As lawmakers continue their work on President Donald Trump’s legislative agenda, his promise that the One Big Beautiful Bill Act will help cut the federal deficit is colliding with the projections of the Congressional Budget Office. The House’s bill would, according to the CBO’s dynamic analysis, result in $2.77 trillion added to federal deficits over the next decade.
Such projections have led certain congressional Republicans to lash out, not at the president or party leadership, but at the CBO. One such attempt came from Sen. Tim Scott, a Republican from South Carolina, who took to X to share his thoughts. The CBO was, according to Scott, “wrong on the Mellon tax cuts in the 1930s, they were wrong on the Kennedy tax cuts in the 1960s.”
Observers were quick to point out that the CBO was only created in 1974. But Scott’s comments are among an ongoing string of attacks on the CBO’s record and credibility starting shortly after the election, as Trump’s proposals for extending his 2017 tax cuts went from a campaign promise to a looming political reality—and Republicans sought to preempt any potentially adverse fiscal scoring by the CBO and others. Just days prior to Scott’s video, House Majority Leader Steve Scalise criticized the CBO’s record in a press conference, claiming that it overestimated the deficits created by the 2017 Tax Cuts and Jobs Act (TCJA) because the legislation essentially broke even.
Looking at the CBO’s projections of economic growth, tax revenue, and deficit impact stemming from the TCJA can provide insight into its projections for the still-evolving tax-and-spending bill, which, in addition to toughening Medicaid work requirements, aims to make the 2017 tax cuts permanent.
What is the CBO and what does it do?
The CBO was established in 1974 under the Congressional Budget and Impoundment Control Act, largely as a reaction to then-President Richard Nixon’s withholding of appropriations for water pollution funds that had been approved by Congress. The CBO, hardly a historic attraction for political attacks, has since been responsible for offering impartial advice to Congress on matters pertaining to the budget and macroeconomy. Such advice, often made in coordination with the Joint Committee on Taxation, takes the form of a “score” on a particular bill that estimates the bill’s revenue, spending, and deficits. While the CBO acknowledges it tends to overestimate deficits, its margins of error are comparable to other agencies like the White House’s Office of Management and Budget.
The CBO, home to nonpartisan economists and budget analysts, has long earned high praise among experts—including those at conservative or right-leaning institutes and think tanks.
“CBO has several hundred people who work for them who are all really good at this stuff, who are all really smart people—and as best as humans can get [at] modeling, they’re pretty close,” Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, told The Dispatch. “They’re biased on a few things, but broad macroeconomic impacts they’re not biased on.”
Was the CBO wrong about the TCJA?
In a recent press conference, Scalise accused the CBO of incorrectly scoring the TCJA, the signature legislation of President Trump’s first term signed into law in 2017, and by extension cast doubt on the office’s deficit projections for the OBBBA.
“They said [the TCJA] would cost a decrease in revenue to the tune of one and a half trillion dollars,” Scalise said. “Now you go look at the numbers, they were off by more than one and a half trillion dollars.”
While the CBO declined to comment directly on Scalise’s remarks, experts interviewed by The Dispatch pointed out that the remarks lacked context. According to an analysis by the Committee for a Responsible Federal Budget (CRFB), the CBO’s 2018 scoring forecasted a $1.4 trillion net loss in total revenue due to the TCJA tax cuts by 2024—but by 2024, the government’s total revenue ended up being $1.5 trillion greater than the CBO projected. However, Scalise appears to be conflating the two figures. The extra $1.5 trillion in revenue did not result entirely from the TCJA.
“It’s like comparing apples and oranges,” Elena Patel, a senior fellow at the Urban-Brookings Tax Policy Center, the Brookings Institution and Urban Institute’s joint venture, told The Dispatch, referring to Scalise’s remarks. “There’s so much that happened in the macroeconomy and legislatively after that original score came out, you can’t attribute any change in revenue … to the TCJA.”
Patel emphasized that events that followed the CBO’s original projections, including a global pandemic, may account for the higher-than-expected revenue. “There’s so much that changed between 2017 and the current economy, mostly the pandemic, everything leading up to it, and the entire recovery on the back end, including many trillions of dollars in spending,” Patel added.
Inflation that followed the pandemic is also responsible for pushing nominal incomes into higher tax brackets, resulting in increased revenue. According to the same analysis from the CRFB, the vast majority of the extra $1.5 trillion in nominal revenue came in a single year, 2022, which was the same year inflation reached a 40-year-high at 9 percent.
Adam Michel, director of tax policy studies at the Cato Institute, attributes some of the extra revenue to the TCJA, but similarly emphasized a variety of contributing factors. “I don’t think you can attribute all of the higher revenue to the TCJA, but certainly some of it can be attributed to the reforms,” Michel told The Dispatch. “Yes, there was a pro-growth tax cut that did boost the economy. There was also a pandemic. There were a lot of trade actions, both under the Trump administration and the Biden administration that cut against growth. There was a lot of unanticipated immigration, which also has an impact on the budget.”
Stern agrees that the attacks on the CBO are unwarranted—but for different reasons. “I do think it’s fair to say that the extra revenues and the extra growth largely came from the tax bill, but I think it’s actually unfair to say that CBO missed it,” Stern said.
Stern went on to note that the CBO’s original scores for the TCJA’s deficits, which were released on June 4, are not dynamic, meaning they do not reflect potential macroeconomic changes. Instead, they limit the analysis to two areas: the bill’s immediate deficits and the proximate microeconomic changes in behavior. This score, known as a conventional score, does not address bigger impacts that are downstream of any immediate behavioral changes. Dynamic scoring involves assessing those bigger impacts and is necessary for the construction of a baseline, a macroeconomic projection.
Stern pointed out that the CBO’s dynamic revenue projections from 2018, following the TCJA’s enactment, were nearly accurate, noting, “[W]here they put the dynamic score, and which is in the economic baseline projection, they hit the mark pretty close to precisely.”
According to the CBO’s post-TCJA baseline in 2018, total real revenue would reach $3.7 trillion by 2023. It ended up being $3.6 trillion, with final corporate and individual income tax revenues mimicking the CBO’s projections almost flawlessly, according to data visualizations by the CRFB.
“The fact that CBO’s economic projection estimates on [the TCJA] came really close in real life to projecting where the economy would be in 2024 is pretty breathtaking,” Stern added.
What About the OBBBA?
Shortly after Scalise’s remarks, the White House issued its own point-by-point rebuttal of the CBO’s analysis of the OBBBA. In it, the administration pointed to another CBO projection—this one pertaining to Trump’s tariffs. “If you cite the CBO’s faulty score,” the White House stated, “you must also cite CBO’s forecast that President Trump’s tariffs will cut the deficit by $2.8 trillion over the next decade.”
The CBO forecast referenced in the statement details that, at current tariff rates, total federal deficits will decrease by $2.8 trillion between 2025 and 2035, while it also projected that the overall U.S. economy would shrink. Long term, the CBO forecasted that investment and productivity would fall, and inflation will reduce the spending power of households and businesses. The White House’s statement did not address that part of the CBO’s analysis.
“Tariffs are not going to increase the size of the economy,” Patel told The Dispatch. “It’s an increase in taxes on U.S. consumers.”
More importantly, the CBO’s forecast assumes the tariffs would remain in place for 10 years. But Patel noted that this “not at all probable,” adding, “the trade acts that the administration is relying on to impose these tariffs are not explicitly meant to be permanent. They’re statutorily temporary. … They require reauthorization.”
Michel emphasized that Trump’s tariffs are more appropriately conceived of as a tool of negotiation, rather than a permanent policy. “The CBO [tariffs] score itself should be taken with a sort of handful of salt, because it assumes that the tariffs, as you noted, are implemented fully and stay in place in perpetuity, which is a big assumption,” Michel said. “Their entire sort of message has been that this is all part of a negotiation.”
Will the OBBBA pay for itself?
On June 18, the CBO released its dynamic score for the OBBBA, finding even higher deficits of $3.4 trillion than its conventional score of $3 trillion, including interest. This is primarily due to higher interest rates, which, per the CBO’s analysis, will outweigh the revenue gains caused by growth.
Patel said of the bill, it has “very little to do with pro-growth elements like expensing for businesses, which is expensive … that’s the only pro-growth element of the big bill.”
Michel believes that the CBO admits some, if little, bias in its projections. “CBO and [Joint Committee on Taxation] mildly understate the economic benefits from tax cuts, and that can then mildly understate some of the additional revenue that you might get from the reforms.”
In spite of this, Michel remained steadfast in his recommendation that the CBO’s projections be taken seriously. “Generally speaking, I think Congress should take CBO at its word, and they are at least in the ballpark on the One Big Beautiful Bill,” he said. “[T]o claim that the One Big Beautiful Bill is not going to expand the deficit or add to the debt is pure fantasy.”
