Trump’s blowup with Musk stems from a dispute over the fiscal impact of the mammoth tax-and-spending package, dubbed the “big, beautiful bill.” Musk and others have said the House-passed bill would worsen the federal government’s fiscal health. The White House has rebutted these claims, noting that the reconciliation package is not a budget bill or a blueprint for balancing the budget. Instead, it is a procedural tool designed to advance as much of the president’s agenda through Congress as possible, based on the Republican votes currently available, and it excludes projected revenue from tariffs and economic growth tied to tax cuts, according to Trump’s top budget official Russ Vought. Still, various organizations estimate that this legislation will exacerbate federal deficits and contribute to the national debt over the next decade. Let's look at the different projections through the 2025–2034.
The Congressional Budget Office (CBO), a nonpartisan budget watchdog, released its scoring on the House-approved package. In its report, the CBO projected that outlays would decline by more than $1.25 trillion, but revenues would fall nearly $3.7 trillion. This will result in a $2.4 trillion increase in federal deficits over the next decade. White House Deputy Chief of Staff Stephen Miller disputed the CBO’s projection that the bill increases the deficit. “This lie is based on a CBO accounting gimmick,” he said. “Income tax rates from the 2017 tax cut are set to expire in September. They were always planned to be permanent. CBO says maintaining ‘current’ rates adds to the deficit, but by definition, leaving these income tax rates unchanged cannot add one penny to the deficit.” “CBO continues to use a baseline that is fundamentally skewed toward the way the real world is,” Vought said. “They assume that all spending will continue into eternity, but somehow tax relief that has an expiration date isn’t assumed for the entirety of the fiscal window.” Treasury Secretary Scott Bessent also alluded to the CBO’s recent tariff projections. This week, the CBO projected that tariff revenues will slash deficits by $2.8 trillion over 10 years, which Bessent said “puts the bill in surplus if you include the tariff revenue, which they won’t do.”
The Tax Foundation estimated that the bill would result in a $2.6 trillion increase in the deficit. “Overall, the bill would prevent tax increases on 62% of taxpayers that would occur if the TCJA expired as scheduled,” Tax Foundation said. The University of Pennsylvania’s Penn Wharton Budget Model forecast that the reconciliation bill would raise deficits by $2.8 trillion. According to Yale’s Budget Lab, over 30-years, the bill would add $10.8 trillion to the national debt. “If the tax provisions become permanent, with no additional tariff revenue, the debt-to-GDP ratio would hit approximately 191% in 2055. The only countries that currently have a higher debt-to-GDP ratio are Japan and Sudan,” the Budget Lab said.
Once the bill is enacted, the White House states that their actions, whether increased tariff revenues or substantial spending cuts, will reduce deficits by “at least $6.6 trillion over the next decade.” Supporters argue that the tax-and-spending plan, which includes tax cuts, would increase government revenues through more vigorous economic activity. This concept is related to the famous Laffer Curve. According to the Laffer Curve, popularized in the 1970s, there is an optimal tax rate that maximizes revenue, highlighting the relationship between tax rates and tax receipts. Following the passage of the 2017 Tax Cuts and Jobs Act, actual revenue from 2018 to 2024 totaled approximately $28.5 trillion. This has been $1.5 trillion higher than CBO’s projections—before adjusting for inflation.
In a CBO report officials predict that the One Big Beautiful Bill Act would trigger additional debt-servicing costs of $551 billion over the 10-year period. “That change would increase the cumulative effect on the deficit to $3 trillion,” the report stated. The Committee for a Responsible Federal Budget, an independent policy organization, estimate that interest costs on the new debt from the bill will amount to $1.8 trillion, accounting for 4.2% of GDP.
If interest rates remain elevated—the benchmark 10-year Treasury yield hovers around 4.5%—interest payments could surge to $2.1 trillion in 2034, representing more than 5% of GDP. “All else being equal, higher debt and deficit levels will raise interest rates,” the Yale Budget Lab said.
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