The $11 trillion gap between White House and economists on Trump's 'big, beautiful' bill

Yahoo

a day ago

An array of economists — from the Congressional Budget Office to the Tax Foundation to the Penn-Wharton Budget Model — have reached a similar conclusion: Trump's signature legislation comes with a price tag in the neighborhood of $3 trillion over the next decade.
They're all wrong, the White House says. And not just by a little.
President Trump and his aides have instead offered claims that the bill will make money and that the final tally for both the tax-cutting legislation and other parts of the Trump agenda will usher in a new golden age not just for the US economy but also for government debt.
The claims from 1600 Pennsylvania Avenue go as high as $8 trillion in black ink (an $11 trillion chasm with the experts) in claims that go beyond what even Capitol Hill Republicans are projecting.
As for reconciling the two, some economists essentially throw up their hands.
"You can't square it because it's ridiculous," Erica York of the Tax Foundation said.
"The bill unambiguously will increase deficits, it will not contribute that much to economic growth," she added, noting that the bill is largely focused on extending current tax rates that would not be expected to push the economy significantly upward from current levels.
Yet the White House has remained steadfast even as this gap has led to increased tensions as the bill goes through another round of adjustments on Capitol Hill.
A Wednesday appearance before Congress by Treasury Secretary Scott Bessent was marked by lawmakers — mostly Democratic, but some Republicans as well — raising the debt issue.
In one colorful moment, Democratic Rep. Mike Thompson of California asked Bessent to point to an independent expert "not on the payroll of this administration" who says this bill will not add to our debt.
Bessent then cited Arthur Laffer, the former Reagan official and longtime Trump supporter who received the Presidential Medal of Freedom during the president's first term.
The comment led to laughter in the chamber, with Thompson shooting back, "I don't think that one counts."
It was a hearing where Bessent declined to repeat some of the administration's most aggressive claims, saying instead that "it remains to be seen" whether the bill will add to the national debt.
Others have not been so restrained about the impact of Trump's overall agenda.
"We're going to cut the deficit by $8 trillion over the next 10 years," press secretary Karoline Leavitt offered recently on Fox News.
And a recent White House memo offered a slightly lower figure of about $6.7 trillion to $6.9 trillion in deficit reductions over the coming decade.
One issue is that White House projections rely on a set of assumptions that are often internally contradictory, such as taking credit for taxes spurring economic growth while simultaneously saying they have no cost.
Other parts of the bill would enact temporary tax cuts — and then take credit for lower costs there — while also claiming other permanent cuts are free.
That's in addition to an overriding assumption at the White House that, essentially, things break historically right for the US economy and sustained 3% economic growth is in the offing.
That's above even what House Republicans are projecting, as lawmakers there have rallied behind a lower (but still very aggressive) assumption of 2.6% growth.
Both projections are unlikely, Marc Goldwein of the Committee for a Responsible Federal Budget said.
"Some people are at 2%, some people are at 1.6% ... that is the neighborhood," he said of a series of projections for growth that hover around 1.8%.
He added in an interview that even if sustained 3% growth were to happen, "it would have very little to do with this tax bill."
Yet the White House has repeatedly dismissed the experts. Trump budget chief Russ Vought recently told reporters that everything "is part of a coherent fiscal agenda" and that the combination of tax cuts, tariffs, additional promised spending cuts, and "reforms we can do ourselves" to programs like Medicaid will lead to good outcomes for the US bottom line.
White House projections also fully embrace recent CBO projections of $2.8 trillion in tariff revenues over the coming decade.
But that embrace appears to ignore a prediction in the same report that tariffs will "reduce the size of the U.S. economy" and also lead to a potential inflation increase of 0.4 percentage points in 2025 and 2026.
York has calculated that even two seemingly minor adjustments — taking the slightly lower but still very aggressive House estimate of 2.6% economic growth and factoring in the economic costs of tariffs — means the bill "is basically a wash or even negative for GDP."
"They're picking and choosing," she added.
Read more: What Trump's tariffs mean for the economy and your wallet
And few are expecting tariffs to stay steady in the coming months, not to mention the coming years.
Tariff levels are under active negotiation — two fronts this week are duties on goods from China and India — as the CBO report assumed rates remain steady not just during Trump's term, but also years after he is scheduled to leave office.
The tariffs are also under a considerable cloud of legal uncertainty, with an appeals court ruling on Tuesday that Trump's "Liberation Day" tariffs could stay in force for now while it considers whether they are legal.
"Even if they are upheld by the courts, it still seems like the Trump administration is willing to negotiate them down somewhat," York noted, "and then what happens in four years when a new administration comes in?"
Ben Werschkul is Washington correspondent for Yahoo Finance. David Foster is a graphic artist for Yahoo Finance.
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