The “big, beautiful bill” that President Trump signed into law earlier this month will add nearly $3.4 trillion to the nation’s deficits over roughly the next decade, the Congressional Budget Office (CBO) estimated in a report on Monday.
The analysis released by the nonpartisan budget scorekeeper projected the bill would add $3.394 trillion to the nation’s deficits from 2025 to 2034.
A lion’s share of the cost comes from the plan’s tax provisions — a core element of the bill — which are estimated to decrease revenues by more than $4 trillion into 2034, while also cutting federal dollars for social programs like Medicaid and food stamps.
The biggest tax cuts in the bill are extensions of cuts first passed in 2017. They include a reduction of the corporate tax rate to 21 percent from 35 percent as well as reductions of most individual income tax rates.
The bill boosts the standard deduction while getting rid of personal exemptions.
Major business tax provisions in the law other than the lower corporate rate include a 20 percent deduction for businesses like S-corps and LLCs, which pass their tax liability on to their owners.
There’s also an advanced depreciation schedule for businesses that allow deductions to be made up front as well as a new accounting standard for interest payments, which is especially valued by companies that pay for assets with borrowed money, such as the leveraged buyout and private equity sectors.
The bill also raised the state and local tax deduction cap — one of the most controversial provisions within the Republican conference — to $40,000 from $10,000. That was a big win for blue state Republicans who threatened to spike the legislation if the cap wasn’t lifted.
The tax and spending cut bill includes a number of provisions pledged by President Trump while on the campaign trail, including changes to taxes on tips and overtime and a new credit for seniors.
Estimated revenues through 2034 pertaining to the Senate Finance Committee, which has jurisdiction over taxes in the upper chamber, will diminish by more than $4.5 trillion.
Republicans are likely to dispute the recent cost estimate, as the president and administration officials have sought to downplay the cost of the plan’s tax cuts.
The argument has drawn sharp criticism from budget hawks, some of whom have argued the true cost of the plan is likely higher than the recent CBO estimates given its potential macroeconomic effects.
“It’s still hard to believe that policymakers just added $4 trillion to the debt,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement on Monday. “Many supporters of this law have spent months or years appropriately fuming about our unsustainable fiscal situation. But when they actually had an opportunity to fix it, they instead made it $4 trillion worse.”
The CBO estimated on Monday that the overall plan, which includes major changes to Medicaid, would lead to an additional 10 million people without health insurance in 2034.
The law also includes what some Republicans have hailed as a “historic” $150 billion boost for defense programs, along with more than $160 billion to help advance the president’s deportation and border security plans.
At the same time, the bill includes major changes that could lead to hundreds of billions dollars in reduced spending for Medicaid and the Supplemental Nutrition Assistance Program, new restrictions for student loan borrowers and the phaseout of multiple popular repayment plans, and changes targeting the Consumer Financial Protection Bureau’s funding.
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