Reassessing the Fiscal Impact of the “One Big Beautiful Bill”: A Closer Look at the Numbers
In recent statements, officials from the White House and President Trump have highlighted the purported fiscal benefits of the legislation known as the “One Big Beautiful Bill.” According to Russell Vought, Director of the Office of Management and Budget (OMB), the latest Congressional Budget Office (CBO) analysis confirms that the bill reduces the federal deficit by approximately $1.4 trillion over a decade-when adjusting for a notable budgetary “gimmick” involving the baseline assumptions. The bill also claims to deliver a historic $1.7 trillion in mandatory savings, marking the largest such reduction in U.S. history. Vought asserts that, for those concerned about national debt, this legislation significantly enhances the country’s fiscal outlook.
Meanwhile, President Donald Trump has lauded the bill as one of the most impactful in congressional history, citing a record $1.6 trillion in spending cuts and the largest tax reductions ever enacted. He warns that failure to pass this legislation could result in a 68% increase in taxes and other economic deterioration, emphasizing his role as a fixer rather than the creator of current fiscal challenges.
The Discrepancy in Deficit Projections: What’s Behind the Numbers?
Despite these optimistic claims, the CBO’s analysis-supported by internal documents from the OMB-paints a more complex picture. The core issue lies in the choice of baseline used to measure the bill’s impact on the federal deficit.
The CBO adheres to a “current-law baseline,” which assumes existing laws and policies will remain in effect unless explicitly scheduled to expire. Conversely, the White House and proponents often rely on a “current-policy baseline,” which presumes that current policies, including temporary tax cuts and spending measures, will continue indefinitely, regardless of their legal expiration dates. This difference in assumptions can lead to vastly different conclusions about whether a bill increases or decreases the deficit.
The White House’s approach tends to ignore the expiration of temporary provisions, effectively treating them as permanent, which can artificially inflate perceived savings or reductions. For example, the 2017 tax reform law was designed to be temporary, with many provisions set to expire after nine years-meaning in 2026, the tax landscape would revert to pre-2017 policies. The CBO, following standard budget rules, incorporates these expiration dates into its calculations, leading to higher projected deficits once temporary measures lapse.
The 2017 Tax Cuts and Their Lingering Effects
The 2017 tax overhaul, signed into law by President Trump, was structured with an expiration date for many of its provisions, primarily to comply with budget reconciliation rules that limit deficit increases over a decade. To stay within the $1.5 trillion deficit cap, lawmakers agreed to sunset the tax cuts after nine years, rather than making them permanent. This decision resulted in a projected revenue increase in the tenth year, which the CBO accounts for when scoring the bill’s long-term impact.
However, the White House contends that these provisions would almost certainly be extended or made permanent in practice, arguing that the scenario where they lapse is unrealistic. A senior administration official emphasized that, regardless of political party, the idea of a $4 trillion tax hike starting next year is implausible, and thus, the CBO’s scoring based on expiration is overly conservative.
President Biden’s campaign pledge to preserve the 2017 tax cuts for households earning less than $400,000 further complicates the picture. Yet, the financial feasibility of extending these cuts remains uncertain, as the projected cost is around $3.8 trillion over a decade, a figure that has not been fully addressed in policy proposals.
The Role of Budget Baselines and Political Gimmicks
The debate over baseline assumptions is central to understanding the conflicting narratives. The White House often dismisses the CBO’s scoring as a “gimmick,” claiming it relies on a strict adherence to current law, which they argue does not reflect real-world policy continuity. Conversely, critics argue that ignoring existing law and relying on temporary measures to claim deficit reductions is misleading.
In the current legislative context, reconciliation procedures have been used to pass significant tax and spending measures with a simple majority, bypassing filibuster rules. In 2017, this process was used to pass the tax reform law, with the understanding that many provisions would expire, thus limiting the bill’s long-term impact on the deficit.
The White House’s approach involves assuming that temporary tax cuts and spending increases will be extended or made permanent, which would significantly increase the projected deficit. For example, recent additions to the bill include temporary tax breaks for tips, overtime pay, and auto loans, as well as increased defense and border security spending-all scheduled to expire after four years. The CBO scores these as if they will disappear, but in reality, political realities suggest they may be extended, leading to higher deficits.
The Broader Fiscal Outlook: What Do the Numbers Say?
Independent analyses, such as those from the Committee for a Responsible Federal Budget, estimate that if all temporary provisions in the legislation remain in effect for the full decade, the national debt could swell by approximately $5 trillion, factoring in increased interest payments.
The bill also proposes significant reductions in mandatory spending programs, including Medicaid work requirements, cuts to the Affordable Care Act, and tightening eligibility for SNAP benefits. These measures could result in nearly 11 million Americans losing health coverage, according to the CBO. While mandatory spending reductions are generally more durable than discretionary cuts, the savings are often offset by new tax cuts or policy changes that expand other programs.
Furthermore, the bill’s overall effect on the federal budget is to substantially increase the deficit over the next ten years, at a time when the national debt has reached levels comparable to those seen in 1946-immediately after World War II-when the debt-to-GDP ratio was at historic highs. Despite claims of fiscal improvement, critics argue that the legislation could exacerbate the debt crisis rather than alleviate it.
The Reality Check: Are the Claims Accurate?
When scrutinized, the claims made by Vought and other White House officials about the bill’s fiscal benefits appear inconsistent. They praise the use of standard scoring methods while simultaneously dismissing the implications of temporary measures that, in practice, are likely to be extended or made permanent.
President Trump’s signing of the 2017 tax law, which explicitly set expiration dates for many provisions, was a strategic move to limit the bill’s long-term deficit impact. However, the political landscape suggests that many of these temporary measures could be extended, contradicting the assumptions used in official scoring.
In conclusion, the narrative that the “One Big Beautiful Bill” significantly reduces deficits is heavily dependent on baseline assumptions and political forecasts. When considering the full scope of temporary provisions and potential extensions, the legislation’s impact on the national debt could be far more negative than the simplified figures suggest.
Final Verdict: A Critical Perspective
Given the conflicting claims and the reliance on different baseline assumptions, the true fiscal impact of this legislation remains uncertain. The White House’s assertions about deficit reduction are based on optimistic assumptions that may not materialize, while independent analyses warn of substantial increases in the national debt.
In the end, transparency about the assumptions underlying these projections is essential for an informed debate. As it stands, the claims of significant deficit reduction appear overstated, and the potential for increased debt remains a serious concern.
Rating: Four Pinocchios – The White House’s portrayal of the bill’s fiscal impact is misleading, relying on questionable assumptions and ignoring the full implications of temporary measures that are likely to be extended or made permanent.
