“The objective and our commitment has always been deficit neutrality. That’s the goal here. If we can reduce the deficit, even better.” So pledged Speaker of the House Mike Johnson in February about the budget package now officially called the “One Big Beautiful Bill Act.”
Two months later, Johnson reaffirmed his commitment to pass the budget resolution, which is nonbinding but a necessary precursor to passing a binding budget bill through the filibuster-proof budget reconciliation process. The House Freedom Caucus, composed of right-wing fiscal hawks, issued a statement explaining they backed the resolution because “the Speaker committed to ensuring the final bill will provide enough spending reduction so that tax cuts will be fully offset.”
Johnson is about $3.3 trillion off the mark, even with using charitable numbers. Maybe that’s why he can’t be sure the bill is going to make it out of the House Budget Committee today.
While we don’t have a final bill yet, the main planks have cleared the relevant House committees—including tax cuts, and Medicaid cuts—and they have received cost estimates from the Congressional Budget Office (CBO) or the Joint Committee on Taxation (JCT). The independent Committee for a Responsible Federal Budget synthesized these analyses and concluded that “the reconciliation bill as written would boost total deficits through FY 2034 by roughly $3.3 trillion.”
As with Trump’s 2017 tax cut package, the bill masks the long-term cost by putting an expiration date on the tax cuts when Trump’s term ends. (The lion’s share of “tax cuts” in the forthcoming bill is just a renewal of those expiring provisions.) If we assume the tax cuts remain in place past 2029, CRFB estimates the cumulative 10-year deficit increase to be $5.2 trillion.
In the past, Republicans wouldn’t let a little red ink get in the way of tax cuts. The accumulative debt-to-Gross Domestic Product ratio shot up dramatically under Ronald Reagan (though the annual federal deficit-to-GDP ratio only grew in his first term, a growing economy helped shrink it in his second term, as did comprehensive tax reform). George W. Bush raided the budget surplus he inherited from Bill Clinton to fund big tax cuts. Trump’s first-term tax cut package similarly reduced the deficit-to-GDP ratio trajectory. Back then, Republicans only seemed to care about deficits when Democrats occupied the Oval Office.
And perhaps this is still true for most Republicans. Losing just four Republicans would sink the bill if Democrats, as expected, unanimously oppose it. When Johnson was elected Speaker in January, 11 Freedom Caucus members said their support for Johnson was contingent on ensuring “any reconciliation package reduces spending and the deficit in real terms with respect to the dynamic score of tax and spending policies under recent growth trends.”
Using a “dynamic score” as the benchmark—in which assumptions can be made about future economic growth—creates the potential for some fuzzy math. But the conservative Tax Foundation this week performed a dynamic score analysis of the big beautiful tax provisions and only recouped $700 billion, not enough to close the deficit gap.
One of the 11, the oft-vocal Representative Chip Roy, slammed the current draft on TV and social media. On X, Roy posted, “It does not meaningfully change spending ([retaining the Affordable Care Act’s] Medicaid expansion to [the] able bodied [and Inflation Reduction Act] subsidies). Plus many of the decent provisions and cuts, don’t begin until 2029 and beyond. That is swamp accounting to dodge real savings.”
Passage of budget bills is usually done by splitting differences. But insisting on deficit neutrality while also being committed to renewing the 2017 Trump tax cuts complicates matters. Dynamic scores of renewal alone were conducted last year by JCT and CBO and came in between $3 trillion and $3.76 trillion over 10 years.
Freedom Caucus members don’t flinch at spending cuts of that size, even though a large share of it would have to come from Medicaid cuts. To Roy’s crew, taking government-provided insurance from “able-bodied” people is a win. Whereas Johnson, as well as Trump, have sold the Medicaid cuts as narrowly targeting “waste, fraud, and abuse,” and not taking away anyone’s coverage.
The CBO analysis explodes that notion. Even though the “swamp accounting” in the current bill doesn’t go as far to cut Medicaid as the Freedom Caucus wants, CBO has still made a preliminary determination that the bill’s estimated $715 billion in cuts to Medicaid and the Affordable Care Act will lead to 8.6 million people losing health coverage. That’s already making swing district House members and some senators sweat. The right-wing populist Senator Josh Hawley even wrote a New York Times column warning Republicans, “If Republicans want to be a working-class party—if we want to be a majority party—we must ignore calls to cut Medicaid.”
The circle cannot be squared. There’s no way to achieve deficit neutrality and satisfy the competing demands with honest numbers. I only foresee two scenarios. Either most of the Freedom Caucus accepts that the bill won’t cut the deficit. Or the Big, Beautiful Bill collapses under its own weight.
