CBO: Trump’s $3.7 Trillion Tax Bill to Expand Deficit by $2.4 Trillion/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The CBO estimates Trump’s new tax bill will slash taxes by $3.7 trillion but add $2.4 trillion to the national deficit. The proposal also cuts federal spending by $1.3 trillion and increases the uninsured population by nearly 11 million. Republicans support it as an economic boost; Democrats call it reckless and damaging to social safety nets.
Trump’s Tax Plan and Deficit Impact: Quick Looks
- $3.7 Trillion in Tax Cuts Proposed: Trump’s new tax legislation aims to extend and expand 2017-era cuts, including no taxes on tips.
- $2.4 Trillion Deficit Increase Predicted: The Congressional Budget Office says the package will sharply expand the national deficit over 10 years.
- Health Insurance Coverage Declines: The CBO projects 10.9 million more uninsured people, partly due to Medicaid and SNAP reforms.
- Federal Spending Cut by $1.3 Trillion: The bill would trim costs mainly by reducing green energy incentives and tightening welfare eligibility.
- $4 Trillion Debt Limit Boost Included: The legislation raises the borrowing ceiling to avoid a fiscal default.
- Republicans Praise, Democrats Condemn: The bill is central to Trump’s economic agenda, while critics call it irresponsible and harmful to the poor.
- CBO’s Objectivity Challenged: The White House and GOP leaders have tried to undermine the CBO’s credibility, claiming its models are flawed.
- Next Steps in Congress: With Republicans in control of both chambers, the bill advances amid partisan divisions and looming fiscal deadlines.
Deep Look: Trump’s $3.7 Trillion Tax Bill to Expand Deficit by $2.4 Trillion, CBO Finds
WASHINGTON — President Donald Trump’s signature tax overhaul is poised to dramatically reshape federal finances if passed, delivering a historic $3.7 trillion in tax cuts while expanding the U.S. deficit by $2.4 trillion over the next decade, according to a report released Wednesday by the Congressional Budget Office (CBO).
Dubbed the “One Big Beautiful Bill Act”, the legislation is a top Republican priority as Congress races to finalize the plan ahead of Trump’s July 4 deadline. The CBO’s findings could sway the final stages of debate, offering a nonpartisan forecast on how the legislation might reshape the nation’s fiscal and social landscape.
“Ultimately, this bill represents a trade-off between deep tax relief and long-term fiscal risk,” said Phillip Swagel, director of the CBO.
Bill Expands Tax Cuts, Cuts Federal Aid
The bill extends key provisions from Trump’s 2017 tax reforms, which are set to expire at the end of the year. In addition to prolonging lower individual income tax rates, it introduces new tax breaks, including eliminating taxes on tips, a move Trump announced at campaign stops to appeal to service industry workers.
However, the package also includes significant spending cuts. These would come from:
- Phasing out green energy credits enacted under President Biden.
- New work requirements for Medicaid and SNAP, set to begin in December 2026.
- Reductions in health and nutrition aid, estimated to leave 8.6 million more without health insurance and 4 million fewer with food stamps.
Republicans Applaud, Democrats Alarmed
Republicans are celebrating the bill as an aggressive economic stimulus, while Democrats denounce it as a fiscal catastrophe in the making.
“This is Trump’s big, ugly bill,” said Senate Minority Leader Chuck Schumer. “It’s a handout to the wealthy and a gut punch to working families.”
Republican leaders, including Senate Majority Leader John Thune, preemptively criticized the CBO report, claiming it underestimates tax revenue from increased economic activity.
Debt Ceiling Hike Built In
The bill includes a built-in $4 trillion increase to the national debt ceiling, currently at $36 trillion, in anticipation of growing borrowing needs. The Treasury Department has warned that without action, the government could face a payment crisis this summer.
CBO: Nonpartisan But Under Fire
Founded in 1975 to give Congress independent fiscal analysis, the CBO has become a lightning rod in budget battles. Trump’s White House blasted its findings, with Press Secretary Karoline Leavitt alleging a “bias” within the agency — an accusation contradicted by the CBO’s strict ethics policies and bipartisan hiring practices.
“CBO was flat wrong before,” said Thune, referencing earlier underestimates of revenue from Trump’s 2017 tax law. However, the CBO later explained that higher-than-expected revenues stemmed largely from pandemic-era inflation, not tax cuts.
Long-Term Consequences Loom
While the short-term economic benefits of tax cuts and deregulation may please Trump’s political base, experts warn the deficit increase and safety net reductions pose long-term risks, especially for low-income Americans and an already-stretched federal budget.
“Tax cuts don’t pay for themselves — and this bill proves it,” said Maya MacGuineas of the Committee for a Responsible Federal Budget. “What we’re seeing is a fiscal sugar high with a brutal hangover.”
Despite sharp divides, the bill is expected to advance through Congress with Republican majorities in both chambers. Democrats are likely to attempt amendments, but major changes remain unlikely unless GOP lawmakers defect.
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