Congressional Budget Office: GOP Tax Cut Plan Adds $3.5 Trillion to Deficit

If the GOP’s agenda were realized, trillions of dollars would be shifted from the general public directly into the hands of the wealthy.

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While Republicans threaten to jeopardize the entire U.S. economy in their pursuit of significant cuts to federal programs and climate initiatives, supposedly in an effort to reduce the national debt, a recent report reveals that their simultaneous push to permanently implement substantial tax cuts for corporations and the affluent would nullify any “savings” achieved through their debt limit proposal. Instead, it would add trillions of dollars to the national deficit.

A recent analysis conducted by the Congressional Budget Office (CBO), at the request of Senators Sheldon Whitehouse (D-Rhode Island) and Ron Wyden (D-Oregon), has revealed that the Republican plan to make the Tax Cuts and Jobs Act (TCJA) a permanent fixture, which was signed into law by President Donald Trump in 2017, would result in a $3.5 trillion increase in the deficit over the next ten years.

The CBO specifically identified that extending the individual income tax provisions, the majority of which are set to expire by the end of 2025, would contribute $2.5 trillion to the deficit. Additionally, the costs associated with servicing the debt would add an extra $278 billion. Moreover, the inclusion of other provisions within the TCJA, such as the significantly high estate tax exemptions and business tax provisions, would further contribute approximately $1 trillion to the deficit.

The proposed debt ceiling bill put forth by House Speaker Kevin McCarthy (R-California) would render all the proposed budget cuts ineffective, undermining the stated purpose behind those cuts. An analysis conducted by Americans for Tax Fairness reveals that McCarthy’s debt limit bill slashes $3.2 trillion from vital agencies and provisions like renewable energy spending.

Simultaneously, the Tax Cuts and Jobs Act (TCJA) has already provided significant advantages to the wealthy, having contributed $2 trillion to the national deficit. If the TCJA’s provisions were made permanent, this trend would continue.

According to a recent analysis by the Institute for Taxation and Economic Policy, the top 20 percent of Americans would receive 63% of the tax cuts from extending the TCJA, while the bottom 20 percent would only receive 1 percent. In 2026, the average tax cut for the wealthiest 1 percent would amount to $25,650—a sum equivalent to the entire annual income of a full-time worker earning $12 an hour. In contrast, the poorest 20 percent would receive a meager average tax cut of merely $100.

In essence, if the GOP’s agenda prevailed, encompassing both the tax cuts legislation and McCarthy’s debt ceiling bill, it would result in a massive diversion of trillions of dollars away from the public and government agencies, solely to facilitate significant tax cuts for the wealthy.

This report serves as additional evidence that Republicans exploit their concerns about the deficit as a guise to slash spending on public programs, while conveniently disregarding it when it comes to granting favors to the affluent and corporations.

“As highlighted by the CBO report, the GOP is content with accumulating more government debt if it means protecting their wealthy friends and supporters from paying their fair share of taxes,” remarked David Kass, executive director of Americans for Tax Fairness, in a statement. “We are aware of the Republicans’ long-standing strategy to dismantle programs and services that working families rely on, channeling those public funds directly into the pockets of the ultra-wealthy. However, it remains shocking to witness such a brazen repetition of this cycle.”

Whitehouse also pointed out Republicans’ clear ulterior motives in a statement.

“MAGA Republicans don’t give a damn about the deficit, and today’s estimate of the cost of kickbacks for their friends and donors is further proof,” Whitehouse said. “Republicans racked up the national debt by giving tax breaks to their billionaire buddies, and now they want everyone else to pay for them.”

The report strengthens the findings of previous analyses conducted on the Tax Cuts and Jobs Act (TCJA). Back in March, the Center for American Progress discovered that the tax cuts implemented by both the TCJA and President George W. Bush in 2001 have contributed to over 50 percent of the growth in the debt ratio, which represents the proportion of the national debt relative to the size of the economy, since 2001. When excluding the stimulus packages introduced during the Great Recession and the COVID-19 recession, the report reveals that these tax cut packages were accountable for 90 percent of the increase in the debt ratio.

The Truth Out By Sharon Zhang contributed to this report: