WASHINGTON: The House-passed version of Republicans’ tax and spending bill would add US$2.8 trillion to US deficits over the next decade, according to new estimates from the Congressional Budget Office (CBO) that incorporate the broader impact the legislation would have on the economy and federal budget.
The CBO had previously estimated the bill would add US$2.4 trillion to deficits, before accounting for so-called dynamic effects.
A release on Tuesday showed an US$85bil decrease in the deficit thanks to economic effects, mainly through faster growth.
It also indicates a US$441bil added cost thanks to higher interest rates. That produces a net hit of US$2.77 trillion, the new estimate shows.
Independent analysis has also indicated the bill will add to federal borrowing.
The Penn Wharton Budget Model earlier this month tallied a US$3.2 trillion increase to deficits over a decade after incorporating dynamic effects.
The Tax Foundation weighed in at US$3.1 trillion.
Average annual economic growth would be 0.04 percentage point higher over the decade to 2034 as a result of the House version of the bill, relative to a baseline estimate, the CBO said on Tuesday.
The agency’s January baseline showed gross domestic product (GDP) climbing about 1.8% on average over that period.
Treasury Secretary Scott Bessent has set a goal of 3% sustained GDP growth, and last month said the economy would be expanding at at least that pace after 12 months’ time.
He and other GOP members have repeatedly derided CBO projections for not taking into account what they say are pro-growth incentives in the legislation.
The so-called “One Big Beautiful Bill” encompasses much of President Donald Trump’s economic agenda. — Bloomberg
