benefit cuts or tax competition. Whether the outcry on social media can be transformed into deliberation is a common challenge for America and indeed all developed countries.