US Congressional Budget Office's warning: Trump's big bill could raise national debt by $2.4 trillion; 10.9 million to lose health insurance

Time of India

2 days ago

The independent US Congressional Budget Office (CBO) announced on Wednesday that the comprehensive Republican legislation for tax reductions and federal programme cuts would potentially increase the national debt by $2.4 trillion in the next ten years.
This analysis, reported by the New York Times, raised concerns about excessive government borrowing under President
Donald Trump
's domestic policy.
The evaluation centred on the House-approved version, though figures might adjust as Senate Republicans begin their modifications. Senate members aim to enhance certain tax reductions, while some advocate for maintaining Medicaid funding, the healthcare programme for low-income individuals, and environmental tax benefits.
Both conservative groups and financial investors previously voiced serious reservations about the deficit implications, with several Senate Republicans refusing to support the current version. This resistance threatens the bill's advancement, as the party cannot lose more than three Senate votes assuming unified Democratic opposition.
The substantial cost of extending Republican tax reductions from 2017, the legislation's cornerstone, meant significant debt increases were anticipated.
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Although right-wing legislators insisted on spending reductions to offset costs, the CBO's assessment showed they achieved far less than the approximately $3.8 trillion needed to fund the tax cut extension.
House Republicans employed familiar tactics to reduce the apparent cost. Various tax reduction measures, including Trump's promised exemptions for tips and overtime earnings, were limited to several years.
These reductions could become significantly more expensive if extended.
Financial analysts have recently expressed increasing concern about the legislation's impact, considering the nation's existing fiscal challenges. Moody's reduced the United States' credit rating last month, becoming the final major agency to question the nation's debt-servicing capability.
Some Republican officials and White House staff have responded by questioning the CBO's objectivity and reliability.
However, multiple independent non-partisan organisations analysing the bill have similarly concluded it would substantially increase federal debt.
A group of six Nobel Prize-winning economists have also criticised the comprehensive budget bill approved by the House of Representatives, with a similar warning that it would increase the national debt while undermining essential social support programmes.
The economists expressed their concerns about the Republican-supported legislation, known as the "one big beautiful bill," stating it would negatively impact millions of Americans through reductions in Medicaid and food stamp programmes, according to their June 2 letter written for the Economic Policy Institute.
"Even with the safety net cuts, the House bill leads to public debt rising by over $3 trillion in coming years (and over $5 trillion over the next decade if provisions are made permanent rather than phasing out)," the economists state.
"The higher debt and deficits will put noticeable upward pressure on both inflation and interest rates in coming years."
The letter was signed by MIT economists Daron Acemoglu, Peter Diamond and Simon Johnson, Harvard University's Oliver Hart, Columbia University's Joseph Stiglitz, and Paul Krugman from the City University of New York, as reported by CBS News.
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Meanwhile, in addition to the national debt increase, the analysis by the CBO finds that while the major bill moving through Congress would cut taxes by $3.7 trillion, it would also leave approximately 10.9 million people without health insurance, according to the Associated Press. This figure encompasses 1.4 million undocumented immigrants currently enrolled in state-funded healthcare programmes. According to the budget office's assessment, the proposed legislation would lead to a reduction in federal expenditure of $1.3 trillion during the specified timeframe.