U.S. Congressional Budget Office: “Big and Beautiful” Act to Increase Deficit by $3.4 Trillion

On Monday Eastern Time, the U.S. Congressional Budget Office (CBO) released its latest estimate, stating that President Trump’s recently enacted tax and spending legislation, known as the “Big and Beautiful” Act, will increase the federal deficit by $3.4 trillion over the next decade and result in the loss of health insurance for millions of Americans.

According to the CBO’s analysis, compared to the baseline under current law, the “Big and Beautiful” Act will reduce federal revenue by $4.5 trillion and cut spending by $1.1 trillion through 2034. This estimate does not factor in dynamic effects, such as the potential long-term impact on economic growth or interest rates.

Following months of negotiations with congressional Republicans, President Trump signed the “Big and Beautiful” Act into law on July 4. The legislation reflects a significant portion of Trump’s economic agenda, permanently extending the 2017 income tax reductions and several corporate tax benefits. It also raises the federal cap on deductions for state and local taxes and temporarily eliminates taxes on tips and overtime wages.

After the bill's enactment, numerous economists and investors warned that the already substantial U.S. budget deficit could widen further, potentially driving up borrowing costs and inflation.
The Trump administration, however, asserted that record-high tariff revenue from most U.S. imports this year would help fill the fiscal gap.

To curb the deficit and offset expenditures, the act includes provisions to reduce spending, including cuts to Medicaid, which provides healthcare coverage for low-income populations.
The CBO estimates that the act’s provisions will lead to 10 million Americans losing their health insurance coverage by 2034.

Given that tariff-induced price increases have already imposed significant financial pressure on low-income households, the potential reduction in healthcare access is likely to further worsen their living conditions.

Inflation data from June has shown early signs of rising costs due to tariffs. Economists anticipate that prices in the U.S. will continue to climb throughout the summer. This trend will disproportionately impact low-income Americans, who typically allocate a larger share of their income to essential goods such as food.