Permanently extending Tax Cuts and Jobs Act provisions without paying for them would increase the
U.S. debt-to-GDP ratio by 47 percentage points, to 214 percent by 2054, according to the
Congressional Budget Office.

And if underlying interest rates rise 1 percentage point higher than previously expected, debt held
by the public would exceed 250 percent of GDP by that time, the CBO said in an analysis released
March 21.

The analysis was requested by House Ways and Means Committee member and deficit hawk Rep. David
Schweikert, R-Ariz.

“The numbers are every bit as bad as we thought they would be,” Schweikert said in a statement sent
to Tax Notes.

Republicans are working on a way to advance President Trump’s agenda and make permanent the 2017
tax provisions, some of which are set to expire on December 31. But it’s unclear if and how
lawmakers will pay for the extensions.

Some Republicans argue that extending the tax cuts will spur economic growth, helping to offset the
cost and reducing the effect on the deficit over time. But the CBO report doesn’t predict that to
happen.

“What the CBO finds is actually the exact opposite,” said Marc Goldwein of the Committee for a
Responsible Federal Budget.

Extended tax cuts without offsets “push up interest rates and actually would reduce economic
growth,” Goldwein said.

The CBO has scored a full extension of the TCJA as costing $4.6 trillion over 10 years. The
estimate is based on current law, assuming individual tax rates will return to higher levels in
2026, the standard deduction will be halved, and other tax breaks will end if Congress doesn’t act.

That doesn’t include additional tax cuts that Trump has called for, like no tax on tips or overtime
pay.

But Senate Finance Committee Republicans have urged lawmakers to score the tax package using a
current-policy baseline, which would essentially show that extending the tax cuts would cost
nothing because they reflect the status quo. Opponents call that a budget gimmick.

Not every Republican is on board with using the current-policy baseline. Schweikert, who also
chairs the Joint Economic Committee, has called the approach “intellectually a fraud.”

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Posted on Mar. 24, 2025
By Katie Lobosco

View the full article here.

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