Trump tax bill will add $2.42 trillion to deficit
The Congressional Budget Office projects that the Trump tax bill will increase the US deficit by $2.42 trillion. The House-passed version of President Donald Trump’s tax and spending bill is projected to increase US budget deficits by $2.42 trillion over the next decade, as per a recent estimate from the nonpartisan Congressional Budget Office. The CBO’s calculation, released Wednesday in its assessment of the “One Big Beautiful Bill,” indicates a $3.67 trillion reduction in anticipated revenues and a $1.25 trillion decrease in spending over the decade ending in 2034, compared to baseline projections.
Concerns regarding the potential for a more severe US fiscal trajectory are likely to intensify among GOP fiscal hawks regarding the bill. Elon Musk, an ally of Trump, criticized the package on Tuesday, describing it as a “massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination.” Last month, House Republicans achieved a narrow passage of the bill, which now encounters resistance in the Senate, where several lawmakers have articulated diverse requests for amendments. Trump is anticipated to convene with Senate Finance Committee Republicans on Wednesday to deliberate on the bill.
Officials from the Trump administration have consistently characterized CBO projections as flawed, arguing that they do not adequately consider the boost to economic growth anticipated from tax cuts, tariff increases, and deregulation measures. Treasury Secretary Scott Bessent remarked last month, “I’m not worried about the US debt dynamics,” citing that a growing GDP will alleviate the burden. He also forecasted “north of 3%” growth by this time next year. The CBO’s estimate of a $2.42 trillion increase in the deficit does not take into account any potential dynamic effects stemming from alterations in economic growth or other indicators that may arise from the newly implemented tax and spending policies.
Bessent has urged legislators to enact the bill, which encompasses a rise in the statutory debt ceiling, by mid-July. The Treasury has employed specific accounting strategies to remain compliant with the debt ceiling since the beginning of the year, cautioning that it may deplete its capacity by August. Fiscal conservatives have insisted that the measure should contribute more significantly to deficit reduction. However, certain GOP members have insisted that the temporary tax cuts included in the bill be established as permanent, a move that would likely exacerbate the decline in revenues. The Senate’s rules-keeper will also review the CBO score to ascertain whether the provisions align with the chamber’s requirements.
The legislation incorporates a significant portion of Trump’s economic agenda. The proposal aims to solidify the income-tax reductions established in 2017 and introduce additional benefits that were pledged during the campaign, such as the removal of taxes on tips and overtime pay until 2028. The measure increases the federal deduction limit for state and local taxes to $40,000, up from the previous cap of $10,000. The legislation encompasses a range of federal expenditure reductions, notably in clean-energy incentives, while introducing additional work obligations for Medicaid recipients and establishing new criteria for the Supplemental Nutrition Assistance Program. Certain reductions are encountering resistance among Senate Republicans. Wednesday’s CBO release indicated that measures in the existing bill could result in 10.9 million individuals lacking health insurance by 2034. This encompasses 1.4 million individuals lacking verified citizenship, nationality, or satisfactory immigration status, who would consequently be excluded from state-funded programs.
