Tax Scam 2.0. Now with more debt!

It's been a month since Trump/GOP's Big Bunch of Bogus got signed into law, but it was such a rushed document that the Congressional Budget Office is still sorting out all of the provisions and effects in that package. And we found out recently that the reality of more debt means Tax Scam 2.0 will drive our deficits even higher.

The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) estimate that over the 2025–2034 period deficits will increase by $3.4 trillion for the legislation as enacted, excluding any macroeconomic or debt‑service effects (see Table 1).

CBO estimates that the additional debt-service costs under the legislation as enacted will total $718 billion over the 10-year period. That change will increase the cumulative effect on the deficit to $4.1 trillion. As a result, and net of any changes in borrowing for federal credit programs, the agency estimates that the legislation will increase debt held by the public at the end of 2034 by 9.5 percentage points relative to CBO’s January 2025 baseline budgetary projections of gross domestic product (GDP). Other factors, such as administrative actions affecting tariffs and immigration, also have affected deficits and debt since January 2025 and will be reflected in CBO’s next baseline.

In fairness, we have seen a significant amount of tariff revenue coming in, to the tune of a $15-$20 million boost each month.

If that level of tariff revenue were to hold up, we’d see $200 billion or even a little more raised from them that weren’t a part of the calculations at the start of the year. So that’s a bit of an offset, although the tariffs will cost Americans and businesses more, and the higher inflation (and unemployment?) that results will likely drive up the costs of benefits and lower income tax revenues for the future.

The CBO went on to respond to a question from US Sen. Jeff Merkeley to find out what it would cost to keep the tax cuts beyond the few years the GOP put in to limit the total costs.

You have asked in particular about the additional effects on deficits and the debt of permanently enacting the act’s temporary tax provisions. JCT has estimated that making those 10 provisions permanent would increase primary deficits over the 2025–2034 period by an additional $0.8 trillion (see Table 2).

CBO estimates that if those provisions were made permanent, overall debt‑service costs would total $789 billion over the 10‑year period. That change would increase the cumulative effect on the deficit to $5.0 trillion.

If that were to happen, we'd see baseline budget deficits going over $3 trillion a year by 2032.

Maybe the tariff revenue offsets some or even all of these added costs from debt and the possibility of keeping these tax cuts. But the tariffs are already unpopular with the general public, and probably will become more disliked if we fall into recession in the near future, and prices stay elevated.

I see the future decisions that are looming with Tax Scam 2.0, and I get more confident that we’ll have free and fair elections in 2028. Because the GOP has cynically put these time bombs where many of the severe service cuts are set to get worse after 2029, and if Dems were to be in power in that year, they could be blamed for “raising taxes” if they rightly choose not to continue these costly, regressive tax cuts and related gimmicks.