CBO Latest Analysis: "Beautiful Act" Could Lead to Massive Deficit Increase
A recent assessment report released by the Congressional Budget Office (CBO) has reignited debate over the Trump administration's tax and spending policies. The report indicates that the newly signed "Budget Optimization and Prosperity Act" (abbreviated as the "Beautiful Act") will expand the federal budget deficit by approximately $3.4 trillion over the next decade.
This estimate has been adjusted slightly upwards compared to previous calculations. CBO emphasizes that if the act is executed as currently outlined, it will undermine the sustainability of U.S. finances, particularly as economic growth slows and interest rates potentially rise, exerting additional pressure on federal debt levels.
Significant Shrinkage in Health Insurance Coverage
In addition to fiscal deficit concerns, CBO has issued warnings about healthcare budget provisions within the act. According to model projections, about 10 million Americans could lose their current healthcare coverage by 2034, with low-income groups and families relying on Medicaid public medical assistance being the most affected.
Analysis points out that cuts in social security within the act, particularly the roughly trillion-dollar reduction in the Medicaid program, could lead to uneven medical services and exacerbate disparities in healthcare resources between regions.
Decline in Revenue and Tax Cuts for the Wealthy Spark Discontent
Though Republicans promote the act as a means to boost the economy through tax cuts, CBO notes that the act will result in a reduction of about $4.5 trillion in federal tax revenues over the next decade, while spending cuts will amount to only $1.1 trillion. This signifies that the U.S. will need to resort to a larger scale of debt financing to bridge the fiscal gap.
Independent economists criticize the policy structure, which primarily benefits high-income groups. Previously, CBO estimated that the annual income of the wealthiest families would rise by over $10,000 on average, while the lowest-income groups could face an average annual loss of up to $1,600.
The Real Costs Under the Policy's "Halo"
Institutions such as the "Tax Foundation" have expressed concerns about the act, stating that too much funding is allocated to political clauses and non-essential projects, failing to systematically enhance the potential of the U.S. economy. Experts believe that tax cuts should ideally guide efficient allocation of funds through structural optimization rather than merely expanding deficits.
Furthermore, at the time the act was passed, U.S. inflation data already showed a trend of rising prices due to tariff policies, increasing the financial burden on low-income families in areas such as food and housing, compounded by the effects of medical care cuts, which pose significant risks of rising living costs.
Looking Ahead: Legislative Aftermath Continues to Unfold
Although the White House maintains that the act is beneficial for medium to long-term economic growth, market participants and policy observers generally fear that its fiscal impact will become a "heavy burden" for future government responses to economic fluctuations.
Following the release of CBO's latest report, several Wall Street rating agencies have reassessed the long-term credit prospects of the U.S. government. Uncertainty in the healthcare sector has also prompted some state governments to seek emergency subsidy mechanisms to address healthcare gaps.
