Republicans disregard financial critics to approve Trump's preferred tax reductions, frequently praised as 'beautiful' by the President.
The One Big Beautiful Bill Act (OBBBA), a package of tax cuts and spending measures, is projected to significantly increase the U.S. budget deficit and national debt as a percentage of GDP over the next decade.
According to analyses by the Committee for a Responsible Federal Budget (CRFB) and the Congressional Budget Office (CBO), the bill is expected to reduce federal tax revenue by about $5 trillion between 2025 and 2034, with economic growth offsetting about 19% of the cuts dynamically, reducing the net revenue loss to roughly $4 trillion.
When combined with estimated net spending reductions of about $1.1 trillion, the bill is still expected to increase federal budget deficits by approximately $3 trillion dynamically from 2025 through 2034. Adding the impact of higher interest costs due to increased borrowing (about $725 billion), the total deficit increase is estimated to approach $3.8 trillion over the decade dynamically.
Another analysis by the CRFB projects the bill would add roughly $4 trillion to the federal deficit over 10 years, including an additional $700 billion in interest costs from servicing the larger debt load. If temporary provisions are made permanent, deficits could rise to $5.5 trillion over the decade.
The bill's passage through the Senate, with the help of JD Vance and his tie-breaking vote, has been met with criticism from fiscal watchdogs. CRFB president Maya MacGuineas has stated that the bill shows "blatant disregard" for the country's fiscal condition and is a "failure of responsible governing." MacGuineas argues that the bill's claims of reducing deficits rely on phony baselines, fantastical economic assumptions, and arbitrary expirations.
Regarding the debt-to-GDP ratio, the bill would cause this to rise significantly. Without the bill, the debt held by the public is projected to be 117.1% of GDP in 2034. With the bill, the conventional estimate is that the debt-to-GDP ratio would increase by 9.6 percentage points to 126.7% in 2034. On a dynamic basis, incorporating economic growth effects, the debt-to-GDP ratio could increase further, from 162.3% to about 175.5% in approximately 35 years.
Senate Majority Leader John Thune and House Speaker Mike Johnson will lead their narrow majorities to a compromise on the OBBBA. Economists say the SALT deduction in the bill will do 'nothing for 90% of US taxpayers.' As the bill heads back to the House, Republicans are looking to pass the bill ahead of the self-imposed Fourth of July deadline.
- Critics have expressed concerns about the One Big Beautiful Bill Act (OBBBA), as it's projected to increase the U.S. budget deficit and national debt as a percentage of GDP over the next decade.
- According to analyses, the bill is expected to reduce federal tax revenue by about $4 trillion between 2025 and 2034, with economic growth offsetting around 19% of the cuts, reducing the net revenue loss to roughly $3.6 trillion.
- The bill still is anticipated to increase federal budget deficits by approximately $3 trillion dynamically from 2025 through 2034 when combined with estimated net spending reductions of about $1.1 trillion.
- The Committee for a Responsible Federal Budget (CRFB) projects the bill would add roughly $4 trillion to the federal deficit over 10 years, including an additional $700 billion in interest costs from servicing the larger debt load.
- Senate Majority Leader John Thune and House Speaker Mike Johnson are working on a compromise on the OBBBA, but the bill has faced criticism from fiscal watchdogs who argue that it shows disregard for the country's fiscal condition and relies on questionable assumptions.
