On Wednesday, June 4, the nonpartisan Congressional Budget Office (CBO) in the United States revised their estimated increase in cost for President Trump’s tax bill, projecting that the bill will add approximately $2.4 trillion on top of the current $36.2 trillion debt.
The previous estimate by the Budget Office was that the Republican bill, passed on May 22 without Democratic support, would increase Washington’s debt by about $3.8 trillion over the next decade.
Specifically, the Budget Office predicts that the tax bill passed by the House will reduce federal government revenue by $3.67 trillion over a decade, while also cutting expenditures by $1.25 trillion.
The updated report also assessed other key impacts of the bill. As a result of the policy changes in the House bill, the number of Americans without health insurance is projected to increase by 10.9 million by 2034. Among them, an estimated 1.4 million undocumented immigrants will no longer have access to state-subsidized health insurance plans.
However, the report did not include predictions on the potential macroeconomic effects of the bill, which will be released in the future. Republicans believe that extending current tax cuts and adding new tax incentives (including those in the House bill) will further stimulate the economy.
They made a similar argument in 2017, stating that tax cuts will offset costs through stimulating economic growth. At that time, the Budget Office estimated that considering the positive economic effects, these changes would increase the federal deficit by nearly $1.9 trillion over a decade.
The 1,100-page bill passed by the House extends the tax policies for corporations and individuals passed during Trump’s first term in 2017 while repealing several green energy incentives enacted by President Biden, and tightening eligibility requirements for health and food programs for low-income individuals. It also allocates funding for Trump’s immigration enforcement actions, increasing the number of border guards by tens of thousands and enhancing the capacity to deport up to one million people annually.
Democrats criticize the bill for favoring the wealthy and cutting benefits for the American working class.
The bill is currently awaiting action in the Senate. The Budget Office’s updated report takes into account the modifications made by Republican leaders in the late stages of pushing the bill through.
Lowering the cost of the bill’s expenditures will help guide the Republican-controlled Senate, which is currently working to draft its own version of the bill in the coming weeks.
With a narrow 53-47 majority in the Senate, different factions within the Republican party are vying to make amendments to the bill passed by the House. Some are pushing to reduce subsidies for the Medicaid program by over $700 billion or to repeal tax cuts supported by Trump targeting overtime pay, tips income, or Social Security retirement income.