How can something so big and beautiful pivot into one huge hunk of ugly?
By cutting health care for 10 million Americans over the next decade, according to the latest estimate by the nonpartisan Congressional Budget Office (CBO).
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The CBO study also warns of trillions of dollars in additional economic impacts, saying President Donald Trump’s recently enacted tax and spending law will add trillions of dollars plus interest to the federal deficit.
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OBBBA tax reconciliation law will likely hurt your wallet
Bloomberg reports that the CBO score for the One Big Beautiful Bill Act (OBBBA), released July 21, reflects a $4.5 trillion decrease in revenues and a $1.1 trillion decline in spending through 2034.
The new analysis doesn’t incorporate so-called dynamic effects, such as the long-term impact the legislation’s measures might have on growth or interest rates, Bloomberg said.
OBBBA also triggered warnings from some economists and investors that it would increase America’s budget shortfall — already large by historical standards — and push up interest rates, borrowing costs, and inflation.
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The White House points to record collections from the tariffs President Trump imposed on most U.S. imports this year, saying that revenue will help fill the gap.
Numerous spending cuts were included in the tax law in an effort to reduce deficits and offset the cost, including to Medicaid, which provides health insurance for vulnerable seniors and low-income people.
According to the CBO, OBBBA will significantly increase the federal debt and deficits over the next decade. The CBO report also said the increased debt will lead to higher interest costs for the government and could impact borrowing costs for businesses and individuals.
Related: Fed official voices blunt 3-word message on Fed rate cuts
President Trump and his aides have dismissed reports of the $3.5 trillion addition to the federal debt. That figure, the president has said, would be much smaller if the Federal Reserve Board, headed by Fed Chair Jerome Powell, would slash interest rates.
“Even our Country is having to pay a higher Rate than it should be,” the president wrote on his Truth Social account July 23. “Our Rate should be three points lower than they are, saving us $1 Trillion per year (as a Country). This stubborn guy at the Fed just doesn't get it.”
OBBBA makes U.S. debt ‘$4 trillion worse’
Committee for a Responsible Federal Budget President Maya MacGuineas weighed in on the OBBBA's impact.
“It’s still hard to believe that policymakers just added $4 trillion to the debt,” MacGuineas said. “Many supporters of this law have spent months or years appropriately fuming about our unsustainable fiscal situation. But when they actually had an opportunity to fix it, they instead made it $4 trillion worse.”
MacGuineas dismissed “claims that economic growth will cover the costs, or that spending cuts will wildly exceed expectations, or that they shouldn’t have to pay for extending temporary provisions in the law.”
Related: Former Fed Chair sends stern message on economy, Fed
Instead, MacGuineas noted, “Modelers from across the ideological spectrum universally agree that any sustained economic benefits are likely to be modest, or negative, and not one serious estimate claims this bill will improve our fiscal situation.”
Though dwarfed by the amount of lost revenue, the legislation does include a number of important spending reductions.
But their savings are multiples short of what is needed, and there are already efforts underway to prevent many of them from taking effect.
MacGuineas also called out lawmakers for their “cynical game of using a score that mixes different baselines in this bill – all to try to hide the actual debt run-up they endorsed.”
“If the expiring provisions in this bill are instead extended, it would add another $1.5 trillion to the ten-year cost – up from more than $4 trillion as written,” she said.
“This is a dangerous game we are playing. It has been going on for years, and it was brought to new levels with this bill. And it is time to stop.”
The full CBCO report is available at www.cbo.gov/publication/61410.
Related: JPMorgan drops blunt forecast on future interest rate cuts
