Trump's tax bill to widen deficit by $2.4 trillion, increase uninsured by nearly 11 million, says CBO

Time of India

2 days ago

US President Donald Trump's sweeping tax and spending legislation, now advancing through Congress, will cut taxes by $3.75 trillion but add $2.4 trillion to federal deficits over the next decade, according to a new analysis from the nonpartisan Congressional Budget Office (CBO) released Wednesday.
The CBO also projects the bill would lead to 10.9 million more people without health insurance by 2034, including 1.4 million undocumented immigrants currently covered by state-funded programs.
The package would also reduce federal outlays by nearly Rs 1.3 trillion during that same period, the report noted, as reported AP.
'Republicans cry crocodile tears over the debt when Democrats are in charge — but explode it when they're in power,' said Rep.
Brendan Boyle of Pennsylvania, the top Democrat on the House Budget Committee. 'In the words of Elon Musk,' Boyle added, referencing the billionaire and former Trump aide's criticism of the plan, 'this bill is a 'disgusting abomination.''
The findings land at a critical juncture in the legislative process, as Trump urges Congress to finalize the package by the Fourth of July. The CBO's assessment, considered a key benchmark for evaluating the fiscal impact of federal legislation, will be closely scrutinized by lawmakers and stakeholders seeking to understand the consequences of the more than 1,000-page proposal.
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In anticipation of the report, the White House and GOP leaders mounted a pre-emptive critique of the CBO, seeking to cast doubt on its findings. White House Press Secretary Karoline Leavitt said the CBO has been 'historically wrong,' and Senate Majority Leader John Thune argued the agency was 'flat wrong' in its projections for Trump's 2017 tax cuts. The CBO last year said government revenue was 5.6% higher than initially estimated, in part due to pandemic-era inflation spikes.
Leavitt also suggested bias among CBO staff, despite the agency's strict ethics rules that prohibit political activities and campaign contributions to ensure objectivity.
Along with the projected costs, the CBO previously estimated that 8.6 million people would lose health coverage and 4 million fewer would receive monthly food stamps due to proposed cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
The bill — dubbed the 'One Big Beautiful Bill Act,' echoing one of Trump's signature catchphrases — is the GOP's top legislative priority and faces unified Democratic opposition. Democrats, in turn, have labelled it Trump's 'big, ugly bill.'
The legislation seeks to extend individual tax breaks from Trump's 2017 tax overhaul that are set to expire in December unless Congress intervenes. It also introduces new tax measures, including an exemption on taxes for tips.
The plan includes a $350 billion increase in funding for border security, deportations, and national defence.
To offset some of the lost revenue, Republicans propose phasing out green energy tax credits implemented under President Joe Biden and introducing stricter work requirements for Medicaid and SNAP recipients up to age 65, starting in December 2026.
The proposal also includes a Rs 4 trillion increase to the US debt ceiling, currently at Rs 36 trillion, allowing for continued government borrowing.
The Treasury has warned that the ceiling must be raised this summer to avoid defaulting on existing obligations.
Established in 1974 to serve as Congress's independent fiscal referee, the CBO is now in its 50th year and employs about 275 economists, analysts, and staff. It was created to provide lawmakers with nonpartisan insights and serve as a counterweight to the White House's Office of Management and Budget.
The CBO's current director, Phillip Swagel, who previously served under Republican President George W. Bush at the Treasury Department, was reappointed in 2023 to a second four-year term.
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