Fiscal Fallout: CBO’s Stark Warning on House GOP’s Sweeping Tax and Spending Bill
Fiscal Fallout: CBO’s Stark Warning on House GOP’s Sweeping Tax and Spending Bill
A bombshell report from the Congressional Budget Office (CBO) has cast a long shadow over the House Republican’s ambitious tax and spending package, projecting a staggering $2.4 trillion increase to the national deficit over the next decade. The highly anticipated analysis, released this week, also warns that nearly 11 million more Americans could lose their health insurance by 2034, primarily due to significant cuts to Medicaid.
The “big, beautiful bill,” which narrowly passed the House last month and aims to fulfill former President Donald Trump’s agenda, faces an uphill battle in the Senate as lawmakers grapple with the CBO’s sobering figures. Senate Majority Leader John Thune is tasked with crafting a version that can unite a divided Republican conference, with some senators pushing for deeper spending cuts while others express grave concerns about the proposed reductions to critical safety net programs.
The CBO’s score reveals that while the package would cut close to $1.3 trillion in spending, it would simultaneously lower revenue by nearly $3.7 trillion. Taking interest payments into account, the bill’s true cost to the national debt could balloon to $3 trillion over a decade. This analysis provides fresh ammunition for critics, including billionaire Elon Musk, who recently took to X (formerly Twitter) to decry the bill as “pork-filled” and a path to “bankrupt America.”
At its core, the House package seeks to make permanent most of the individual income tax cuts from the 2017 Tax Cuts and Jobs Act. It also proposes temporary tax relief for seniors, tipped workers, and businesses through restored R&D and equipment deduction breaks. To offset some of these costs, the bill introduces “historic cuts” to Medicaid, including new work requirements, and expands work mandates within the Supplemental Nutrition Assistance Program (SNAP), potentially leading to millions losing vital health coverage and food assistance.
Despite these cuts, the legislation boosts spending on key Trump priorities such as defense, border security, and immigration enforcement. However, independent analyses, including one from the Penn Wharton Budget Model, suggest the tax relief disproportionately benefits higher-income households, while lower-income groups could see their incomes fall after accounting for taxes and government benefits.
Republicans, including House Majority Leader Steve Scalise, have been quick to dismiss the CBO’s projections, arguing the nonpartisan agency has historically underestimated economic growth spurred by tax cuts. Scalise asserted that the bill would lead to unprecedented economic expansion, boosting both worker pay and Treasury revenue.
Democrats, conversely, have seized on the CBO findings as proof of the bill’s “fiscally irresponsible” nature and its devastating impact on ordinary Americans. Representative Frank Pallone Jr. criticized GOP leaders for rushing the vote before the CBO’s full accounting was available, alleging they sought to hide the “catastrophic consequences.”
With senators beginning their work on the legislation this week, the pressure is on to find a compromise that addresses the CBO’s warnings while still advancing the party’s agenda. The goal remains to send a bill to President Trump’s desk by the ambitious July 4 deadline, but the path forward appears fraught with significant fiscal and political challenges.
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