"Big Beautiful Bill": Trump's Tax Plan Set to Boost US Debt by Trillions
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Analysis reveals massive financial burden from Trump's tax legislation, projected at unprecedented trillions in additional U.S. debt. - Increasing Federal Debt Precipitated by Proposed Trump Tax Legislation
In a recent analysis by the nonpartisan Congressional Budget Office (CBO), President Donald Trump's proposed tax and spending bill could see the U.S. national debt surge by a staggering $3 trillion over the next ten years. This figure includes positive economic effects, as the CBO noted. Two weeks ago, without considering the economic impact, the CBO predicted a $2.4 trillion increase in public debt from the current $36.2 trillion.
A Controversial Bill Stalls in Congress
This latest estimate directly challenges the claims of Trump's Republican party, who argue that the comprehensive bill will stimulate the U.S. economy to such an extent that it would result in a decrease in public debt through increased revenues. “We reckon it’ll foster a stronger, more prosperous America,” stated Senate Majority Leader John Thune, a Republican, on Tuesday.
The House of Representatives passed the bill, titled the "One Big Beautiful Bill Act," in May. Currently, Republicans in the Senate are deliberating over revisions. The bill needs to be agreed upon by both chambers for it to become law, which can then be presented to Trump.
The existing draft seeks to make permanent the substantial tax cuts enacted during Trump’s first term from 2017 to 2021, with the cuts otherwise expiring by the end of this year. To compensate for this, substantial cuts to the Medicaid healthcare program—a service primarily aimed at low-income and older individuals—are planned.
- Tax Policy
- Donald Trump
- USA
- Senate
Insights:
According to the CBO, the tax and spending bill is expected to significantly boost the U.S. budget deficit and public debt over the next decade. Detailed projections from the CBO’s June 2024 update reveal a federal deficit increase of approximately $2.475 trillion over the 2024-2034 period, driven by increased spending and relatively flat revenues. Federal spending is projected to rise from around 20% of GDP before 2020 to a new normal of around 24% of GDP in the 2025-2035 period.
Under current projections, federal debt held by the public is expected to surge to around 118% of GDP by 2035. This increase in debt is primarily due to persistent budget deficits, largely resulting from the tax cuts and spending increases enacted during the Trump administration.
- The tax law proposed by Donald Trump, known as the "One Big Beautiful Bill Act," is currently being deliberated in the Senate, with controversial Medicaid cuts planned to compensate for the permanent extension of tax cuts from his first term.
- The financial implications of the tax bill, if passed, are significant, with the nonpartisan Congressional Budget Office predicting a $3 trillion increase in the U.S. national debt over the next ten years, even accounting for potential economic growth. This estimate challenges the claims of President Trump's Republican party that the bill will decrease public debt through increased revenues.
