President Donald Trump’s megabill, signed on July 4, is projected to increase the federal deficit by $3.4 trillion and result in 10 million people losing health insurance over the next decade, according to a Congressional Budget Office (CBO) report.
The CBO released its final analysis on Monday, detailing the impact of the newly enacted legislation on the national debt and U.S. households. The structure of the bill, primarily a permanent extension of the 2017 tax cuts, is expected to significantly reduce incoming federal revenue while contributing to a marked increase in the deficit. The bill was a key legislative achievement for President Trump and the Republican-controlled Congress.
The primary driver of the mounting deficit is the GOP’s decision to maintain the tax cuts from Trump’s first term, which the Senate Finance Committee projects will decrease tax revenue by approximately $4.5 trillion. This figure also incorporates additional GOP-backed tax cuts that were introduced during the Senate floor debates.
The CBO’s report indicates that while the legislation will cut more than $1 trillion in federal healthcare spending—with the majority of cuts targeting Medicaid—the savings will not offset the costs of the package. The anticipated increase in the deficit highlights the imbalance between the package’s financial outflow and the savings from health expenditure reductions.
Additionally, the CBO predicts that 10 million people will lose their health insurance as a result of these legislative changes. This estimation marks a slight improvement from prior figures, which predicted that 11.8 million people would lose coverage. The updated numbers reflect the removal of a previous policy that would have caused an estimated 1.4 million undocumented immigrants to lose health insurance.
The CBO also provided additional insights into the bill’s impact on agricultural policies. Negotiations spearheaded by Senator Lisa Murkowski of Alaska led to a softening of initial requirements that would have compelled states to bear more costs related to SNAP, a key U.S. food assistance program. These modifications, along with cuts to federal agriculture spending, are projected to result in $120 billion in savings over the coming decade.
The bill initially contained provisions aimed at penalizing states that offer healthcare to undocumented immigrants, despite federal prohibitions on Medicaid coverage for this demographic. However, due to objections from the Senate parliamentarian, a controversial element that would have withdrawn funding from states that expanded Medicaid under the Democrats’ 2010 health law was removed from the final version.
In an alternate analysis requested by Senate Republicans, the CBO used a new accounting method that does not factor in the cost of permanently extending the 2017 tax cuts. Under this method, the projected increase in the federal deficit is limited to $366 billion. Republicans argue that utilizing traditional accounting methods presents a bias against maintaining existing tax rates, which they perceive as amounting to tax increases if not extended.
This controversial legislative package continues to be a subject of intense debate, with significant political and financial implications for the country, as outlined in the comprehensive report from the Congressional Budget Office.