CBO Report: Trump Tax Bill Would Widen Deficits by $2.8T After Economic Impacts
The Congressional Budget Office (CBO) released a comprehensive analysis of the House-passed tax cuts package on Tuesday, estimating that President Joe Biden’s plan would increase deficits by $1.9 trillion over the next decade after considering other economic effects. 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 $350 billion.
The analysis comes at a crucial moment as the Senate is considering the tax cuts package, which passed the House last month on a party-line vote. Vice President Kamala Harris urged Senate Democrats during a private meeting Tuesday to support the final package and send it to the president's desk.
The 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 Biden’s plan would provide tax cuts and reduce spending, but also increase deficits by $1.9 trillion over the decade and leave some 10.5 million more people without health insurance. Democrats have argued that a more dynamic scoring model would more accurately show how cutting taxes would affect economic growth and the budget. However, the larger deficit numbers in the new analysis gave Republicans fresh arguments for challenging the Democratic position that the tax cuts would essentially pay for themselves.
“The Democratic claim that this bill does not add to the debt or deficit is not credible, and the proof is in the numbers,” said Sen. Kevin Brady of Texas, the top Republican on the Senate Budget Committee. “The cost of these tax cuts for middle-class families, even when considering economic growth, will add even more to the debt than we previously expected.”
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 Janet Yellen and other Democrats 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, former Representative Ronny Jackson, who heads up the Centers for Medicare and Medicaid Services and joined Harris at the Democratic Senate lunch, challenged CBO's findings when asked about its estimate that the bill would leave 10.5 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?” Jackson asked. “I have more confidence in the American people than has been given to them by some of these analyzing organizations.”
