GOP bill could add trillions to the U.S. deficit, some experts say. Here’s what to know.

The Republican-backed tax and spending bill that is currently making its way through the House is facing scrutiny from Wall Street due to concerns about the potential impact on the nation’s debt and fiscal outlook. Economists and policy experts have warned that the proposed tax breaks in the bill could far exceed any savings, leading to a significant increase in U.S. debt.

Analyses have projected that over the next decade, the GOP bill could cost the U.S. an estimated $3.8 trillion, according to a report by the Joint Committee on Taxation. This has raised concerns about the nation’s debt levels and the potential consequences of financing the tax cuts through increased borrowing.

Moody’s Ratings recently downgraded the nation’s debt, citing the bill’s potential to add $4 trillion to the federal primary deficit over the next decade. This has further fueled worries about the bill’s impact on federal spending and the nation’s fiscal health.

Even within the Republican party, there are dissenting voices, with the House Freedom Caucus criticizing the bill for failing to address the federal government’s spending trajectory and lead the nation towards a balanced budget. The concern is that adding billions to the U.S. debt could result in higher interest payments, potentially squeezing federal spending on programs like Social Security and infrastructure.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, has called for policymakers to reassess the bill and come up with a plan that puts the nation on a sustainable fiscal path. She highlighted the skyrocketing federal interest payments, which already exceed annual spending on defense and Medicare.

The Trump administration has defended the bill, disputing forecasts of widening deficits. White House spokeswoman Karoline Leavitt stated that the bill does not add to the deficit and highlighted the estimated $1.6 trillion savings in the legislation.

Savings versus Spending

The GOP bill aims to renew President Trump’s 2017 Tax Cuts and Jobs Act, which introduced lower tax brackets for many Americans. Extending these provisions is a key component of the bill, as failure to do so could result in tax increases for many filers in 2026. The Council of Economic Advisers has stated that the bill would avert a $4 trillion tax hike by extending the TCJA’s provisions.

Renewing the tax cuts alone would cost $2.2 trillion over the next decade, according to the Joint Committee on Taxation. However, the bill also includes additional tax breaks that would add to its long-term costs, such as a more generous standard deduction and tax relief for workers and senior citizens.

While the bill does include some spending cuts, they are not sufficient to offset the costs of the tax breaks. Several analyses have pointed out the significant gap between the tax cuts and spending cuts, raising concerns about the bill’s impact on the nation’s deficit and debt levels.

Moody’s decision to downgrade the nation’s credit rating reflects the growing worries about the U.S.’ fiscal performance and increasing debt burden. The agency highlighted the failure of previous administrations and Congress to reverse the trend of rising deficits, leading to a deteriorating fiscal outlook for the nation.

The Trump administration has maintained that the tax bill will stimulate economic growth by lowering taxes on consumers and businesses. National Economic Council director Kevin Hassett has expressed optimism about the economy’s prospects once the tax cuts are implemented.

Who Wins and Loses

The GOP tax bill is still subject to changes as it progresses through the House. House Speaker Mike Johnson has acknowledged that there are details to be ironed out, particularly regarding work requirements for Medicaid participants. Conservative Republicans are pushing for work requirements to be enacted in 2029 under the bill passed by the Ways and Means Committee.

House Republicans are pushing for a quicker end to tax breaks for green energy projects across the nation as part of a new bill that is set to pass through the House this week. The proposed changes would then move to the Senate, where Republicans are also considering additional modifications.

Democrats have raised concerns about the cuts Republicans are proposing to Medicaid and food stamps to offset the costs of the tax breaks. They argue that these reductions in social safety net programs disproportionately affect the lowest-income Americans while providing significant tax breaks for wealthier individuals.

Rep. Jim Clyburn, a Democrat from South Carolina, criticized the spending bill, labeling it as “terrible” and highlighting the impact it would have on working men and women. He emphasized that while balancing the government’s budget is important, it should not come at the expense of vulnerable populations.

An analysis from the Penn Wharton Budget Model revealed that the bottom 20% of income earners, who make up to $17,000 per year, would face a $1,035 loss in 2026 due to the proposed cuts to Medicaid and other programs. On the other hand, households in the top income quintile would see an average tax savings of $30,000.

The Penn Wharton Budget Model also noted that households in the bottom income quintile would experience the largest losses, with working-age individuals facing an average lifetime value reduction of $28,000. This disparity underscores the disproportionate impact of the proposed changes on lower-income Americans.

As the debate over the bill continues, it is clear that there are significant differences in how various income groups would be affected by the proposed tax breaks and cuts to social programs. The outcome of this legislation will have far-reaching implications for the country’s fiscal policy and the well-being of its citizens.