The 'Big, Beautiful Bill' Will "Massively" Increase Near-Term Deficits, Add $5 Trillion In Debt
Late last week, the
Joint Committee on Taxation (JCT) released its preliminary score of the House Ways and Means Committee mark-up of the large budget reconciliation bill working its way through Congress, also known as Trump's "
Big, Beautiful Bill" (
BBB). And while the BBB is inching to passing through Congress - despite holdouts still remaining
especially over the size of the SALT deduction - here is a snapshot of what is in the Bill, and how it will affect the US in the coming decade.
We start with a look at the fiscal policy focus of the BBB: Republicans' slim majority and their use of the budget reconciliation process are key influences on the composition of the fiscal policy-related legislation. That said,
extending the expiring provisions of the TCJA should have sufficient support within the party for enactment. Additional tax cuts, such as a domestic manufacturing credit and not taxing tips, will be facilitated by the political viability of sufficient “pay-fors”. This will likely include watered-down versions of proposed IRA tax credit phase-outs and cuts to social spending programs.
So how does one quantify the impact of the BBB: as a reminder, the
Ways and Means Committee is responsible for writing the main tax code portion of the bill. Relative to the CBO’s January 2025 baseline, the JCT estimated the mark up to
increase deficits by $3.8trn over the next 10 years, with most of the deficit increase ($2.2trn) occurring over the next five years. Indeed, breaking the bill down even further, of the $1.9trn of total savings identified in the mark up, the majority ($1.2trn) is realized over the back half of the 10-year budget window.
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