Budget office says Trump's tax law will add $3.4 trillion to deficits,
leave 10 million uninsured
[July 22, 2025]
By KEVIN FREKING
WASHINGTON (AP) — President Donald Trump's tax and spending law will add
$3.4 trillion to federal deficits through 2034, the Congressional Budget
Office reported Monday, a slight increase in the projection that takes
into account the final tweaks that Republicans made before getting the
legislation over the finish line.
More than 10 million people will be uninsured under the law in 2034
because of the law, CBO found, an improvement from an earlier projection
that found 11.8 million people losing coverage over the decade.
The release of the CBO analysis Monday comes at the end of a grueling
legislative fight, but at the start of a longer political struggle to
come as the two parties clash over the law's impact on the economy,
healthcare and government programs. Republicans are touting the bill as
a tax cut for all Americans, yet a recent AP-NORC poll found about
two-thirds of U.S. adults expect the new tax law will help the rich as
Democrats attack the legislation.
The bill Trump signed into law on July 4 extended current tax rates for
individuals that were set to expire at the end of this year and
temporarily created new tax deductions for tips, overtime and auto
interest loans for new vehicles assembled in the U.S. Republicans also
used the bill to cut future spending on Medicaid and food assistance,
and to phase out certain clean energy tax credits more quickly.
Democrats were quick to highlight the CBO's findings.
“Today’s report reminds us of something: facts are stubborn and the
facts are clear,” said Senate Democratic leader Chuck Schumer. ”The big,
ugly betrayal is a loser for the country and will be a loser for the
Republicans."
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Republicans say the bill was critical to ensure most Americans
didn't experience a significant tax increase next year. Trump and
Republicans have also insisted that economic growth will exceed the
CBO's projections for the next decade, erasing the projected
deficits as more revenue comes into the Treasury than anticipated.
Nonpartisan fiscal watchdogs also highlighted the CBO's latest
projection. Maya MacGuineas, president of the Committee for a
Responsible Federal Budget, said there will be a shorter-term “sugar
high” as stimulus makes its way through the economy. But modelers
from across the ideological spectrum agree that any sustained
economic changes are likely to be modestly beneficial, or negative.
“And not one serious estimate claims this bill will improve our
fiscal situation,” MacGuineas said. “Rather, positive growth effects
are likely to be swamped by the effects of higher debt and interest
rates.”
The CBO said more than $1 trillion in deficit savings is generated
through the health portions of the bill, which includes new work
requirements for certain Medicaid beneficiaries in states that
expanded the program through the Affordable Care Act.
Some late changes on Medicaid were made to the bill to win over
holdouts. One of those changes added a $50 billion fund for rural
hospitals.
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Associated Press writer Mary Clare Jalonick contributed to this
report.
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