Unmasking "Big Beautiful Bill": A Look at Trump's Tax Proposal's Financial Impact
Research Findings: Trump's Tax Reform to Result in Additional U.S. Debt Reaching Trillions - U.S. Debt Increase Predicted by Study Due to Potential Trump Tax Policy Adoption
Catch a GlimpseIn a nutshell, the nonpartisan Congressional Budget Office (CBO) predicts that President Trump's proposed tax and spending bill will potentially swell the US budget deficit by an astounding $2.8 trillion over the next decade - even taking into account positive economic effects. Previously, the CBO forecast a $3 trillion increase in national debt sans these economic impacts.
A Step Away from Reality or More?These findings clash with claims by Trump's GOP allies that the sweeping plan would work magic on the American economy, slashing public debt through higher revenues. House Republicans passed the bill, dubbed the "One Big Beautiful Bill Act," in May, with senators currently debating a revised version. To become law, both chambers must reconcile their differences and send a united version to Trump for signing.
Picking Up the PiecesThe current draft extends tax cuts from Trump's first term, which expire at the year's end, and slashes Medicaid, the healthcare program for the poor and elderly, to cover the costs.
Enlivening the Enrichment Data
- The revenue dip due to the bill's major tax provisions is expected to amount to about $4.8 trillion between 2025 and 2034, according to conventional accounting[3].
- Some provisions, such as axing clean energy tax incentives, are forecast to boost revenues by around $175 billion. On the other hand, permanent estate and gift tax exemption extensions could lead to a revenue loss of about $200 billion[1].
- Medicare and SNAP spending cuts anticipated under the bill are expected to slash outlays by roughly $1 trillion, somewhat offsetting revenue losses[1].
Investigating DeeperAccording to White House data, the One Big Beautiful Bill's net impact on the federal deficit is anticipated to be a reduction of around $1.4 trillion over ten years[4]. This deficit reduction is part of a broader Trump Administration strategy aiming at sharpening its fiscal stance by augmenting tariff revenues, cutting discretionary spending, and implementing regulatory reforms, together amounting to a potential deficit reduction of $6.7 trillion to $6.9 trillion over the decade[4].
Interestingly, the administration dreams of far greater deficit reduction if economic growth fueled by tax cuts, deregulation, and other policies exceed projections made by the CBO[4]. It positions these efforts as a momentous stride towards improving the fiscal outlook when combined with other deficit reduction measures[1][3][4].
- The tax law proposed by President Donald Trump, known as the "One Big Beautiful Bill Act," has been forecast by the Congressional Budget Office to potentially increase the US budget deficit by $2.8 trillion over a decade, even considering positive economic effects.
- The proposed bill, if passed, would extend tax cuts from President Trump's first term and make cuts to Medicaid to cover the costs, according to current drafts.
- The revenue dip due to the bill's major tax provisions is expected to total around $4.8 trillion between 2025 and 2034, while some provisions, such as axing clean energy tax incentives, are projected to boost revenues by about $175 billion.
- The White House anticipates a net reduction of around $1.4 trillion on the federal deficit from the One Big Beautiful Bill over ten years, which is part of a broader Trump Administration strategy to improve the fiscal outlook through measures like tariff revenues, discretionary spending cuts, and regulatory reforms, potentially reducing the deficit by up to $6.9 trillion over the decade.
