Trump tax bill would widen deficits by US$2.8 trillion after factoring in economic impacts, CBO says

President Donald Trump participates in a session of the G7 Summit, Monday, June 16, 2025, in Kananaskis, Canada. (AP Photo/Mark Schiefelbein)

WASHINGTON — U.S. President Donald Trump’s tax and budget bill would increase deficits by US$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 US$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 US$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.

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The proposals from Republicans keep in place the current US$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 US$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 US$1,600 a year while increasing the income of the wealthiest households by an average of US$12,000 annually.

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Fatima Hussein And Lisa Mascaro, The Associated Press