CBO Analysis: Trump's OBBBA to Increase Deficit by $2.8 Trillion Over Next Decade

On June 17, 2025, the nonpartisan Congressional Budget Office (CBO) released an analysis indicating that President Donald Trump's proposed tax-cut and spending legislation, known as the "One Big Beautiful Bill Act" (OBBBA), would increase the federal deficit by $2.8 trillion over the next decade. This projection accounts for dynamic economic impacts, including anticipated GDP growth and higher interest rates.

The OBBBA is a comprehensive legislative package introduced by President Trump, aiming to extend and expand key provisions from the 2017 Tax Cuts and Jobs Act (TCJA). The bill includes a permanent extension of the 2017 tax cuts, lowering income tax rates with the top rate at 37%, and doubling the standard deduction to $16,000 for individuals and $32,000 for joint filers. It also proposes increasing the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for incomes under $500,000. For businesses, the bill enhances deductions for small businesses, including an increase in the Qualified Business Income (QBI) deduction for S-Corporations from 20% to 23%, and restoration of 100% bonus depreciation for qualified property through 2029. Additionally, the bill allocates an additional $150 billion for defense spending and $70 billion for border security measures. To offset some of these costs, the OBBBA proposes reductions in Medicaid and Supplemental Nutrition Assistance Program (SNAP) funding by approximately $700 billion, introducing new work requirements for beneficiaries.

The CBO's dynamic analysis projects that the OBBBA would increase the federal deficit by $2.8 trillion over the next decade. This figure surpasses the previous static projection of a $2.4 trillion deficit increase. The analysis accounts for factors such as higher GDP growth and interest rates. Additionally, the CBO estimates that the bill could result in 10.9 million people losing health insurance coverage by 2034, primarily due to the new Medicaid work requirements and other eligibility changes.

Democrats have expressed strong opposition to the OBBBA, highlighting concerns over the substantial deficit increase and potential loss of health insurance for millions. House Democratic Leader Hakeem Jeffries criticized the bill, stating that it would "strip healthcare from their constituents" and calling for its rejection. Republicans argue that the bill is essential for economic growth and stability. House Budget Committee Chairman Jodey Arrington celebrated the House passage of the OBBBA, emphasizing its provisions for border security, national defense, tax cuts, and spending reductions.

The proposed Medicaid cuts and work requirements could lead to significant reductions in health coverage, particularly affecting low-income individuals and families. The American Diabetes Association has expressed deep concern over these changes, emphasizing the potential jeopardy to healthcare access for millions of people with diabetes. While the bill aims to stimulate economic growth through tax cuts and increased spending in certain areas, the projected increase in the federal deficit raises concerns about long-term fiscal sustainability. The CBO's analysis suggests that the economic gains may not fully offset the revenue losses, leading to a substantial increase in national debt.

The OBBBA represents one of the most significant legislative efforts to reshape tax and spending policies since the 2017 TCJA. The current debate echoes past discussions on balancing tax cuts with fiscal responsibility, highlighting the ongoing challenge of stimulating economic growth while managing the national deficit.

As the OBBBA moves to the Senate for consideration, the political and economic implications of the bill continue to be a focal point of national discourse. The coming weeks will be critical in determining the future of this legislation and its impact on the nation's fiscal health and social programs.