Edward Conard

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  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
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  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
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Upside of Inequality Oxford Unintended Consequences

AI Summary. The Senate reconciliation bill is estimated to add more than $4tn to the national debt through 2034, about $1tn more than the House-passed version, with deficits averaging roughly 7% of GDP annually. Making its temporary tax cuts and spending increases permanent would raise the total to more than $5.3tn.

Marc Goldwein Committee for a Responsible Federal Budget
Date Posted:

The CRFB team estimates that the Senate’s reconciliation bill will result in a deficit of 7% of GDP next year. This estimate doesn’t account for tariff revenue.

How much would the Senate reconciliation bill add to the debt?

Core argument: The Senate reconciliation bill would add $4.1 trillion to the national debt through FY2034, about $1 trillion more than the House-passed One Big Beautiful Bill Act, rising to more than $5.3 trillion if its temporary tax cuts and spending increases were made permanent.

The Senate passed a reconciliation bill that would add over $4 trillion to the national debt through Fiscal Year (FY) 2034, $1 trillion more than the House-passed One Big Beautiful Bill Act (OBBBA). Annual deficits would average about 7% of GDP per year under the Senate bill, including 7.1% in 2027. That’s more than double Secretary Bessent’s proposed fiscal target of 3% of GDP, almost 2% of GDP above current law, and nearly 1% of GDP higher than a simple extension of the Tax Cut and Jobs Act’s (TJCA) individual provisions. If made permanent, deficits would rise to roughly 8% of GDP by the end of the budget window.The Senate bill as written would increase debt by $4.1 trillion through 2034, with more than $3.5 trillion of borrowing from the Finance title (taxes and Medicaid), nearly $300 billion of borrowing from other deficit-increasing titles, about $500 billion of savings from deficit-reducing titles, and nearly $700 billion from interest. If various temporary tax cuts and spending increases were made permanent, the bill would add more than $5.3 trillion to the debt.

Takeaways by Macro Roundup® AI

  1. The Senate reconciliation bill would add $4.1 trillion to the national debt through FY2034, about $1 trillion more than the House-passed One Big Beautiful Bill Act, rising to more than $5.3 trillion if its temporary tax cuts and spending increases were made permanent.
  2. Annual deficits under the Senate bill would average about 7% of GDP, including 7.1% in 2027, more than double Secretary Bessent's proposed 3% of GDP fiscal target and nearly 1% of GDP above a simple extension of the Tax Cuts and Jobs Act's individual provisions.
  3. The Senate bill's $4.1 trillion debt increase comprises more than $3.5 trillion of borrowing from the Finance title covering taxes and Medicaid, nearly $300 billion from other deficit-increasing titles, about $500 billion of savings from deficit-reducing titles, and nearly $700 billion of interest.

Related Articles:

  • CBO Score Shows Senate OBBBA Adds Over $3.9 Trillion to Debt — The Congressional Budget Office's score of the Senate reconciliation bill implies it would add over $3.9tn to the national debt against a current-law baseline including interest, with roughly $4.45tn of net tax cuts and nearly $300bn of gross spending increases partially offset by nearly $1.5tn of spending cuts.
  • Rapidly Growing Treasury Supply Crowding Out Other Types of Credit Growth — Roughly half of all fixed income issuance coming to market over the past year has been US Treasuries, meaning investors must allocate a growing share of dollars to financing the government. The argument is that lower government debt would free up more funds for consumer borrowing and business investment.
  • Treasury Issuance Growing — US Treasury auction metrics show no current weakness in demand, with stable bid-to-cover ratios and no systematic tailing, even as debt-to-GDP rises, the term premium increases, and the government must refinance $9tn over the next year. The author argues Treasury issuance will keep outgrowing the economy, likely pushing long-term interest rates higher.
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