WASHINGTON — A new analysis of President Donald Trump’s tax cut initiative forecasts substantial fiscal repercussions over the forthcoming decade. Released by the Congressional Budget Office (CBO) and the Joint Committee on Taxation, the study predicts the plan will expand deficits by $2.8 trillion when considering various economic impacts. The study encompasses prospective debt servicing costs, indicating the tax bill will elevate interest rates and augment interest payments on federal debt by $441 billion.
This analysis emerges as a pivotal juncture where President Trump is advocating for the GOP-dominated Congress to endorse what he describes as a “big, beautiful bill.” The legislation previously passed in the House strictly along party lines, and it is now being reworked in the Senate. In a private Tuesday luncheon, Vice President JD Vance encouraged Senate Republicans to expedite the bill’s passage to the president’s desk.
Senate Majority Leader John Thune expressed optimism afterward, saying, “We’re excited to get this bill out.” The CBO’s report goes beyond static scoring by conducting a dynamic analysis, which weighs how adjustments in the economy might sway revenue and spending figures, as opposed to assuming other economic conditions remain unchanged.
Earlier in the month, the CBO’s static analysis estimated that Trump’s proposal would lead to trillions in tax reductions and spending cuts, yet swell deficits by $2.4 trillion over ten years, leaving approximately 10.9 million more individuals uninsured. Despite Republican assertions that dynamic scoring would illuminate how tax cuts stimulate economic growth and mitigate revenue loss, the heightened deficit figures in the recent examination arm Democrats with fresh arguments against the GOP’s position.
“The Republican claim that this bill does not add to the debt or deficit is laughable, and the proof is in the numbers,” remarked Sen. Jeff Merkley of Oregon, who ranks as the leading Democrat on the Senate Budget Committee. He asserted that even when factoring in economic growth, the tax cuts would burden the debt more than anticipated.
Marc Goldwein, a senior figure of the Committee for a Responsible Federal Budget, conveyed skepticism on social media about the dynamic analysis. He argued, “It’s not only not paying for all of itself, it’s not paying for any of itself.” Meanwhile, Treasury Secretary Scott Bessent and Republicans have attempted to undermine CBO’s projections, asserting insufficient credit is given for the economic growth anticipated from the bill.
In Congress, Mehmet Oz, leading the Centers for Medicaid and Medicare Services, contested the CBO’s estimate of 10.9 million additional people without healthcare, attributed mainly to new work conditions. He noted, “What will an American do if they’re given the option of trying to get a job or an education or volunteering in their community? … I have more confidence in the American people than has been given to them by some of these analyzing organizations.”
Recently proposed by Senate Republicans, their version of the package introduces further cuts to Medicaid, including work prerequisites for the parents of teenagers, aimed at compensating for permanent tax cuts. Additionally, the Senate bill enhances President Trump’s suggested tax breaks for seniors, offering a more significant deduction of $6,000 for seniors earning no more than $75,000 for singles and $150,000 for couples.
Contention also lies with the Senate’s decision to retain the existing $10,000 state and local tax deduction, triggering backlash from Republicans in high-tax regions like New York and other states who had lobbied for a $40,000 ceiling incorporated in the House’s edition. Negotiations on this issue persist.
Bessent asserted that the Senate’s proposal “will deliver the permanence and certainty both individual taxpayers and businesses alike are looking for, driving growth and unleashing the American economy.” He expressed eagerness to work with both the Senate and the House on fine-tuning the bill to present it to President Trump.
While the House-passed bill excused parents with dependents from new Medicaid work mandates, the Senate’s proposal expands this requirement to parents with children over the age of 14, underscoring efforts to minimize program wastage and promote personal accountability.
Separately, another CBO analysis shed light on income distribution impacts, estimating the tax plan would financially burden the poorest Americans by roughly $1,600 annually while boosting the income of the wealthiest by an average of $12,000 each year.