Latest news with #PhillipSwagel
CBS News
6 days ago
- Business
- CBS News
Trump tariffs would cut deficits by $2.8 trillion and shrink the economy, CBO says
Washington — President Trump's sweeping tariff plan would cut deficits by $2.8 trillion over a 10-year period while shrinking the economy, raising the inflation rate and reducing the purchasing power of households overall, according to an analysis released Wednesday by the Congressional Budget Office. The numbers were revealed in a letter sent to Democratic congressional leadership outlining how the Trump administration's plan to impose wide-ranging tariffs on countries around the world will affect American households. Baked into the CBO analysis is a prediction that households would ultimately buy less from the countries hit with added tariffs. The budget office estimates that the tariffs would increase the average annual rate of inflation by 0.4 percentage points in 2025 and 2026. The budget office's model also assumes that the tariffs, announced through executive action between January and May, will be in place permanently. "If the Administration makes additional changes to tariffs, the budget baseline will be adjusted to reflect the budgetary implications of those changes as they take effect," CBO Director Phillip Swagel wrote. Since the analysis was conducted, a federal court struck down sweeping tariffs that Mr. Trump invoked under an emergency-powers law. An appeals court allowed the Trump administration to continue collecting the tariffs while the case goes through appeals. Largely confirming what other economic models have predicted, the CBO's estimations show that the tradeoff for a $2.8 trillion deficit reduction over 10 years would be an overall reduction in household wealth. In addition, the tariffs would shrink the economy, or reduce the rate of the gross domestic product by 0.06 percentage points per year. The Penn-Wharton Budget Model's April report predicted that the Republican president's tariffs would reduce long-run GDP by about 6% and wages by 5%. A major caveat of the CBO's estimates is written into the report — its estimates are "subject to significant uncertainty, in part because the Administration could change how the tariff policies are administered." The evaluation also does not appear to take into account any impact from Mr. Trump's massive tax and budget bill currently being debated in Congress. The CBO released another estimate earlier Tuesday showing that the legislation would increase deficits by a total of roughly $2.4 trillion over 10 years. White House have argued that any deficit increase caused by the "one big, beautiful bill" would be offset by the "reciprocal" tariff plans, and touted the CBO's new analysis on Tuesday. Mr. Trump has often announced changes and pauses to his tariff plans on his social media platform. In April, he posted that he was backing off his tariffs on most nations for 90 days and jacking up the tax rate on Chinese imports to 125%. Last week, he announced plans to hike the tariffs on steel and aluminum imports to a punishing 50%, a move that's set to hammer businesses and likely push up prices for consumers even further. The 50% tariffs went into effect Wednesday. The Organization for Economic Cooperation and Development forecast Tuesday that the U.S. economy, the world's largest, will slow growth to just 1.5% in 2026.
Boston Globe
6 days ago
- Business
- Boston Globe
What is the Congressional Budget Office? And why is it a target of Trump?
The budget office also projected that by 2034, 10.9 million more people would be uninsured, due to proposed spending cuts to Medicaid and the Affordable Care Act. Related : The bill now Advertisement In the weeks ahead of the CBO's analysis, the White House and Republican leaders have criticized the budget office in an effort to sow doubt in its findings. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Here's what to know about the nonpartisan agency and what the Trump administration has said about it: What is the CBO? The CBO is a nonpartisan agency that helps lawmakers estimate the cost of proposed legislation and provides reports on federal spending. It's led by a director appointed by Congress to a four-year term, with the selection alternating between the House and Senate Budget Committee chairs. The CBO emphasizes that political affiliation plays no role in its hiring process, stating it selects candidates 'solely on the basis of his or her fitness to perform the duties of the position.' Advertisement Is the CBO partisan? CBO hires analysts based on their expertise, not political affiliation. Staff is expected to maintain objectivity and avoid political influence. In evaluating potential employees, the CBO says that for most positions it looks at whether that person would be perceived to be free from political bias. Like other federal employees, the CBO's staff is also prohibited from making political contributions to members of Congress. The CBO's director, Phillip Swagel, served in former Republican President George W. Bush's administration as an economic adviser and as an assistant secretary at the Treasury Department. What has the CBO said in the past about Trump policy? The budget office said in April 2018, during Trump's first term, that tax receipts would reach $27 trillion from fiscal years 2018 to 2024. However, receipts came in about $1.5 trillion higher than the CBO projected and Republican lawmakers have seized on that discrepancy since then. The CBO later reported that revenues were higher than expected because of the 'burst of inflation' during the COVID-19 pandemic in 2021. There was also an increase in economic activity in 'the later years of the period' adding $700 billion. Also, new tariffs added about $250 billion, with other legislation partially offsetting those factors. What Trump and his allies have said about the agency Ahead of the CBO's analysis, Trump slammed the agency in a 'The Democrat inspired and 'controlled' Congressional Budget Office (CBO) purposefully gave us an EXTREMELY LOW level of Growth, 1.8% over 10 years,' Trump wrote. 'I predict we will do 3, 4, or even 5 times the amount they purposefully 'allotted' to us (1.8 percent) and, with just our minimum expected 3 percent growth, we will more than offset our tax cuts (which will, in actuality, cost us no money!),' Trump added. Advertisement In an 'The CBO sometimes gets projections correct, but they're always off every single time when they project economic growth,' Johnson told NBC News. '[The CBO] always underestimate the growth that will be brought about by tax cuts and reduction in regulations,' Johnson added. At a Alyssa Vega can be reached at
Bloomberg
6 days ago
- Business
- Bloomberg
CBO Projects Trump Tariffs to Cut Budget Gap by $2.8 Trillion
President Donald Trump's tariff policies in effect as of mid-May would help to shrink US fiscal deficits by an estimated $2.8 trillion, according to the nonpartisan Congressional Budget Office. The CBO released the figure Wednesday in a letter to Democratic congressional leaders, who had requested the estimate. The head of the office, Phillip Swagel, cautioned in the letter that the 'CBO's estimates are subject to significant uncertainty,' in part because the Trump administration could change how it conducts its tariff policies.
The Independent
21-05-2025
- Business
- The Independent
To save Trump's ‘one big, beautiful bill,' Republicans disregard the math
As the House Rules Committee's early-hours hearing on President Donald Trump's ' One Big, Beautiful Bill,' got underway, Rep. Erin Houchin, a Republican from Indiana, asked Jodey Arrnington, the chairman of the Budget Committee, a simple question about the Congressional Budget Office. 'Has the CBO ever been wrong?' she asked. Arrington responded by noting that the CBO, which scores and estimates how much legislation will cost, got wrong the price of the Tax Cuts and Jobs Act (TCJA), the 2017 tax slash law whichTrump signed, and the scoring of the 2010 health care law signed by Barack Obama, also known as Obamacare. 'In my short tenure, they actually were off their estimation of the deficit,' he said regarding spending under President Joe Biden. 'They were wrong in their projections on revenue to the Treasury post-TCJA.' Republicans began their hearing on Rules – which needs to pass legislation for it to go to the floor for a simple majority vote – at 1 a.m. Wednesday. 'So all this conversation about how reliant we should be on the CBO score to tell us what the cost of we're doing is going to be, CBO has not been reliable, as history has shown,' he emphasized. Arrington and Houchin's characterizations are selective at best, but a way to advance partisanship at worst. Despite occasionally falling short, the Congressional Budget Office is still regarded as the most credible and nonpartisan source for spending projections on Capitol Hill. Its director, Phillip Swagel, an alumnus of the George W. Bush administration, began the job during Republican control of the Senate in 2019, and was re-appointed during Democratic control of the Senate in 2023. Yet House Republicans have every reason to discredit the CBO ahead of a vote on Trump's proposal. They don't like the numbers. The CBO found that if Congress passed just an extension of the 2017 Trump tax cuts, the deficit would increase by $3.8 trillion. That same analysis showed that the bottom ten percent of households would lose 4 percent of income in 2033, while the top 10 percent of households would see their incomes increase by 2 percent in 2033. This would be the result mostly of proposed changes to the Supplemental Nutrition Assistance Program, also known as SNAP, and Medicaid. The bill would put in place work requirements that fiscal conservatives like Texas Rep. Chip Roy and South Carolina Rep. Ralph Norman considered insufficient. Specifically, it also requires that parents of children between the ages of seven and 18 to work for SNAP benefits – but a parent can get an exception if they are a stay-at-home married parent. And that's not the only body blow that is ready for Democrats to attack. A separate CBO report on the estimated effects on the budget found that as many as 7.6 million people would lose coverage because of the Medicaid changes. That might make some of the lawmakers from swing districts, or with large swaths of their population dependent on Medicaid, queasy. And this all came without the manager's amendment, which would lay out the side deal that House Speaker Mike Johnson made with the SALT caucus, a group of Republicans from blue states who want the cap raised on the amount of money that people can deduct from their state and local taxes on their federal taxes. As of Wednesday evening, the House leadership had yet to release the manager's amendment. As a result, House Republicans are pushing for a bill that is already outdated. Trump had made his trek to the Hill on Tuesday, and on Wednesday, he invited the fiscal hawks in the House Freedom Caucus to the White House. Two of them, Ralph Norman and Chip Roy of Texas, who both sit on the Budget Committee, initially sank the bill on Friday before they voted 'present' late on Sunday evening to allow it to move to Rules, where both men also sit. But it seems like the pressure campaign hasn't worked on the Freedom Caucus. Before the meeting, Roy posted on X, that he would dig in his heels. 'Writing a deficit-backed blank check (SALT) is easier than cutting spending (DOGE, Green New Scam, Post-COVID spending),' he posted. 'Congress/swamp will always choose the easy route but we can't afford it.' In the past, Roy has correctly pointed out that the bill would explode the federal budget deficit. Yet the House Republican leadership has decided to throw congressional math homework on the debt out the window for political expediency. Whether the Freedom Caucus decides to give them a failing grade will determine if Trump's bill passes.
Yahoo
21-05-2025
- Business
- Yahoo
Economic Analysis Shows ‘Big, Beautiful Bill' Taking From Poor, Giving To Rich
WASHINGTON ― The big legislation Republicans are trying to pass this week would shrink economic resources for the poorest Americans while boosting the richest, according to a new analysis by Capitol Hill's official budget scorekeeper. The Congressional Budget Office said Tuesday the One Big Beautiful Bill Act, as it's officially known, would shrink household resources for the lowest-income households by 2% in 2027 and 4% in 2033, mainly because of cuts to health and nutrition programs. 'By contrast, resources would increase by an amount equal to 4 percent for households in the highest decile in 2027 and 2 percent in 2033, mainly because of reductions in… taxes they owe,' CBO director Phillip Swagel wrote in a letter to Democrats. Democratic leader Hakeem Jeffries (D-N.Y.) and Rep. Brendan Boyle (D-Pa.), the top Democrat on the House Budget Committee, requested the CBO analysis of the bill's distributional effects for the top and bottom 10% of households by annual income. 'This is what Republicans are fighting for – lining the pockets of their billionaire donors while children go hungry and families get kicked off their health care,' Boyle said in a statement. 'CBO's nonpartisan analysis makes it crystal clear: Donald Trump and House Republicans are selling out the middle class to make the ultra-rich even richer.' Democrats have been hammering Republicans for the bill's not-so-populist economic impacts for weeks; the CBO analysis distills the legislation's reverse Robin Hood dynamic in dry and authoritative terms. The legislation uses about $1 trillion in cuts to Medicaid and the Supplemental Nutrition Assistance Program to help pay for $3.8 trillion in tax cuts that benefit all income groups, but especially wealthier Americans. The CBO has previously estimated the legislation would shrink Medicaid enrollment by more than 7 million, including through increased eligibility checks and limits on benefits for people without jobs. A key House committee plans to vote on the bill in the early hours of Wednesday morning ahead of a possible final vote on passage later this week, but it wasn't clear as of Tuesday afternoon if enough Republicans will support the bill for it to pass with all Democrats opposed. House Speaker Mike Johnson (R-La.) has struggled to balance the demands of conservative Republicans who want steeper Medicaid cuts with blue-state moderates seeking bigger tax benefits for wealthy homeowners in their districts. President Donald Trump visited Capitol Hill on Tuesday morning to urge House Republicans to quit squabbling and pass the bill. Trump cautioned Republicans against overly aggressive Medicaid cuts and has previously suggested he would accept a 'TINY' tax cut on the rich to help pay for the bill, but Republicans rejected the idea.
