Trump Tax Cuts to Add Trillions to Deficit, Sparking Debate and Challenging GOP's Economic Claims

A Congressional Budget Office (CBO) analysis of President Donald Trump's tax cuts package indicates that it would increase deficits by $2.8 trillion over the next decade, accounting for various economic effects. This assessment, conducted by the nonpartisan CBO and the Joint Committee on Taxation, considers debt service costs and projects that the bill would raise interest rates, leading to an additional $441 billion in interest payments on the federal debt.

This analysis comes as the Trump administration is actively urging the GOP-led Congress to pass the tax cuts bill. The House of Representatives approved the measure last month, and it is now undergoing revisions in the Senate. Vice President JD Vance has been advocating for Senate Republicans to finalize the package.

The report employs dynamic analysis, which estimates the budgetary impact of the tax bill by considering how economic changes might affect revenues and spending. This approach contrasts with static scoring, which assumes constant economic factors. The CBO had previously released a static scoring analysis, estimating that the bill would increase deficits by $2.4 trillion over the decade and potentially leave millions more people without health insurance.

Democrats are using the new deficit projections to challenge the Republican argument that the tax cuts would be self-funding. Republicans have argued that dynamic scoring would more accurately reflect how tax cuts would stimulate economic growth, offsetting revenue losses.

Treasury Secretary Scott Bessent and other Republicans have criticized the CBO, claiming the organization is not adequately considering the economic growth the bill will generate. Mehmet Oz, who heads up the Centers for Medicaid and Medicare Services, questioned the CBO's estimate that the bill would lead to millions more people without health care.

Senate Republicans have proposed deeper Medicaid cuts, including new work requirements, to offset the costs of making Trump's tax breaks permanent. The Senate's version also enhances Trump's proposed tax break for seniors. The Senate proposals maintain the current deduction for state and local taxes, drawing criticism from lawmakers in high-tax states.