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Analysis Reveals Trump's Tax Reform Poised to Accumulate Billions in Additional U.S. National Debt - Increased government debt potentially ascribed to Trump's tax legislation
The hotly debated tax and spending bill put forth by US President Donald Trump could bump up the US budget deficit by a whopping $2.8 trillion over the next ten years, according to a fresh assessment from the nonpartisan Congressional Budget Office (CBO). This figure includes positive economic effects, as stated in their latest report last Tuesday (local time). Two weeks prior, the CBO had projected an increase in public debt from the current $36.2 trillion by approximately $2.4 trillion, or $3 trillion including interest costs, without these economic benefits factored in.
Trump's Tax Bill Faces Challenges in Congress
This new estimate contradicts the assertions of Trump's Republicans that the legislative package would thicken the US economy enough to lessen public debt through enhanced revenues. "This bill will lead to a stronger and more prosperous America," said Senate Republican leader John Thune on Tuesday.
The House of Representatives passed the bill, officially known as the "One Big Beautiful Bill Act," back in May. Senators are currently deliberating over revised versions of the bill. To enact the bill, both houses of Congress need to agree on a common version, which can then be presented to Trump.
The proposed legislation extends enormous tax cuts instituted during Trump's initial term (2017-2021), which would otherwise expire at year's end. To compensate for this, there are planned drastic reductions to the Medicaid healthcare program, which predominantly caters to low-income and older citizens.
Key Aspects of the "One Big Beautiful Bill"
Here's a breakdown of the "One Big Beautiful Bill:"
- "Permanence of 2017 Tax Cuts:" The bill ensures that the tax cuts from 2017 remain in place, averting a potential 22% tax hike for the average taxpayer if the cuts were rescinded.
- "Tax Savings:" It saves the average American family from a $1,700 tax hike, delivers an additional $1,300 tax cut on average, and potentially increases wages by up to $11,600 per worker. For families with two children, it boosts take-home pay by up to $13,300 a year.
- "Fulfilling Trump Campaign Promises:" The bill does away with tax on tips and overtime pay and offers seniors up to $450 in tax relief, making good on key Trump campaign pledges.
- "Child Tax Credit and Family Support:" It locks in and amplifies the doubled Child Tax Credit benefiting more than 40 million families, maintains and increases the standard deduction for 91% of taxpayers, and broadens 529 education savings accounts.
- "Additional Social and Economic Supports:" It expands access to child care, makes the paid leave tax credit permanent, increases healthcare choice by expanding health savings accounts, and creates new savings accounts to launch financial security for children at birth.
- "Senior Deduction:" Temporarily adds a senior deduction of $6,000 for qualifying individuals for both itemizers and non-itemizers from 2025 through 2028, with the deduction phasing out for adjusted gross incomes exceeding $75,000.
- "Small Business Tax Deduction:" Boosts the small business tax deduction from 20% to 23%, supposedly benefiting approximately 26 million entrepreneurs.
Budget Deficit and Economic Implications
The bill claims to achieve the largest deficit reduction in nearly three decades by making $1.6 trillion in mandatory spending cuts, a historic spending reduction. This may suggest that the bill incorporates spending cuts or budgetary reforms alongside tax cuts. Furthermore, the legislation is said to stimulate the economy by putting more money into workers’ pockets, raising wages, and increasing disposable income.
Impact on Medicaid
It remains unclear as to how Medicaid is directly impacted, but the emphasis on mandatory spending cuts may have repercussions for Medicaid funding or eligibility as the search results did not provide explicit details regarding Medicaid in relation to the One Big Beautiful Bill.
A Glimpse at the One Big Beautiful Bill
The One Big Beautiful Bill, spearheaded by President Trump, is a wide-reaching tax reform bill that combines tax relief, wage increases, and various economic and social incentives for taxpayers and businesses. Significantly, the bill's focus on spending reductions may influence federal spending choices, including Medicaid, in the coming years.
- The tax law, proposed by US President Donald Trump and colloquially known as the "One Big Beautiful Bill," includes provisions to extend and make permanent the tax cuts instituted during his initial term, aiming to boost personal-finance and general-news for the average American family.
- The projected budget deficit increase from Trump's tax bill, according to the nonpartisan Congressional Budget Office, is $2.8 trillion over the next ten years, raising concerns about the USA's financial situation and policy-and-legislation.
- The proposed legislation, currently under deliberation by the Senate, includes a variety of beneficial aspects for families, seniors, and small businesses, but with potential cuts to the Medicaid healthcare program that caters mainly to low-income and older citizens.
