"The Magnificent Makeover Bill" Debunked: Trump's Tax and Spending Bill Would Skyrocket US Debt by Trillions
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Analysis: Trump's tax legislation could potentially escalate the U.S. national debt by billions. - Increase in U.S. Debt Due to Trump's Tax Legislation: Research Findings
The enormous tax and spending bill proposed by US President Donald Trump could surge the US budget deficit by a staggering $2.8 trillion over a decade, according to a fresh estimate from the non-partisan Congressional Budget Office (CBO), unveiled on Tuesday (local time). This figure encompasses favorable economic outcomes, the CBO revealed. A fortnight ago, without accounting for these economic advantages, the CBO had forecast an increase in public debt from the current $36.2 trillion by $2.4 trillion. This sum, including interest charges, amounts to $3 trillion.
Trump's "Magnificent Makeover Bill" Falters in US Congress
The fresh estimate contradicts the assertions of Trump's Republicans, who claim the comprehensive package will stimulate the US economy sufficiently to facilitate a decrease in public debt via increased revenues. "We're convinced it will lead to a stronger and more prosperous America," declared Senate Republican leader John Thune on Tuesday.
The House of Representatives approved the bill, christened the "One Big Beautiful Bill Act," in May. Republicans in the Senate are currently deliberating a revised version. To become law, both chambers of Congress must concur on a mutual version, which could then be delivered to Trump.
The existing draft extends the substantial tax reductions introduced by Trump during his first term from 2017 to 2021, which would otherwise expire by year-end. To counter this, drastic cuts to the Medicaid health program are being considered, which predominantly provides coverage for low-income and older citizens.
- Tax Bill
- Donald Trump
- USA
Deconstructing the "One Big Beautiful Bill Act"
The One Big Beautiful Bill Act (H.R. 1, 119th Congress, 2025-2026) is a comprehensive reconciliation bill endorsed by the House on May 22, 2025. It aims to trim taxes, adjust federal expenditures, expand the statutory debt limit, and modify various government programs spanning multiple sectors[4][5].
Key Features and Provisions
- Tax Cuts and Economic Prosperity
The bill intensifies the small business tax deduction from 20% to 23%, making it permanent. This amendment benefits around 26 million entrepreneurs and is predicted to create over 1 million new Small Street small business jobs each year, generating approximately $750 billion in economic growth[1][2]. It also prolongs 100% immediate expensing for equipment, machinery, research & development, and new or upgraded production facilities in the US, fostering industrial expansion and manufacturing job growth[2]. - Assistance for Families and Farmers
It enhances the Child Tax Credit, adjusting it for inflation, and enlarges the standard deduction, benefiting American families. Family farms receive permanent protections via an increased Death Tax Exemption, safeguarding around 2 million family farms from estate taxes[2]. - Regulatory Relief and Gig Economy Support
The bill abolishes a previous rule compelling gig economy platforms like Venmo and PayPal to report transactions exceeding $600 to the IRS, alleviating regulatory constraints on gig workers. It also raises the threshold for 1099-MISC reporting to $2,000, lessening paperwork for small businesses and workers[2]. - Transformations to Federal Nutrition Assistance (Medicaid-related Influence) Under Title I related to the Department of Agriculture, the bill alters the Supplemental Nutrition Assistance Program (SNAP). It prohibits the USDA from enhancing the Thrifty Food Plan (TFP) cost based on reevaluation or updates to the market basket of goods, restricting annual adjustments to the Consumer Price Index for All Urban Consumers. Though this does not cut Medicaid directly, alterations to SNAP and other program budgets may affect federal aid to low-income families and potentially relate to broader social welfare and health program spending[4][5].
Examining US Budget Deficit and Economic Impact
- Budget Deficit:
As a reconciliation bill, it encompasses provisions that both increase and decrease the deficit. It raises the statutory debt limit to accommodate federal borrowing needs. The combination of expanded tax deductions and credits alongside limits or adjustments on spending programs reflects a complex balance between tax cuts and spending constraints. While tax reductions might diminish federal revenue, the bill's design sought to stimulate economic growth, which in theory could broaden the tax base long term[4][5]. - Economic Growth:
By bolstering small businesses and manufacturing through tax policies and immediate expensing, the bill intends to fuel job creation and investment in the domestic economy, particularly boosting rural America and Main Street businesses. The expansion of family tax benefits further supports consumer expenditure[2]. - Specific Policy Changes:
- No explicit Medicaid cuts are detailed in the information found, but the bill adjusts nutrition assistance policies (SNAP).
- It restricts USDA from raising the cost basis of the Thrifty Food Plan except by CPI, potentially limiting SNAP benefit increases under the program[4][5].
- The bill abolishes certain regulatory measures affecting gig workers, thus impacting tax reporting and compliance rules[2].
- The One Big Beautiful Bill Act, proposed by US President Donald Trump and currently under deliberation in the Senate, is a comprehensive reconciliation bill that primarily focuses on tax cuts, adjustments in federal spending, increasing the statutory debt limit, and modifying various government programs.
- The projected economic growth from the One Big Beautiful Bill Act, if passed into law, is expected to benefit various sectors, including small businesses, families, and the gig economy, by creating jobs, stimulating investments, and expanding tax benefits. However, it's crucial to note that this expansive tax and spending bill is projected to significantly increase the US budget deficit by trillions of dollars over a decade, according to the non-partisan Congressional Budget Office.
