Trump’s Tax-and-Spending Plan: A Look at Its Potential Impact on National Debt
Economists are cautioning that former President Donald Trump’s proposed tax and spending plan, which he has dubbed “big, beautiful,” could have significant negative consequences due to its potential impact on the national debt.
Independent research organizations analyzing the proposal project that it would increase the national debt—which currently stands at a record $36.8 trillion—by over $2.5 trillion over the next ten years.
Despite these projections, White House Press Secretary Karoline Leavitt asserted on Monday that the bill would actually result in $1.6 trillion in savings for the federal government. She told reporters that the bill would not add to the deficit and would represent the largest savings of any legislation ever passed on Capitol Hill.
The White House and the Office of Management and Budget did not provide clarification when asked about the calculation of the $1.6 trillion figure.
Fiscal watchdogs have strongly challenged such claims, pointing to the bill’s substantial tax cuts—estimated at $3.8 trillion—and comparatively small spending cuts. The nonpartisan Committee for a Responsible Federal Budget that the current House bill would increase the debt by $3.3 trillion by 2034, raising annual deficits to between $2.9 trillion and $3.3 trillion.
The size of the deficit is a major concern for several Republican fiscal conservatives in Congress, and their could jeopardize the bill’s passage. The tax cuts Trump enacted in 2017 are scheduled to expire at the end of the year; simply extending them would cost $4.6 trillion over a decade, according to the Congressional Budget Office. The Republican bill also lowers taxes on tips and overtime and increases spending on military and border security. To partially offset these costs, Republicans plan to cut Medicaid, food stamps, and federal subsidies for clean energy initiatives.
Republican leaders are struggling to find a balance between reducing the bill’s cost and maintaining support from moderate members who are hesitant to cut too much from popular social safety net programs. Trump is scheduled to attend the House Republicans’ conference meeting on Tuesday to bolster support for the bill.
The bill aims to save money by implementing work requirements for Medicaid recipients, reducing nutrition assistance, and tightening eligibility requirements for undocumented migrants seeking federal benefits. Critics contend that these cuts disproportionately affect low-income Americans. According to Daniel Hornung, a former Deputy Director of the National Economic Council under President Joe Biden, the bill is structured in such a way that low- and middle-income households bear the brunt of the impact, while the wealthy receive significant benefits.
He further stated that there is no scenario in which the bill would reduce deficits.
The debate over the bill’s final cost has revealed divisions within the Republican Party. Fiscal conservatives argue that the proposed spending cuts are insufficient and that the claimed savings are unrealistic. Texas Rep. Chip Roy stated on social media late Sunday that they could and must do better before passing the final product. His statement came after the House Budget Committee narrowly advanced the bill in a 17-16 vote, with four deficit hawks voting “present” to allow the measure to proceed. The previous Friday, five Republican fiscal conservatives on the committee joined all Democrats in voting against the bill.
House Speaker Mike Johnson and his leadership team engaged in intense negotiations over the weekend before the bill passed out of the Budget Committee on Sunday. Johnson has pledged to bring the bill to a vote before Memorial Day, meaning it could reach the House floor as early as this week. Following that, it would go to the Senate, where Republicans have their own concerns and, as in the House, will need nearly unanimous support from their caucus.
Republican Sen. Ron Johnson of Wisconsin wrote recently that the One Big Beautiful Bill will almost certainly add to deficits and debt. He added that he couldn’t imagine that they want Republicans to increase annual deficits, which is why he can’t support this bill as it’s currently being discussed and doubt that it will pass the Senate.
Economists caution that the bill’s impact on the deficit could be even greater than current estimates, as some tax cuts are set to expire to keep the initial cost lower. Historically, Congress has often extended temporary tax cuts beyond their expiration dates. The Committee for a Responsible Federal Budget estimates that extending all of the bill’s tax cuts for a full decade could increase the total deficit increase to as much as $5.3 trillion.
Deficits are a concern not just for fiscal conservatives in Congress. Moody’s Ratings recently lowered the U.S.’s AAA rating, citing concerns about the country’s ability to maintain fiscal responsibility. The bill’s passage could put further pressure on U.S. bond yields, which have already risen above 5%, indicating increasing investor concern about American debt.
House Republicans maintain that the bill will stimulate economic growth, generating enough revenue to offset the increased debt. Jason Smith, chairman of the tax-writing House Ways and Means Committee, stated that the economy would “go gangbusters” under Trump’s tax and regulatory policies.
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