"Big Beautiful Bill": A Closer Look at Trump's Tax Plan and Its Predicted Impact on US Debt
- ~ 2 Min Read
Analysis Reveals Potential Accumulation of Trillions in New U.S. Debt Due to Trump's Tax Legislation - Trump's Proposed Tax Bill Could Expand US National Debt by Billions
The latest analysis from the non-partisan Congressional Budget Office (CBO) suggests that President Donald Trump's tax proposals, dubbed the "One Big Beautiful Bill Act," could significantly expand the U.S. national debt by an estimated $2.4 trillion over the next ten years. However, this forecast takes into account positive economic impacts, which, when omitted, would result in a deficit increase of $2.8 trillion. Adding interest costs pushes the figures to $3 trillion.
The Current Status of Trump's Tax Proposal
The proposed tax and spending bill contradicts assertions from Trump's Republicans that it would stimulate the U.S. economy enough to reduce the national debt through increased revenues. Despite this, Senate Majority Leader John Thune remains optimistic, stating, "We believe it will lead to a stronger and more prosperous America."
The bill, originally passed by the House of Representatives in May, aims to extend the tax cuts introduced during Trump's first term beyond their year-end expiration, all the way until 2021. To offset this cost, the bill proposes dramatic cuts to Medicaid, a healthcare program that predominantly serves low-income and elderly individuals.
The bill now undergoes debate within the Senate, with both chambers of Congress required to agree on a consolidated version before it can be presented to Trump.
Breaking Down the Tax Bill's Estimated Deficit Impact
- The CBO predicts a net increase in the federal deficit of $2.4 trillion over the next decade as a result of the proposed tax cuts and spending changes included in the legislation.
- The bill reduces taxes by approximately $3.7 trillion, but only cuts spending by $1.2 trillion, resulting in a substantial net increase to the deficit.
Independent Tax Analysis
- According to the Tax Foundation, major tax provisions in a Senate GOP version of the bill would decrease federal revenues by about $3.9 trillion to $4.8 trillion between 2025 and 2034.
- Taking into account the potential economic growth effects, the dynamic scoring reduces the revenue loss to approximately $3.9 trillion.
- The final impact on deficits and debt depends on the analysis of spending changes and interest costs.
Controversial White House Claims on Deficit Reduction
- While the CBO's analysis disagrees with the White House and Trump Administration's projection of a $1.4 trillion reduction in deficits, Trump's team argues that the bill will give rise to increased tariff revenues and spending cuts, reducing deficits by at least $1.4 trillion. These claims are often viewed as relying on overly optimistic assumptions.
The Bottom Line
The CBO estimate points to a potential increase in the U.S. federal deficit of $2.4 trillion over the next decade, with controversial White House claims suggesting the bill may modest deficit reductions. Independent tax analyses suggest substantial revenue losses contributing to rising deficits, but a full understanding of the bill's impact on deficits and debt is yet to be reached.
- The tax law proposed by Donald Trump, known as the "One Big Beautiful Bill Act," is currently being debated in the Senate, and if passed, could increase the USA's national debt by an estimated $2.4 trillion over the next ten years, according to the Congressional Budget Office (CBO).
- The proposed tax and spending bill aims to extend tax cuts beyond their year-end expiration and intends to offset these costs by making significant cuts to Medicaid, a healthcare program that serves primarily low-income and elderly individuals.
- In personal-finance and general-news discussions, the impact of Donald Trump's tax plan on finance, policy-and-legislation, and budgeting has been a topic of continued debate, with some independent analyses predicting substantial revenue losses that could contribute to rising deficits.
