Trump's budget bill gets a new, bigger price tag

The Congressional Budget Office released a new "dynamic" score of President Trump's "one, big beautiful bill" on Tuesday, estimating that it would increase budget deficits by as much as $2.8 trillion over the next decade.Why it matters: The fresh score, which factors in the effect of both higher GDP growth and higher interest rates, exceeds CBO's previous estimate of $2.4 trillion in deficit costs.Republicans and Democrats will both seize on parts of the new analysis.But expect more GOP squabbling with the CBO's math, which effectively undermines the White House argument that many of the tax cuts will pay for themselves.Zoom in: Republicans will likely agree the bill will increase real GDP growth, which the CBO puts at 0.5% higher over the decade, bringing in an additional $124 billion in revenue.But Democrats are expected to seize on its impact on interest rates, which CBO estimates will increase by an average of 14 basis points, resulting in an additional $441 billion in interest payments.Between the lines: The new CBO analysis actually includes two estimates for how much the deficit would increase as a result of Trump's "big, beautiful bill."At the low end of the dynamic score, the deficit would increase by $2.8 trillion.After accounting for all costs associated with servicing the additional debt and other credits, CBO estimates that the bill would increase public debt by $3.3 trillion by 2034.Zoom out: Scoring the effects of a given piece of legislation is always a matter of controversy.In 2022, Republicans argued the CBO underestimated the cost of President Biden's Inflation Reduction Act, which was originally credited with $238 billion in deficit reduction over a decade.But due to the popularity of some of the electric vehicle tax credits, a 2024 CBO analysis calculated the IRA would actually increase the deficit by $300 billion.Democrats tend to be more skeptical of so-called dynamic scoring, which takes into account the effect of the tax and spending cuts across the entire economy, typically by boosting GDP.But they have embraced it when it suits them.Go deeper: Earlier this month, the White House all but demanded that reporters use a CBO score that estimated Trump's tariffs would decrease the deficit by $2.8 trillion over 10 years.Kevin Hassett, the director of the National Economic Council, has suggested that Trump's budget bill will boost GDP growth to over 4% and lead to substantial deficit reduction.

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