- The Republican reconciliation package could increase national debt by $4 to $7 trillion over the next decade.
- GOP lawmakers in the House and Senate have committed to find up to $2 trillion in spending cuts.
- A new poll found three-quarters of voters say Congress should make addressing the debt a priority.
A Republican-led Congress returned to Washington, D.C., this week with committees focused on identifying significant spending cuts.
But a recent analysis found these reductions could fall far short of paying for President Donald Trump’s priorities.
Trump’s “one big, beautiful bill" could increase the national debt by as much as $7 trillion over the next decade, according to an analysis by the Peter G. Peterson Foundation, a nonprofit group that promotes fiscal responsibility.
The Peterson Foundation says unless Congress does much more to cut deficit spending than it did during the first Trump administration, the analysis found the bill’s impact on the national debt will include:
- $3.8 trillion from renewing previous tax cuts
- $1.5 trillion from other unfunded tax changes
- $1 trillion from associated interest costs
- $500 billion from new spending programs.
Other nonprofits, and Republicans peg the total cost at $4 trillion over 10 years. And without an extension of the cuts in the 2017 Tax Cuts and Jobs Act, Republicans say, taxpayers are looking at a $4 trillion tax hike — the “largest tax increase in American history,” House Speaker Mike Johnson says.
Either way, fiscal conservatives are rooting through the budget, looking for places to cut.
What is the Tax Cuts and Jobs Act?
The president continues to pressure Republicans in Congress to extend the tax cuts, which are set to expire in December.
As one of the landmark legislative accomplishments from Trump’s first term, the Tax Cuts and Jobs Act:
- Reduced the income tax for corporations from 35% to 21%.
- Lowered individual tax rates for most income levels by 1-4%.
- Doubled the child tax credit from $1,000 per child to $2,000.
Congress is attempting to entrench these changes by including them in a massive budget reconciliation package that includes new spending on national security, immigration and energy.
But making Tax Cuts and Jobs Act policies permanent will ensure these sources of government revenue remain off the table as the United States fails to keep up with more than $36 trillion in national debt driven by $2 trillion annual budget deficits.
Sen. John Curtis on opposition to spending cuts
The conservative solution, according to some GOP lawmakers, is to shrink the size of government to match the tax cuts.
But deciding exactly what to cut is — as always — the tricky part, Utah Sen. John Curtis told the Deseret News on Friday.
“There’s a lot of pushback on cuts,” Curtis said. “And those are good conversations to have; they’re conversations we should have been having for a very long time.”
Representatives and senators on both sides of the aisle are wary to see a tax hike, Curtis said, and are “working as hard as (they) can” to find “pay-fors” to make that goal a reality.
“If Democrats are honest, they would not increase taxes either,” Curtis said. “I don’t think anybody in Washington, D.C., wants to see those tax rates go up.”
How much will Congress cut?
Before initiating the reconciliation process, both chambers voted on a budget framework to instruct committees that oversee different areas of spending.
The House originally approved a measure that required committees to identify $1.5 trillion in cuts. This was amended by the Senate to a minimum of just $4 billion.
But the “budget resolution” only received final passage in the House after Senate leadership assured holdouts that they would look for cuts “of at least $2 trillion.”
Even if committees can come up with significant cuts, the reconciliation is likely to increase the national debt significantly over the coming decade, the Peterson Foundation said.
“When lawmakers return from recess, they should work to pay for their priorities and at the very least ‘do no fiscal harm’ with this year’s budget legislation,” Peterson Foundation CEO Michael Peterson said in a statement.
U.S. voters worried about the debt
Earlier this month, the Peterson Foundation commissioned a Democratic polling firm and a Republican firm to survey 1,000 U.S. voters about their feelings regarding the national debt.
What they found is that the bipartisan concern over federal debt approached unanimity.
Nearly 9 out of 10 respondents — regardless of party affiliation — said they were worried about lawmakers adding trillions to the debt through this year’s budget bill, the poll found.
More than three-quarters of respondents said their concern has increased in the last few years, with the same share saying Congress should spend more time addressing the national debt and should make it a top-three priority.
Between 80%-90% of Republicans and Democrats said their fears about the debt crisis have increased because of recent economic turmoil in financial markets.
Trump has said that the new tariff regime announced in April could someday replace the income tax as a source of government revenue.
To raise the equivalent amount, tariff rates of more than 100% would need to be placed on all goods imported to the United States, multiple reports have found.
This is assuming that American levies on foreign imports would not shrink the tariff base by disrupting international trade.