Latest news with #CBO
Bloomberg
9 hours ago
- Business
- Bloomberg
Why Everyone in Washington Is Talking About the Congressional Budget Office
Never miss an episode. Follow The Big Take daily podcast today. As the debate about President Trump's tax bill — known as the 'One Big Beautiful Bill' — plays out among lawmakers in Washington, there's been increasingly heated criticism of the non-partisan Congressional Budget Office. It calculates the costs and savings from the bill — including from the White House.
Bloomberg
10 hours ago
- Business
- Bloomberg
Big Take: CBO Director Responds to its Critics
As the debate about President Trump's tax bill — known as the 'One Big Beautiful Bill' — plays out among lawmakers in Washington, there's been increasingly heated criticism of the non-partisan Congressional Budget Office. It calculates the costs and savings from the bill — including from the White House. On today's episode of the Big Take, host Saleha Mohsin sits down with CBO director Phillip Swagel to hear how his agency churns out economic forecasts from inside the center of a political storm.
Yahoo
10 hours ago
- Business
- Yahoo
Trump's Disastrous Budget Bill Is Even More Expensive Than We Thought
Donald Trump's 'big, beautiful bill' would increase the total U.S. deficit by nearly $2.8 trillion over the next decade, according to a new analysis from the Congressional Budget Office. Previous estimates suggested that the massive spending bill would add $2.4 trillion to the national deficit over the next 10 years, but a 'dynamic' estimate published Tuesday takes into account how the legislation would affect the U.S. economy—and things got even more dire. The CBO projected that an increase in economic output would decrease the primary deficit by $85 billion over the 2025–2034 period, while also significantly boosting interest rates, which would push the federal debt to a whopping $441 billion. 'Incredible—CBO says the House-passed GOP bill pays for only 3.5% of itself,' Bobby Kogan, the senior director of federal budget policy at the Center for American Progress, wrote on X Tuesday. Despite previous damning reports, MAGA Republicans backing the bill have continued to claim that the CBO is biased, rather than make any concessions, and have claimed that the CBO's evaluations of the legislation's cost don't take the revenue from Trump's sweeping global tariffs into effect. In a letter to Democratic lawmakers earlier this month, the CBO projected that Trump's tariffs, as they were in mid-May, could decrease the deficit by $2.8 trillion—but said any projection came with some uncertainty, as Trump's tariffs are ever-vacillating. The newest analysis suggests that the costs will only go up after taking the economy into account. The CBO estimated that over the next decade, the legislation would affect the economy by increasing gross domestic product by an average of 0.5 percent, increasing the interest rates on 10-year Treasury notes by 14 basis points, and increasing inflation 'by a small amount' through 2030, but not afterward.
Yahoo
21 hours ago
- Business
- Yahoo
Budget Director Claps Back At GOP Critics Of Tax Cut Cost Estimates: ‘I Am A Republican!'
WASHINGTON – The director of the Congressional Budget Office pushed back against Republican criticism in a rare interview on Monday. Republicans have claimed the CBO gets things wrong and that its cost estimates of GOP tax and spending cuts are biased in favor of Democrats because the budget office is run by Democrats. It's not. 'I am a Republican,' CBO Director Phillip Swagel said on CNBC. 'This is a nonpartisan organization, and we work for the entire Congress.' It's unusual for a CBO director to come out and defend his agency against critics, but the budget office has been the subject of an unusual amount of bad-faith criticism over its analysis of Republicans' so-called Big Beautiful Bill. Just doing its job, the CBO has pointed out that the tax cuts in the bill are way bigger than the spending cuts, meaning the legislation would enlarge federal budget deficits and add to the national debt. That's embarrassing for Republicans, since they style themselves as champions of fiscal responsibility and haters of debt, so they've been relentlessly attacking the messenger. 'They are historically totally unreliable,' House Speaker Mike Johnson (R-La.) said earlier this month. 'It's run by Democrats. Eighty-four percent of the number crunchers over there are donors to big Democrats. They don't have our best interests in mind, and they've always been off.' White House press secretary Karoline Leavitt also claimed this month that the CBO's staffers are Democratic donors, while President Donald Trump has said the office is controlled by Democrats. It's not clear where Johnson came up with his 84% figure. A Washington Post analysis of federal campaign spending data showed that only 16 people who'd worked for the CBO have made political donations since 2015, all to Democrats. The agency has more than 270 employees, however, and Swagel, who was appointed to his position on a bipartisan basis, once donated $1,000 to a Republican candidate for governor. Republicans' main arguments against the CBO's credibility have been that it fails to account for how economic growth resulting from tax cuts will increase tax receipts, offsetting revenue loss from the cuts, and that the CBO underestimated revenue following Republican tax cuts in 2017. Swagel pointed out Monday that its revenue forecast was correct for 2018 and 2019, and that the 2020 coronavirus pandemic sparked higher government spending and inflation. 'There's very high inflation starting in March of 2021, and that inflated revenues as well,' Swagel said. He also pointed to higher immigration and capital gains revenue resulting from the Federal Reserve's efforts to boost asset prices. He suggested it was weird to fault CBO for not foreseeing cataclysmic global events as part of its cost estimate for a tax bill. 'There are things that the CBO certainly did not predict,' he said. As for the economic feedback on the tax cuts, Swagel said this week the CBO will put out a so-called dynamic score, a cost estimate that accounts for how the bill's macroeconomic effects could juice revenue, though it will likely still disappoint Republicans. Even the conservative Tax Foundation has found that a dynamic score doesn't erase the giant gap between spending and revenue envisioned by Republicans' bill. The CBO has found that the One Big Beautiful Bill Act, which uses $1 trillion in Medicaid and food aid cuts to partially finance nearly $4 trillion in tax cuts,would add $2.4 trillion to the deficit over a decade and that the tax and spending cuts would favor households with higher incomes. Swagel first defended himself from the barrage of Republican criticism earlier this month in an interview with The Wall Street Journal. 'The attacks are coming from so many directions and the kind of misleading talking points have been picked up so widely,' he said. A handful of Republicans, including former White House adviser Elon Musk, have faulted their colleagues for supporting legislation that would worsen the government's fiscal situation. Rep. Thomas Massie (R-Ky.), who voted against the House version of the One Big Beautiful Bill Act last month, told HuffPost he challenged his colleagues to remove Swagel from his position if they thought he was so bad. 'We can go up there today and pass a resolution and remove him from his post,' Massie said. 'If you all are upset and think he's made that big of a math error, he's obviously in the wrong job, let's take him out.' There's been no effort by Republicans to remove Swagel. In February, before the GOP legislation had taken shape, Johnson had trumpeted the CBO's long-term analysis of the country's fiscal situation, in which the office reported annual deficits would reach $2.6 trillion if Congress didn't take action. 'At a time of soaring deficits, high inflation, and sky-rocketing national debt, the nonpartisan Congressional Budget Office's new economic projections confirm the hard truths about the looming fiscal challenges facing our nation,' Johnson said at the time. Trump's Big Bill Will Cut Taxes By $3.7T And Add $2.4T To Deficit, Budget Office Says Senate GOP Strips Contempt Provision From Tax Bill — But Still Lets Trump Be King After Voting For Trillions In Debt, House Republicans Approve A $9 Billion Cut
Politico
a day ago
- Business
- Politico
Megabill debt warnings fall on deaf ears inside the GOP
Senate Republicans are fielding mounting warnings from economists that their signature legislation would add trillions of dollars to the deficit. It appears to be the last thing on their minds. As Senate Majority Leader John Thune prepares to jam through the GOP's sprawling border, energy and tax package to President Donald Trump's desk, fellow Republicans are largely ignoring a host of reports warning that their bill would worsen the nation's fiscal trajectory in a serious way. They're instead relying on estimates from the White House that assume vastly greater economic growth than virtually every other economic model — while trashing the credibility of Congress' nonpartisan budget scorer, the Congressional Budget Office, which said on Tuesday that the House-passed border, energy and tax bill would add around $2.8 trillion to the deficit over a decade. 'It's a model. And obviously, they've been famously wrong before,' said Sen. Kevin Cramer (R-N.D.) of the latest CBO report. 'We do have more debt now than we had before, for sure, but I think they grossly underestimate the economic benefits.' The problem highlighted by CBO and other economists is this: While the GOP's tax cuts may provide some economic growth, they will likely not juice the economy as much as when Republicans first enacted Trump's tax cuts in 2017. On the flip side, with federal debt closing in on $37 trillion, the rising costs of servicing more expensive interest payments will far outweigh any additional revenue that is generated from increased economic growth. 'The economic and fiscal state is not what it was in 2017,' said Paul Winfree, president and CEO of the Economic Policy Innovation Center, who was previously a top economic official in the first Trump administration. Winfree added in a text message that 'the stock of debt is so large that anything we do to modestly increase productivity (and growth) without reducing spending … will lead to higher costs.' That was underscored Tuesday when CBO put a number this week to the warning economists have been making for months: that the GOP package would hike interest rates and in turn increase borrowing costs. Higher interest rates would boost payments on the national debt by an estimated $440 billion over a decade, CBO predicted, while the megabill would drive yearly economic growth of just 0.5 percent on average during that time. House Republican leaders are claiming the bill would generate $2.5 trillion by banking on total average growth of 2.6 percent. That finding prompted an unusual phenomenon. Usually tax-cutting bills tend to cost less under so-called 'dynamic' scores that include economic effects. Not so here: The $2.8 trillion figure released Tuesday outstripped the CBO's prior $2.4 trillion estimate that did not include economic analysis — mostly attributable to the fact that, in their words, the bill 'would increase interest rates.' Lack of recognition of the dynamic has upset at least one Republican, Sen. Ron Johnson of Wisconsin, who dropped his own report Wednesday illustrating that the GOP's megabill has little shot of bending the deficit trajectory downward, even in the rosiest of economic circumstances. Johnson, who said he will vote against the massive tax and spending package as it's currently written, is challenging his colleagues in the Senate and in the administration to show him where he's wrong. 'The whole point of laying out the report was to get everyone to acknowledge and admit reality,' Johnson told reporters. 'Nobody's pushed back on my numbers. Here's an opportunity to do it. … I've shown people my work. Who else has shown people work?' But Thune took to the Senate floor on Wednesday to argue that the party-line megabill would generate enough revenue — around $4.1 trillion — through economic growth to completely make up for the deficit impact from the reduced revenue, citing a report from the White House's Council for Economic Advisors that asserts the bill would lead to long-run GDP growth of up to 3.5 percent. Thune added that CBO 'characteristically, I should say, underestimates the economic growth, and hence the revenue, that this bill would provide.' The White House figures are outliers compared with other economic models. The conservative-leaning Tax Foundation found, for instance, that the GOP's plan would boost economic growth by 0.8 percent in the long-run but still, on a dynamic basis and after $1.5 trillion in net spending cuts, add $1.7 trillion to the deficit over 10 years. The Penn Wharton Budget Model estimates that the bill would spur economic growth of 0.4 percent over 10 years and add $3.2 trillion to the deficit over a decade, all things considered. Kyle Pomerleau of the American Enterprise Institute called the White House estimates 'outrageous' and 'way higher than everyone else's.' He said the in-house analysis takes into account tax incentives, like those for domestic manufacturing, that didn't end up in the bill that passed the House in May. 'They just say that, 'well, the individual income tax — that's going to make people work more and that's it,'' he said. 'But it misses so many different details of the actual reform itself.' Democrats say voters will notice if the GOP package becomes a drag on the economy rather than the boon Republicans are marketing. Reiterating a claim party leaders often voice, Sen. Chris Murphy (D-Conn.) said the 2017 tax bill 'ended up being a stone' around Republicans' neck 'that helped lead to their bloodletting' in the 2018 midterms. 'At some point they have to look at all this new information and decide to stop and go back to the drawing board,' Murphy said in a brief interview. 'Because what they're designing is not going to help our economy and is going to hurt a ton of people.' The release of the CBO report comes as Senate Finance Chair Mike Crapo (R-Idaho) fields requests from several of his GOP colleagues to scale back changes to taxes that fund Medicaid and cuts to green energy credits. Crapo has been also pushing to use an accounting maneuver known as a current policy baseline, which would effectively zero out the cost of around $3.8 trillion in tax cut extensions. It would allow Senate Republicans to make Trump's tax cuts permanent without having to offset much of their deficit impact, which would otherwise be required by the Senate's budget rules. Asked for his reaction to the new CBO report, Crapo said he has 'the same reaction I've always had' to the official scorekeeper's numbers: 'They're not using the right baseline, and they aren't analyzing it dynamically.' Jordain Carney, Jennifer Scholtes and Katherine Tully-McManus contributed to this report.
