The Trump administration asserted on Wednesday that the Senate’s One Big Beautiful Bill Act could potentially reduce the federal deficit between $2.1 trillion and $2.3 trillion over the next ten years, attributing this to economic growth spurred by tax incentives.
Members of the White House Economic Advisors Council (CEA) based this claim on a recent analysis aligned with a draft from the Senate Finance Committee released last week, indicating ongoing negotiations.
Senate Finance Committee Chairman Mike Krapo (R-Idaho) commented on this analysis, highlighting that the tax incentives are designed to foster American business innovation and growth.
The CEA also projected a more substantial deficit reduction when factoring in other Trump initiatives, suggesting that tariffs and spending cuts might lead to a $3.3 trillion increase in federal revenue, with regulations and energy reforms further reducing the deficit by up to $3.7 trillion.
However, Trump’s tariffs are not included in the legislation and remain subjects of litigation and negotiation.
Additionally, while the CEA seems to take discretionary spending cuts into account that aren’t part of the megaville, the White House is pursuing these through standard spending processes.
Nonpartisan estimates warn of rising deficits
The CEA analysis paints a much more optimistic picture compared to traditional policy assessment methods known as “scoring.”
In a recent report, the Congressional Budget Office (CBO) projected that the House version of the One Big Beautiful Bill Act could add $3 trillion to the deficit over the next decade.
The CBO also indicated that the deficit could rise by approximately $3.4 trillion over the same period, primarily due to escalating interest on U.S. government bonds.
Republican leadership has often disputed CBO scoring, arguing that the agency exaggerates the effect of tax cuts on deficits.
Now, the CEA findings provide additional support to fiscal conservatives like Sen. Ron Johnson (R-Wis.) who are advocating for more responsible financial practices.
Economic implications
Aside from potential deficit reductions, the CEA’s evaluations suggested that Trump’s broader agenda could foster significant economic growth and promote business development.
Economic analysts estimate that the megaville could spur actual investments by between 7.3% and 10.2%, increase GDP by 4.6%, and raise real wages by at least $4,000 to $7,200, which might lead to the creation or preservation of around 6.9 million to 7.2 million jobs.
Senate Republicans are eager to advance the One Big Beautiful Bill Act by the end of this week, especially after President Trump urged them not to break for the July 4 holiday until their work is completed.
Nevertheless, there are fiscal conservatives, like Johnson and Senator Rand Paul (R-KY), who are raising concerns and pushing for deeper deficit reductions in the final version of the bill.
Additionally, some senators, such as Josh Hawley (R-Mo.), have voiced worries about potential cuts to Medicaid.
It’s likely that the Senate may introduce too many alterations to the bill, which could complicate consensus among Republicans.
The initial Senate Treasury Committee draft has included well-negotiated provisions to raise the state and local tax (SALT) credit limit to $40,000. Republican representatives from high-tax states, like New York, New Jersey, and California, have pledged not to support measures lacking this cap.
There are also concerns among GOP members about plans to reduce green energy subsidies.
The Republican leadership aimed to get the bill signed by the President before Independence Day, but some lawmakers are skeptical about meeting that deadline.
“I believe we’ll wrap up the bill. Will it be by July 4th? Maybe?” one member speculated, acknowledging the challenge of meeting that goal.
