Trump tax plan expected to increase deficit by $2.8 trillion

In the United States, on June 17, 2025, the Congressional Budget Office (CBO) released a comprehensive analysis of President Donald Trump's tax and budget bill, highlighting its projected fiscal impacts. This evaluation indicated a significant increase in the federal deficit, estimating it to surge by $2.8 trillion over the next decade when accounting for various economic effects not considered in previous estimates. The report also identified expected increases in interest rates and the subsequent rise in interest payments on federal debt, adding an estimated $441 billion to federal costs due to the tax legislation. The analysis employed a dynamic scoring approach, contrasting with earlier static analyses which suggested a $2.4 trillion increase, relying on the assumption that economic factors would remain unchanged. Proponents of the tax cuts, primarily Republican lawmakers, argue that tax reductions would stimulate economic growth, thus reaching a point where lost government revenues would be compensated through enhanced economic activity. The criticism surveyed by Democrats presents a counter-narrative, asserting that the tax cuts would not offset the increased deficits or contribute to better fiscal health, further asserting that 10.9 million people could potentially lose health insurance as a consequence of the changes in Medicaid programs associated with the tax plan. Concerns were raised within Congress regarding the potential ramifications of the bill, including the implications of new work requirements for Medicaid recipients intended to combat perceived waste within the program. Despite substantial resistance, Senate Republicans continued to advocate for deeper cuts to Medicaid and adjustments to the tax framework, aiming to solidify the tax package. Republicans proposed maintaining certain deductions while drawing critique from other Republican factions advocating for broader reforms, indicating internal party disagreements and highlighted the urgency of pushing the tax cuts through before Congress moves on to other legislative priorities. Treasury Secretary Scott Bessent and others on the Republican side attempted to discredit CBO's figures, arguing that the economic growth projected from the tax plan had not been adequately captured by the analysis. The sentiment echoed within the GOP suggested confidence in the ability of American taxpayers and businesses to adapt and thrive under the proposed tax framework. The ongoing negotiations reflected a complex legislative battle as both parties sought to strengthen their positions ahead of President Trump being presented with the finalized proposal.