In recent years, a small number of private-sector modeling groups have become increasingly prominent sources of information during important budget debates. This is a welcome development because, as with other markets, competition is likely to be good for the overall quality of the products on offer—in this case, information to inform budget debates. The GOP’s push to enact a major tax and spending reconciliation bill is giving them ample source material to showcase their capabilities. Their unanimous conclusion is that the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) are right that the bill as it emerged from the House would substantially widen future deficits.
The expansion in the number of modeling organizations producing budget estimates opens up the possibility of comparing estimates and examining their assumptions. The newest entrants are the Penn Wharton Budget Model (PWBM) at the University of Pennsylvania and the Budget Lab (TBL) at Yale University, which began their work in 2017 and 2024, respectively. They join the Tax Foundation (TF) and the Tax Policy Center (TPC), both of which have been in the business of tax policy forecasting for many years (TPC has yet to produce a full revenue estimate of the House-passed bill). The Committee for a Responsible Federal Budget is also a source of much useful information and analyses on the likely effects of various proposals.
The budget forecasting community is small because building and maintaining a credible and fully independent budget model, even one focused exclusively on tax policy, requires substantial professional expertise.
Table 1 provides a summary of their findings to date.
The projections are largely consistent with each other. They all show a tax cut of around $4.0 trillion over ten years, partially offset by spending cuts of about $1.5 trillion over the same time span. Those were the targets set for the House in the budget resolution which was approved earlier this year by both chambers.
One point of divergence is that the PWBM’s dynamic estimates are more pessimistic in the near term than those produced by the Tax Foundation. PWBM projects that the economic effects of the bill will widen the 10-year deficit effect from $2.8 trillion in its conventional forecast to $3.2 trillion, while the Tax Foundation expects higher growth from the bill’s tax provisions to narrow projected deficits by about $0.9 trillion compared to its conventional forecast. PWBM expects the bill to increase GDP in 2034 but slightly reduce average wages.
Despite this different assessment of the likely economic effects of the legislation, the models are in agreement that the overall effect of the legislation will be to widen future deficits rather substantially, even when growth is taken into account. Moreover, if those tax provisions in the bill which are now scheduled to expire in three to eight years were made permanent, the cost of the tax title would increase further. According to PWBM, the ten-year cost of the tax cut would rise under conventional scoring from $4.3 trillion to $5.6 trillion, and the 10-year deficit would widen from $2.8 trillion to $4.4 trillion. CRFB reached a similar conclusion, with its estimates showing the ten-year tax cut rising from $3.8 trillion as scored by JCT to $5.3 trillion.
The Trump administration argues that it has options for eliminating the deficit effects of the reconciliation package. In particular, its 2026 budget would reduce non-emergency, non-defense discretionary appropriations by $163.1 billion relative to approved funding for 2025. In addition, they argue that suggested savings from DOGE will continue to provide more opportunities to cut spending. However, because regular appropriation bills need 60 votes in the Senate to be approved (rescissions are exceptions), the GOP will be hard pressed to turn these proposed cuts into actual changes in spending levels as approved by Congress.
The administration also claims it is on track to produce new tariff revenue of at least $300 billion each year. However, if the president and his team are successful in using the tariffs to leverage better trade deals, it is not clear how much of this planned revenue would get collected. Moreover, it seems increasingly likely that the courts will constrain the president’s asserted unilateral authority to impose broadly applicable tariffs.
The bottom line is that Congress is on its way to producing yet another bill that will put downward pressure on revenue without a commensurate and sustainable reduction in spending. It would be unwise at this point to believe unilateral executive branch decisions, which the courts or a future president could easily reverse, will save the day.
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