Latest news with #deficits
Yahoo
3 days ago
- Business
- Yahoo
Trump tax bill would widen deficits by $2.8T after factoring in economic impacts, CBO says
WASHINGTON (AP) — President Donald Trump's tax cuts package would increase deficits by $2.8 trillion over the next decade after including other economic effects, according to a fuller analysis of the House-passed measure released Tuesday by the Congressional Budget Office. The report, produced by the nonpartisan CBO and the Joint Committee on Taxation, factors in expected debt service costs and finds that the bill would increase interest rates and boost interest payments on the baseline projection of federal debt by $441 billion. The analysis comes at a crucial moment as Trump is pushing the GOP-led Congress to act on what he calls his 'big, beautiful bill." It passed the House last month on a party-line vote, and now faces revisions in the Senate. Vice President JD Vance urged Senate Republicans during a private lunch meeting Tuesday to send the final package to the president's desk. 'We're excited to get this bill out,' said Senate Majority Leader John Thune afterward. Tuesday's report uses dynamic analysis by estimating the budgetary impact of the tax bill by considering how changes in the economy might affect revenues and spending. This is in contrast to static scoring, which presumes all other economic factors stay constant. The CBO released its static scoring analysis earlier this month, estimating that Trump's bill would unleash trillions in tax cuts and slash spending, but also increase deficits by $2.4 trillion over the decade and leave some 10.9 million more people without health insurance. Republicans have repeatedly argued that a more dynamic scoring model would more accurately show how cutting taxes would spur economic growth — essentially overcoming any lost revenue to the federal government. But the larger deficit numbers in the new analysis gave Democrats, who are unified against the big bill, fresh arguments for challenging the GOP position that the tax cuts would essentially pay for themselves. 'The Republican claim that this bill does not add to the debt or deficit is laughable, and the proof is in the numbers," said Sen. Jeff Merkley of Oregon, the top Democrat on the Senate Budget Committee. 'The cost of these tax giveaways for billionaires, even when considering economic growth, will add even more to the debt than we previously expected,' he said. Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said Tuesday on social media that considering the new dynamic analysis, 'It's not only not paying for all of itself, it's not paying for any of itself.' Treasury Secretary Scott Bessent and other Republicans have sought to discredit the CBO, saying the organization isn't giving enough credit to the economic growth the bill will create. At the Capitol, Mehmet Oz, who heads up the Centers for Medicaid and Medicare Services and joined Vance at the GOP Senate lunch, challenged CBO's findings when asked about its estimate that the bill would leave 10.9 million more people without health care, largely from new work requirements. 'What will an American do if they're given the option of trying to get a job or an education or volunteering their community — having some engagement — or losing their Medicaid insurance coverage?' Oz asked. 'I have more confidence in the American people than has been given to them by some of these analyzing organizations.' Republicans on the Senate Finance Committee unveiled their proposal Monday for deeper Medicaid cuts, including new work requirements for parents of teens, as a way to offset the costs of making Trump's tax breaks more permanent in their draft for the big bill. The Senate's version of the package also enhances Trump's proposed new tax break for seniors, with a bigger $6,000 deduction for low- to moderate-income senior households earning no more than $75,000 a year for singles, $150,000 for couples. The proposals from Senate Republicans keep in place the current $10,000 deduction of state and local taxes, called SALT, drawing quick blowback from GOP lawmakers from New York and other high-tax states, who fought for a $40,000 cap in the House-passed bill. Senators insisted negotiations continue. Bessent said Tuesday that the Senate Republican proposal for the tax cuts bill 'will deliver the permanence and certainty both individual taxpayers and businesses alike are looking for, driving growth and unleashing the American economy.' 'We look forward to continuing to work with the Senate and the House to further refine this bill and get it to President Trump's desk,' he said in a news release. While the House-passed bill exempted parents with dependents from the new Medicaid work requirements, the Senate's version broadened the requirement to include parents of children older than 14, as part of their effort to combat waste in the program and push personal responsibility. The work requirements 'demonstrate that you are trying your hardest to help this country be greater,' Oz said. 'By doing that, you earn the right to be on Medicaid.' The CBO separately released another analysis on the tax bill last week, including a look at how the measure would affect households based on income distribution. It estimates the bill would cost the poorest Americans roughly $1,600 a year while increasing the income of the wealthiest households by an average of $12,000 annually.
Associated Press
3 days ago
- Business
- Associated Press
Trump tax bill would widen deficits by $2.8T after factoring in economic impacts, CBO says
WASHINGTON (AP) — President Donald Trump's tax and budget bill would increase deficits by $2.8 trillion over the next decade after including other economic effects, according to a more fulsome analysis of the measure released Tuesday by the Congressional Budget Office. The report, produced by the nonpartisan CBO and the Joint Committee on Taxation, factors in expected debt service costs and finds that the bill would increase interest rates and boost interest payments on the baseline projection of federal debt by $441 billion. Tuesday's report uses dynamic analysis by estimating the budgetary impact of the tax bill by considering how changes in the economy might affect revenues and spending. This is in contrast to static scoring, which presumes all other economic factors stay constant. The CBO released its static scoring analysis earlier this month, estimating that Trump's bill would unleash trillions in tax cuts and slash spending, but also increase deficits by $2.4 trillion over the decade and leave some 10.9 million more people without health insurance. Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said Tuesday on social media that considering the new dynamic analysis, 'It's not only not paying for all of itself, it's not paying for any of itself.' The analysis comes at a crucial moment as Trump is pushing Congress, where Republicans have majority control, to send the final product to his desk to become law by the Fourth of July. Treasury Secretary Scott Bessent and other Republicans have sought to discredit the CBO, saying the organization isn't giving enough credit to the economic growth the bill will create. Republicans on the Senate Finance Committee unveiled a proposal Monday for deeper Medicaid cuts, including new work requirements for parents of teens, as a way to offset the costs of making Trump's tax breaks more permanent in draft legislation unveiled for his self-described big, beautiful bill. The first House proposal on the new Medicaid work requirement exempted parents with dependents. But the Senate's version broadened the requirement to include parents of children older than 14, as part of their effort to combat waste in the program and push personal responsibility. The proposals from Republicans keep in place the current $10,000 deduction of state and local taxes, called SALT, drawing quick blowback from GOP lawmakers from New York and other high-tax states, who fought for a $40,000 cap in the House-passed bill. Senators insisted negotiations continue. Bessent said Tuesday that the Senate Republican proposal for the tax cuts bill 'will deliver the permanence and certainty both individual taxpayers and businesses alike are looking for, driving growth and unleashing the American economy.' 'We look forward to continuing to work with the Senate and the House to further refine this bill and get it to President Trump's desk,' he said in a news release. The CBO separately released another analysis on the tax bill last week, including a look at how the measure would affect households based on income distribution. It estimates the bill would cost the poorest Americans roughly $1,600 a year while increasing the income of the wealthiest households by an average of $12,000 annually.
Washington Post
09-06-2025
- Business
- Washington Post
The White House's through-the-looking-glass budget spin
'OMB just reviewed the new CBO score of the One Big Beautiful Bill. It confirms what we knew about the bill at House passage. The bill REDUCES deficits by $1.4 trillion over ten years when you adjust for CBO's one big gimmick — not using a realistic current policy baseline. It includes $1.7 trillion in mandatory savings, the most in history. If you care about deficits and debt, this bill dramatically improves the fiscal picture.'
Wall Street Journal
05-06-2025
- Business
- Wall Street Journal
Trump Ally Sen. Jim Banks Credits Elon Musk for Cost-Cutting Efforts
Sen. Jim Banks of Indiana told CNN he believes the Senate could address some of the concerns about deficits generated by the House tax bill. Photo: Tom Williams/Zuma Press
Yahoo
05-06-2025
- Business
- Yahoo
A twist in the debate over Trump's deficit-busting bill: A (long shot) scenario where tariffs could offset the costs
Congress's top budget scorekeeper released two reports Wednesday suggesting that costs coming from President Trump's "Big Beautiful Bill" could be at least partially offset by tariffs even as budget hawks offered caution about relying on trade policy for a permanent revenue stream. What the Congressional Budget Office (CBO) found in one report was that recently passed legislation in the House of Representatives is set to increase deficits by $2.4 trillion over the next decade if it is signed into law. The second report examined Trump's tariffs and found they could reduce primary deficits by $2.8 trillion over that same time frame — but with a significant assumption that current duties stay constant and in place even after Trump is scheduled to leave office. The dual reports offered a new wrinkle in a week focused on Trump's likely budget-busting bill, offering ammunition to both sides of a cost debate currently splitting Republicans including President Trump and Elon Musk. The CBO's tariff finding even earned it some guarded praise from Trump's team, which has otherwise spent the week trying to discredit the congressional scorekeeper. Meanwhile, questions abounded at the idea of using trade policy — which can change at the stroke of a presidential pen and the president himself has suggested are a negotiating tactic — to offset the costs of permanent tax cuts. "I certainly would not count on $3 trillion of possibly illegal tariffs that may or may not remain for the next 6 months, let alone the next 6 years, to pay for tax cuts that are gonna be put into law and can't be undone without another action of law," noted Marc Goldwein of the Committee for a Responsible Federal Budget Wednesday. The back and forth began Wednesday when the nonpartisan (but recently controversial) CBO offered a new estimate of the cost of Trump's "big beautiful bill" and then dropped a second report looking at the effects of tariffs. The first analysis underlined a consensus view — backed by multiple outside analyses — that the bill making its way through Congress will be deeply expensive. Tax cuts in the bill deeply cut into government revenues and will increase overall deficits by $2.4 trillion over the next decade, the group found. Wednesday's report was also actually on the low end of some other looks at Trump's signature legislation with other analyses offering estimates often topping $3 trillion. Another way of looking at the bill is to assume that many of the short-term goodies in it are made permanent (which Washington has a long history of doing). That would push the price tag north of $5 trillion, according to groups like the Penn Wharton Budget Model and the Committee for a Responsible Federal Budget, Either way, the influential CBO reports have led to a concerted campaign by Trump's White House to try to discredit the scorekeeper. Just on Tuesday, Press Secretary Karoline Leavitt offered flimsy claims that the CBO was "historically wrong" and "has become partisan and political." The second CBO report looking at tariffs implemented through May 13 offered a sort of mirror image conclusion (as well as a reaction from the White House). That's because it concluded that tariffs could reduce primary deficits by $2.8 trillion over the next decade by accounting for both the revenue coming in, negative economic effects, and reduced debt interest payments. As with pretty much everything in Washington, it's not quite that simple. The report looks at Trump's tariffs through a recently enacted pause on China on May 12, but before recent developments like a court fight over the legality of some of Trump's tariffs as well as new steel tariffs. The analysis also didn't try to weigh Trump's promised additional "reciprocal" duties he says are coming in July. The report also noted the up and down nature of tariffs and as well how long term effects of tariffs of this magnitude are difficult to predict, as "there is little relevant empirical evidence on their effects" on things like trade volume and consumer behavior. The report also foresees a cost for the US economy with tariffs set to "reduce the size of the U.S. economy" and also lead to a potential inflation increase of 0.4 percentage points in 2025 and 2026. But the top-line tariff revenue estimate provided some limited new buttressing for a claim Trump has been making since the 2024 campaign that his tariff agenda could fund other priorities. Tariffs have already brought in about $17.4 billion in April and over $20 billion in May a significant uptick but not yet enough to make a significant piece of the government's revenue picture. And this good news from the Trump team's perspective got noticed and earned some caveated endorsements. It was noted by Trump budget chief and his deputy chief of staff, among others, even amid the larger campaign against the group. Spokesman Kush Desai likewise slammed what he called the CBOs "faulty" projections in a statement to Yahoo Finance but quickly added that any overall accounting "should stay consistent and also take CBO's tariff revenue estimate of $2.8 trillion at face value." All in all, the ongoing political spotlight shining on the staid world of budget analysis has done little to change the central conclusion reached again and again that Trump's "Big Beautiful Bill" would lead to trillions in additional debt if it's passed. And how the back and forth over the CBO effects the ongoing Capitol Hill debate remains far from clear. Tesla (TSLA) CEO Musk recently called the bill "a disgusting abomination" over its high cost and has emerged as a new leader of sorts for fiscal conservatives who have voiced objections — and often cited the CBO and other findings. The case from the White House meanwhile has been to dismiss the CBO suggesting that passage of Trump's legislation will spur huge economic growth that will quickly swamp the costs of tax cuts. Russell Vought, the director of Trump's Budget Office, added in a call with reporters Wednesday that both the bill and tariffs are "part of a coherent fiscal agenda" and promising that the books would eventually balance because of those factors as well as economic growth, "reforms we can do ourselves" without Congress, as well as additional plans for spending cuts to come. Overlooked by many in the White House on tariffs is how the next president — or Trump if he changes his mind as he has done on varied tariffs since taking office — could quickly change the tariff revenue picture dramatically or strike them down entirely with executive actions. Changing tax rates passed into law by Congress is much harder. "These tariffs are highly, highly, highly uncertain, not just in their revenue impact because if they drive us into a recession, for example, or push up interest rates or move people away from the dollar," Goldwein added. Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
