Tax Scam 2.0 blows up the deficit, robs from the poor + gives to the rich.

The US Senate is still working on its changes to Big Beautiful Tax Scam 2.0, which passed the US House 3 weeks ago. And the Congressional Budget Office has recently been releasing their updated estimates of what the bill would do, both in total numbers, and in who would be helped or hurt by the bill's many changes to taxing and spending.

We'd already seen that the bill would increase deficits by large amounts, and they'd especially blow up in the next few years.

And that's not all for the increased deficits, as CBO notes higher deficits require higher amounts of borrowing, and higher interest rates to pay off that debt.

The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the bill would increase deficits over the2025–2034 period by $2.4 trillion, excluding any macroeconomic or debt‑service effects. That change stems from a reduction in revenues of $3.7 trillion and a reduction in outlays of $1.3 trillion over the 2025–2034 period.

CBO estimates that the additional debt-service costs under the bill would total $551 billion over the 10-year period. That change would increase the cumulative effect on the deficit to $3.0 trillion. CBO estimates that the debt-service increase from the change in revenues would amount to $716 billion. Other provisions would, on net, result in a decrease in debt-service costs of $166 billion.

As a result, and net of any changes in borrowing for federal credit programs, the agency estimates that debt held by the public at the end of 2034 would increase from CBO’s January 2025 baseline projection of 117.1 percent to 123.8 percent of gross domestic product.

So we're really talking about a total of $3 trillion in added deficits, not $2.4 trillion, because of the added debt costs.

Then the CBO released their analysis of the "distributional effects" of Big Beuatiful Tax Scam 2.0 today. Bobby Kogan of the Center for American Progress gives the rundown of what CBO had to say on who gets hurt or helped by Tax Scam 2.0.

NEW FROM CBO: brutal distributional analysis of House GOP "Big Beautiful Bill" On avg the bottom 30% of households get poorer under the GOP bill Avg gets little - and are worse off if you include tariffs This'd be the largest transfer of wealth from the poor to the rich in a single law in history

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— Bobby Kogan (@bbkogan.bsky.social) June 12, 2025 at 10:02 AM

And the timing super matters. No tax on tips, etc., are all temporary provisions. By the time those expire, roughly half the country loses or gets nothing. Another thing pushing here is that the cuts to the poor phase in. So the cuts are deeper and the new tax cuts go away. Just a brutal law.

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— Bobby Kogan (@bbkogan.bsky.social) June 12, 2025 at 10:29 AM

UGH! Let's look at the analysis ourselves and see how the CBO got there.

Resources for households in the lowest decile of the income distribution would decrease by about $1,600 per year (in 2025 dollars) compared with their projected income in CBO’s baseline projections (see Figure 1).5 That amounts to 3.9 percent of their income (see Figure 2). Those projected decreases are mainly attributable to reductions in in-kind transfers, such as Medicaid and SNAP.

Households in the fifth and sixth deciles (that is, in the middle of the income distribution) would see their resources increase by $500 (or 0.5 percent of projected income) and $1,000 (or 0.8 percent of projected income), respectively.

Resources would increase, on average, over the projection period by about $12,000 for households in the highest decile, amounting to 2.3 percent of their projected income. Those projected increases are mainly attributable to reductions in the taxes households in that decile owe.

Clear Robin Hood in reverse, and I wouldn’t count on the super-rich doing much positive for the rest of the country with that windfall (they sure haven’t over the last 45 years).

I also want to add one more layer onto the budgetary and economic changes that Trump/GOP are trying to put through. Upon request from Dem members of Congress, the CBO also gave their estimates of the effects that new Trump tariffs would have over the next year. That includes the amount of money that would go into the US government's coffers, and what would happen to the economy as a whole.

Before accounting for effects on the size of the economy, CBO projects that the increases in tariffs implemented between January 6 and May 13, 2025, would decrease primary deficits over the 2025–2035 period by $2.5 trillion relative to the agency’s baseline projections from January 2025. (Unless otherwise indicated, all years referred to in this letter are fiscal years.) Roughly half of that decrease stems from the increases in tariff rates on imports from countries other than China, Canada, or Mexico. Lower net outlays for interest resulting from the decrease in primary deficits would reduce total deficits by an additional $50 billion. As a result, total deficits over the 2025–2035 period would be $3.0 trillion lower than projected in CBO’s January 2025 baseline.

However, CBO says the total reduction in deficits would be a bit less than $2.8 trillion, because the economy will be slower in the coming decade.

CBO’s assessment is that the changes in tariffs will reduce the size of the U.S. economy. That effect would differ year by year; on average, from 2025 to 2035, the tariff changes would reduce the rate of real growth in gross domestic product (GDP) by 0.06 percentage points per year. By 2035, CBO estimates, the level of real GDP will be 0.6 percent lower than it was in CBO’s economic forecast from January 2025. That reduction in output reflects both negative and positive effects: the negative effects of higher tariffs through channels such as reduced investment and productivity, and the positive effects of additional revenues from tariffs, which would reduce federal borrowing and increase the funds available for private investment.

In addition to the slower economy, the CBO says prices will jump due to the tariffs, and stay at those higher levels as long as the tariffs are in place.

The increases in tariffs will make consumer goods and capital goods (the physical assets that businesses use to produce goods and services) more expensive, which will reduce the purchasing power of U.S. consumers and businesses. Those increases in costs will put temporary upward pressure on inflation. In CBO’s estimation, the policies analyzed here will increase the average annual rate of inflation, as measured by the price index for personal consumption expenditures, by roughly 0.4 percentage points over 2025 and 2026 relative to index will be 0.9 percent higher. After 2026, the tariffs will not have additional significant effects on prices.

The CBO doesn’t go into detail as to whether poorer or richer Americans will bear the brunt of those price increases and slower economies, because they couldn’t break down exactly which industries might grow or decline, and which products will have the largest price effects.

But would tariffs really be able to pay for the price tag of Big Beautiful Tax Scam 2.0? Let's look at how much the US government is bringing in for "customs duties" over the last 6 months, after May's Treasury statement was released this week.

So tariff revenue has basically tripled since Tariff Man got going. That would come out to around $15 billion a month in added taxes on products revenue, so maybe $180 billion a year? Then add in some inflation for the later years and could that $180 billion get to $250 billion a year on average? Seems unlikely, but not impossible.

So if we kept all these tariffs on, the already-large deficits wouldn't rise as much (although they'd still go up, especially for the rest of the 2020s). But I have a hard time believing that amount of tariff revenue would lead to an economic outcome most people would want – higher prices and a slower economy. In fact, if you put it together with Big Beautiful Tax Scam 2.0, and most us end up making less!

Under the House-passed “big beautiful bill,” the bottom 30% of America on average gets poorer (see left graph) What happens when you incorporate Trump’s tariffs? Then the bottom 80% of America get poorer (see right graph)

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— Bobby Kogan (@bbkogan.bsky.social) June 12, 2025 at 4:23 PM

The worst effects on the economy from tariffs would hit in the next 2 years, while there would be tax hikes and more severe budget cuts coming in the later years of Big Beautiful Tax Scam 2.0....unless Congress and the 2030s president want to make even larger deficits by continuing with Tax Scam 3.0.

This is the other item that is hiding in plain sight - Big Beautiful Tax Scam 2.0 relies on accounting gimmicks to stay within the 10-year budget limits that would allow for 50 Senators to pass it through. But it cynically lays bombs of future tax increases and higher budget cuts that future Congresses would have to deal with. And if they don't want to deal with it and not cause more economic hardship for Americans with real jobs and real-life budget constraints, our deficits go up by even more.

And what about their "one-time" increase to defense spending? If that gets extended, that's another roughly $250 billion in costs (CBO did not estimate this part). And their one-time ICE funding, etc.? Put it all together, and the bill grows from $2.4 trillion to $4.2 trillion in cost.

— Bobby Kogan (@bbkogan.bsky.social) June 12, 2025 at 1:57 PM

Oh, but I'm sure the Koched-up GOPs in the Senate won't allow these exploding deficits and will put together a taxing and spending plan that doesn't handcuff our future and helps normal Americans over the donor class and.....HAHAHAHA!!! Do you think those MAGAts care about that, or you?

Now, Tax Scam 2.0 having 2/3 of Americans with opinions disapprove of it, which could make a whole lot of red states become purple for 2026, and their stocks and other investments tanking? That might cause them to deal a little bit with the reality of this budget-busting Scam.