On June 30, the Senate approved its version of the massive Republican tax-and-spend reform bill on a 51–50 tie-break vote. As written, the bill will add nearly $4 trillion to the debt. Under realistic assumptions about economic growth, congressional extensions of tax giveaways or delays to spending reform, and the fiscal impact of mass deportations, the bill’s cost could soar past $6 trillion. Put bluntly, the Senate’s megabill is a fiscal disaster. It violates the House’s fiscal framework and speeds the nation toward crisis.
House legislators should stand firm on enforcing their agreed-upon spending reduction demands and reject efforts to rush this bill to passage by an arbitrary date: this July 4th, Independence Day. After all, true independence means freeing future generations from the crushing weight of debt, not celebrating while handing them a budget-busting bill.
The Current State of Play
By every account, the One Big Beautiful Bill (OBBBA) does a wonderful job of adding to the deficit. Per the latest Congressional Budget Office (CBO) estimate, the Senate bill adds $3.4 trillion to the deficit over 10 years on a current law basis, assuming provisions expire as scheduled. Including interest, the price tag rises to $4 trillion.
The OBBBA also packs budget gimmicks that mask its true cost. The bill schedules various tax giveaways, such as no tax on tips and no tax on overtime, and other spending increases to expire early in the ten-year window, making them appear cheaper on its face. Future Congresses will almost certainly be tempted to extend these provisions. Making them permanent would raise the ten-year cost to about $5.4 trillion, interest included. The Senate deploys a bespoke gimmick baseline to hide this actual cost, preferentially selecting different scoring baselines depending on the provision at hand as needed.
Contrary to claims that the bill pays for itself, independent modelers who fully accounted for both positive growth effects and debt drag found that the House version widened deficits more on a dynamic basis than on a conventional one. While the Senate version includes some pro-growth improvements to the House version, such as permanent full expensing, it also adds hundreds of billions in new subsidies in the form of additional tax giveaways and spending pork.
At best, macroeconomic gains might trim the final cost by a few hundred billion. Under less optimistic assumptions, higher interest costs swamp any new revenue from higher growth. Given recent credit downgrades, high interest rates, and a worsening fiscal outlook, doubling down on deficit spending would be reckless.
Costs climb further when you consider the fiscal effects of financing a mass deportation campaign. As Cato’s David Bier explains, the CBO has previously estimated that the 8.7‑million-person surge in illegal immigrants, asylum seekers, and parolees under the Biden administration will reduce the deficit by $897 billion over 10 years. If Congress funds aggressive enforcement that lets the president deport millions, hasten voluntary exits, and slow legal immigration, the debt could jump another $900 billion—double that if Congress makes the OBBBA’s spending boosts permanent.
Bottom line: Accounting for realistic economic growth, interest rates, Congressional profligacy, and the administration’s immigration policy, the bill’s 10-year cost could soar past $6 trillion. And despite the bill containing nearly $1.5 trillion in gross spending cuts, total spending in 2035 under such a scenario would actually increase by hundreds of billions compared to baseline, almost entirely due to resulting interest costs. Congress is putting the nation on a fast track to a debt spiral.
Drawing a Line in the Sand
When the House passed its budget resolution in April, it required every dollar of new tax cuts to be offset by a dollar of spending cuts. In May and June, House fiscal hawks led by Rep. Lloyd Smucker (R‑PA) made it clear that this dollar-for-dollar rule was essential for delivering responsible, pro-growth tax reform. The House bill was less fiscally irresponsible, relative to the Senate bill, in part because the House stuck to this rule.
As it stands, the Senate bill would result in at least $1 trillion more in borrowing than the House bill. In House framework terms, the Senate bill is about $600 billion short of the dollar-for-dollar tax and spending cut rule. The Committee for a Responsible Federal Budget has a nice illustration of how the Senate bill drifted further towards fiscal irresponsibility.
Predictably, the Senate is gambling that it can ignore this framework and simply jam the House with a much costlier bill. This should be an instant deal breaker for House fiscal hawks.
Legislators in the House have plenty of options that would make the bill more fiscally responsible, bringing it more in line with the demands laid out by Rep. Smucker and company in the May and June letters. Here are just a few:
- Eliminate Medicaid financing gimmicks. One of the better changes the Senate made to the House bill was to crack down on the Medicaid financing gimmicks known as provider taxes. Per KFF, the Senate’s provider tax changes reduce spending by $191 billion. Additional savings could be secured by continuing the phase-down of provider taxes past 2031. Per CBO, eliminating provider taxes entirely would save $612 billion over ten years.
- Phase out the enhanced federal Medicaid match for Obamacare expansion enrollees. Currently, Medicaid’s financing scheme prioritizes able-bodied adults over the most vulnerable, including children, the disabled, and pregnant women. Simply reducing the expansion population’s enhanced match rate to the state’s underlying FMAP rate could save $607 billion over ten years, per the CBO. An amendment floated by Sen. Rick Scott (R‑FL) would have phased out the enhanced match rate starting in 2031, a step in the right direction, but it was pulled at the last minute. House Republicans ought to revive this effort.
- Eliminate various Senate pork provisions. Per Arnold Ventures, the Senate added in (or retained) hundreds of billions in wasteful handouts on both the tax and spending sides. The pork ranges from an enhanced deduction for seniors to new agricultural subsidies to a handout for Alaskan whaling. Eliminating all the pork Arnold Ventures identified would save about $520 billion.
The Senate’s bill is a fiscal disaster that adds, at minimum, trillions to the national debt. The House must hold the line, reject the Senate’s blunder, and advance a more fiscally responsible package, because pro-growth tax policy must go hand-in-hand with fiscal responsibility. Anything less accelerates us towards a fiscal crisis and sacrifices the future prosperity of all Americans for political expediency.
This post originally appeared on The Debt Dispatch Substack. To get the latest fiscal updates—including the weekly Debt Digest newsletter—delivered straight to your inbox, be sure to subscribe.