According to a large and exhaustive analysis by the CBO released on Wednesday, the sweeping tax-and-appropriations giant bill that President Donald Trump champions would crateringly swell the federal deficit by $2.4 trillion in the next decade.
Further, apart from the fiscal impact, the CBO assessment predicts a steady increase in the number of uninsured persons, estimating nearly 11 million more people will find themselves without health insurance coverage by 2034.
The report comes at a critical juncture as Republicans in Congress push with Trump's backing to enact the legislation that is a cornerstone of former President's domestic policy agenda. The bill mostly attempts to continue the individual income tax breaks from the 2017 Tax Cuts and Jobs Act (TCJA), which expires in December unless Congress intervenes.
It also has additional tax provisions, including one to exempt tips from federal taxation, a major campaign promise of Trump.
The CBO predicts a tax cut of approximately $3.75 trillion through the next decade under the legislation. Yet, there shall be only partial offsetting of these revenue losses by reduced federal spending of nearly $1.3 trillion over the same period. This imbalance is the fundamental aggravator for the $2.4 trillion forecasted to be added to the national deficit.
One major area of dispute raised by the CBO report relates to health care coverage. The analysis forecasts that 10.9 million more people would become uninsured by 2034. Approximately 85 percent of this increase is attributed to changes to Medicaid, which include work requirements among non-disabled adults aged 19 to 64, with some exceptions.
The CBO estimates that 7.8 million will lose health insurance due to the Medicaid changes: 5.2 million from the new work requirements alone. In addition, 1.4 million undocumented immigrants who presently receive health benefits funded by the states will lose coverage, and 400,000 will lose it because of the termination of the medical provider tax.
The Republicans claim the reforms aim to streamline those programs, such as Medicaid, and eliminate waste, fraud, and abuse, and to fund the needy more directly, more often, citing women and children.
Democrats, led by Senate Democratic Leader Chuck Schumer, however, lay the CBO findings bare as "bogus" and say that the bill is yet another dismantling effort of the Affordable Care Act (Obamacare).
The CBO is widely regarded as an impartial scorekeeper of legislative proposals, thus rendering its final analysis comprehensively determining for many lawmakers who must now grapple with the bill's ramifications.
The White House and Republican legislators have paradoxically challenged the CBO report. They argue that the CBO has been "historically wrong" in its economic forecasts, specifically underestimating revenue growth from the 2017 tax cuts. Critics point to recent higher-than-projected receipts, attributing some of this to inflation.
The ongoing debate highlights how deep the divisions are in Washington on fiscal policy and social safety nets. As the bill progresses through Congress, the CBO's grim projections of skyrocketing deficits will only intensify the political stakes. This heightened scrutiny is particularly significant for what Republicans hope will be their signature domestic achievement.
The final shape and impact of the legislation are dependent upon congressional negotiation, but the CBO's report starkly gives us a glimpse of what may occur in the long term.