The White House and congressional Republicans are pushing President Donald Trump’s ambitious tax plan, which they believe will be funded by sweeping tariffs. However, tax experts are questioning whether this plan can hold up over time. The legislation, often referred to as the "big, beautiful bill," aims to extend and make permanent the tax cuts from Trump’s first term.
Senate Republicans are currently working on changes to this legislation after its recent passage in the House. They are considering how to reshape it to better align with their goals and address concerns about its impact on the national debt.
The tax portion of the bill is estimated to cost around $4 trillion. The Congressional Budget Office (CBO) recently reported that, if enacted, the overall package could add $2.4 trillion to the deficit over the next decade. This has raised alarms among some lawmakers, especially since the national debt has surged from $20 trillion to over $36 trillion in just eight years.
While Trump’s tariffs are projected to reduce the deficit by about $2.8 trillion, experts point out that this depends on whether the tariffs remain consistent and effective. Joe Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, noted that the economic landscape has changed significantly since 2017, making the potential impact on debt more concerning.
Critics argue that if the CBO’s findings are accurate, then Trump’s tariffs might make the bill deficit-neutral. However, the report also suggests that the anticipated revenue from tariffs hinges on their permanence, which remains uncertain. The inconsistency in the administration’s approach to tariffs—whether they are seen as a revenue source or a negotiation tool—adds to the confusion.
Some analysts worry that the bill could lead to a decrease in household wealth and a shrinking economy over the next decade. Tad Dehaven from the Cato Institute expressed skepticism about the projected benefits, citing the legal challenges surrounding the tariffs and their fluctuating nature.
Mike Palicz from Americans for Tax Reform criticized the CBO’s scoring, suggesting that it often misjudges the impact of significant legislation. He emphasized that if the tax cuts expire, it would represent a massive tax increase, which would contradict the goal of preventing tax hikes.
As Senate Republicans continue to refine the legislation, the debate over its implications for the economy and the national debt is likely to intensify. The outcome will be crucial not just for Trump’s agenda but also for the financial future of the country.