" doughnuts 'n' debt: Trump's Tax Bill's Trillions in New US Deficit
- ⏱️ - 1 minute read
Analysis indicates Trump's tax legislation could generate unprecedented trillions in fresh U.S. debt. - Potential Increase in U.S. National Debt due to Trump's Tax Proposal
President Donald Trump's tax and spending bill feels like a double whammy for the US federal coffers, with the nonpartisan Congressional Budget Office (CBO) reporting a $2.8 trillion increase in deficit over the next decade - a figure that takes fiscal impacts into account. Two weeks ago, the CBO predicted a $2.4 trillion increase without these economic effects, with interest costs included.
Trump's "Ginormous Goodie Bag Bill" Stuck in US Congress
The CBO's latest estimate contradicts claims by Trump's Republicans that the comprehensive package would boost the US economy enough to reduce public debt via increased revenues. Senate Republican leader John Thune calls it "a stronger and more prosperous America."
The House of Representatives has rolled out the bill, dubbed the "One Big Beautiful Bill Act," back in May. Senate Republicans are currently re-jigging their version. For the bill to become law, both chambers of Congress need to reconcile their versions, which could then be passed on to Trump.
The draft prolongs the tax cuts from Trump's first term, initially set to expire by the end of the year, through 2021. This prolonged tax break comes at a price - drastic cuts to healthcare program Medicaid are on the cards, primarily for low-income and older Americans.
- 2025 Tax Bill
- Donald Trump
- USA
Behind the numbers
According to analysts, the House Republican version of the 2025 tax bill will add approximately $3.8 trillion to federal deficits over the 2025-2034 period. The Senate Finance Committee bill projects a similar revenue loss totaling nearly $4.8 trillion over 10 years, with dynamic effects lowering this figure to about $3.9 trillion. This signifies substantial increases in federal debt unless offset by spending cuts.
In the red, deep red
These deficit hikes will add roughly $3 trillion to the national debt over the following decade, as deficits need to be financed by borrowing, hence the increased public debt. The budget resolution accompanying these tax bills allows for up to $5.3 trillion in deficit-financed tax cuts in total, further indicating rises in debt levels.
But wait, there's more
The key provisions contributing to deficits include the permanent extension of certain TCJA (Tax Cuts and Jobs Act) provisions like the higher Alternative Minimum Tax (AMT) exemption and the $750,000 mortgage interest limit. The bill also includes expanded standard and additional deductions, such as a $4,000 deduction for seniors, which further reduce revenue. Though proponents argue some economic growth gains partially offset revenue losses, the net effect remains a large increase in deficit and debt.
The skinny on the skim
Donald Trump's 2025 tax bill and related GOP tax plans are forecasted to substantially increase the US federal budget deficit by anywhere from $3.8 trillion to $4.8 trillion over the next decade, causing at least a $3 trillion increase in public debt. These deficits arise from extended tax cuts and deductions that decrease federal revenue, with only modest economic growth gains mitigating but not eliminating the fiscal impact.
- The financial implications of President Donald Trump's 2025 tax bill could result in a substantial increase in the US federal budget deficit by approximately $3.8 trillion to $4.8 trillion over the next decade, leading to a minimum increase of $3 trillion in public debt.
- The tax law, under President Donald Trump's administration, is a significant aspect of politics and business in the USA, as it has been found to increase the federal deficit dramatically, thereby affecting the nation's general news and finance sectors.
