The Congressional Budget Office (CBO) has released its final analysis of President Donald Trump’s signature legislative achievement, the GOP megabill signed on July 4, projecting that the bill will increase the federal deficit by $3.4 trillion over the next decade and result in 10 million Americans losing health insurance. While the legislation saves over $1 trillion through cuts in federal health care spending, particularly Medicaid, the overall costs surpass the savings.
The primary driver of the deficit increase is the permanent extension of Trump’s 2017 tax cuts, which are estimated to reduce federal tax revenue by $4.5 trillion. That sum includes the cost of tax cuts Republicans added during Senate floor debate of the package. The CBO’s new estimate of uninsured Americans is lower than its prior projection of 11.8 million people, though the difference is attributed to changes in the legislation, including the removal of provisions that would have affected undocumented immigrants. A prior version of the legislation also offset costs with policies intended to penalize states that offer coverage to undocumented immigrants out of their own coffers. Undocumented immigrants are prohibited from getting Medicaid coverage, but a dozen states and the District of Columbia pay for services with their own funds.
The bill originally cut funding for states that had opted to expand Medicaid under the Democrats’ 2010 health law, but the provision was dropped in the final version due to an objection from the Senate parliamentarian. At the request of Senate Republicans, CBO also included an analysis using a new accounting tactic that zeroes out the cost of permanently extending Trump’s 2017 tax cuts. Senate Republicans have argued that merely extending current tax rates shouldn’t be counted towards the deficit and that traditional accounting used by CBO biases against preventing tax increases. Under the separate analysis, the sweeping domestic policy bill would increase the federal deficit by only $366 billion.
This analysis highlights the contentious nature of the bill, as it represents a significant shift in the nation’s fiscal landscape. The CBO’s report underscores the long-term implications of the legislation, emphasizing its potential impact on public services, tax policy, and economic stability. As the legislative process concludes, stakeholders will need to grapple with the consequences of these policies and their effects on future generations of Americans.
Katherine Tully-McManus contributed to this report.