Trump’s 2025 “Big, Beautiful Bill”: Keynesian Economics or Populist Stimulus?

In mid-2025, President Donald J. Trump introduced what he triumphantly called a “big, beautiful bill”—a sweeping package of fiscal measures intended to stimulate the US economy amid rising inflationary pressures, sluggish post-pandemic growth, and international turbulence, including the ongoing war in Ukraine. Promoted as a bold solution to “bring back American greatness,” the bill includes infrastructure spending, tax rebates, industrial subsidies, and targeted aid to rural and deindustrialised regions.

Trump’s rhetorical style has rarely aligned with textbook economic theory, but the content of the 2025 bill invites a serious question: to what extent does this initiative represent a form of Keynesian economic policy? The answer is not straightforward. While the bill contains elements consistent with Keynesian counter-cyclical stimulus, it also departs from orthodox Keynesianism in motivation, execution and long-term planning.

What Is Keynesian Economic Policy?

Keynesian economics, based on the work of British economist John Maynard Keynes, argues that government intervention is essential to stabilise aggregate demand during economic downturns. When private sector activity falls—due to declining confidence, underconsumption, or other shocks—the state should increase spending, reduce taxes, or both. The aim is to stimulate demand, preserve employment, and prevent deflationary spirals. Keynesianism is pragmatic rather than ideological, and its primary tool is counter-cyclical fiscal policy.

Any public spending designed to boost consumption or investment during a period of sluggish growth may bear a Keynesian imprint—regardless of the politics or rhetoric surrounding it. However it is traditionally adopted predominantly by left-leaning governments; right-of-centre governments conventionally reject Keynesianism as contrary to the principles of fiscal conservatism.

The 2025 Bill: Content and Context

The 2025 “big, beautiful bill” is framed by the Trump administration as a “pro-worker, pro-industry, and pro-American” economic revival act. It includes the following key provisions:

• $1.4 trillion in federal infrastructure spending, focused on roads, railways, energy production, and broadband expansion—particularly in politically sensitive regions such as the Midwest and the Rust Belt.

  
  

• Tax credits and rebates for lower- and middle-income households, including a direct payment scheme totalling around $800 per adult earning under $90,000 annually.

  
  

• Subsidies for domestic manufacturers, especially in the defence, semiconductor, and automotive sectors, with the aim of returning strategic supply chains to the domestic United States.

  
  

• New tariffs and import restrictions on selected Chinese and Mexican goods, justified as protecting American jobs.

  
  

• Expanded rural development funds, including grants to communities affected by deindustrialisation or opioid dependency.

Although details of implementation remain fluid, the bill has already passed the House of Representatives, passed substantially amended by the Senate, and at the time of writing is under final debate in the House of Representatives.

Keynesian Features of the 2025 Bill

The bill’s most salient Keynesian characteristic is its focus on fiscal expansion during a period of economic stagnation, despite elevated inflation and rising interest rates. In particular:

• Infrastructure investment—a long-standing Keynesian recommendation—has clear demand-side benefits. It creates jobs, increases wages, and often stimulates ancillary industries.

  
  

• Direct transfers and rebates boost household consumption, a core mechanism of Keynesian stimulus.

  
  

• Subsidies to key industries function as investment multipliers, encouraging domestic capital expenditure that might not occur in uncertain macroeconomic conditions.

Moreover the bill comes at a time when private investment is weakening, real wages are flatlining, and consumer confidence is fragile. In this environment, Keynesian theory would call for active fiscal intervention to support demand and counteract deflationary risk.

Departures from Keynesian Orthodoxy

Yet in several respects, Trump’s 2025 bill departs from classical Keynesian principles:

1. Timing and Inflation Context

Keynesian spending is typically recommended during downturns or recessions. The US economy in 2025 is not in recession, but in a phase of stagnation with inflation—a condition sometimes called “stagflation.” Injecting more fiscal stimulus into an already supply-constrained economy could worsen inflationary pressures, undermining Keynesian goals.

2. Political Targeting

Many components of the bill are politically targeted, favouring swing states, Republican-leaning regions, and legacy industries. Keynesian economics promotes aggregate demand, not selective political patronage. The bill’s emphasis on tariffs and national preference clauses reflects populist mercantilism more than macroeconomic stabilisation.

3. Absence of Long-Term Fiscal Planning

A core tenet of Keynesianism is that deficit spending during downturns should be followed by budget surpluses in boom periods. The Trump administration has offered no roadmap for eventual fiscal consolidation. Instead, the bill is projected to increase the federal deficit by over $900 billion over five years, with limited new revenue streams.

4. Trade Protectionism

The inclusion of tariffs and import restrictions contradicts the Keynesian principle of international economic openness. While Keynes himself acknowledged the occasional use of tariffs, the bill’s protectionist thrust aligns more with economic nationalism than demand-driven macroeconomic policy.

Populism, Pragmatism or Political Expediency?

It may be more accurate to describe Trump’s 2025 bill as “populist Keynesianism”—an amalgam of fiscal stimulus, nationalist rhetoric and targeted benefits. This approach echoes the 2020 CARES Act (an economic stimulus act passed in response to the Coronavirus pandemic under the first Trump administration), which also combined large government spending with direct payments and industry bailouts, although that was clearly crisis-driven.

The 2025 bill appears more strategic and electoral in its design. Rather than stabilising a collapsing economy, it seeks to shore up political constituencies ahead of the 2026 midterms, energise manufacturing regions, and offer a nationalist economic vision in opposition to globalised liberal capitalism.

Nevertheless, the practical effect—a major increase in government spending during a period of weak private investment—is functionally similar to a Keynesian stimulus.

A Keynesian Bill, But Not in Spirit

President Trump’s “big, beautiful bill” of 2025 contains many elements consistent with Keynesian economic policy: large-scale infrastructure spending, demand stimulation via direct transfers, and public investment in strategic sectors. However the spirit in which it has been designed and implemented—highly politicised, mercantilist, and inattentive to fiscal sustainability—marks a clear divergence from the core principles of Keynesian economics.

It is, in essence, President Trump's project is Keynesian in method but not in motive. The bill seeks to revive economic confidence and activity, but its broader goals appear rooted in populist statecraft, not in macroeconomic management per se.

Whether this hybrid model proves effective—stimulating growth without fuelling inflation or deficits—remains to be seen. But it undoubtedly reflects a new era in conservative politics: one in which government spending is no longer anathema, and Keynesian tools are wielded not by technocrats, but by populist leaders cloaked in nationalist language.