Fiscal Effects Of The One Big Beautiful Bill

The One Big Beautiful Bill passed by the House of Representatives prior to Memorial Day includes many important policies, such as:

• Investing in vital border security;
• Preventing the largest tax increase in American history by extending and expanding President Trump’s 2017 Tax Cuts and Jobs Act;
• Addressing waste, fraud, and abuse in Medicaid;
• Strengthening Food Stamp work requirements;
• Promoting American energy dominance; and
• Providing for national defense.

The House deserves credit for its important work on this legislation. Changes made prior to passage could speed implementation in a way that promotes stronger labor market growth and fiscal responsibility. The core provisions of the House-passed bill should be maintained as it works its way through the legislative process. As the bill moves to the Senate, one of the major topics of discussion has been about how to improve the fiscal outcomes of the legislation by reducing outlays and the deficit.

Fiscal Implications Depend on the Baseline

One challenge with this reconciliation process is that the House and Senate are using two different baselines. A budget baseline provides a benchmark against which to measure legislative proposals. The House budget resolution was prepared using the official baseline prepared by the Congressional Budget Office. The House budget also included assumptions about deficit reduction that would accrue due to future economic growth. Meanwhile, the Senate budget resolution used a “current policy” baseline. Senate Budget Committee Chaiman Lindsey Graham (R-SC) is expected to instruct the CBO and the Joint Committee on Taxation to assume that certain expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are extended in the baseline. The CBO recently released its cost estimate of the House-passed H.R. 1, the One Big Beautiful Bill Act. This report provides a crosswalk between the cost estimate using the official baseline conventional scoring, incorporating the House Budget Committee’s dynamic growth assumptions, and a current policy baseline.

Official Baseline – Conventional Scoring

The CBO estimates that the One Big Beautiful Bill as passed by the House would reduce outlays by $1.25 trillion, reduce revenues by $3.7 trillion, and increase the deficit by $2.4 trillion over the FY 2025 – 2034 period.

One Big Beautiful Bill As Passed by the House - Conventional Scoring
	2025	2026	2027	2028	2029	2030	2031	2032	3033	3034	2025 - 2034
Outlays	-197	3	-15	-69	-95	-135	-164	-183	-196	-203	-1,254
Revenues	-89	-481	-552	-545	-462	-286	-229	-281	-360	-385	-3,670
Deficit	-108	485	536	476	367	151	65	98	163	183	2,416
In billions of dollars. Source: Author Calculations based on Congressional Budget Office.

Eleven House committees reported reconciliation policies.  The Committees on Agriculture, Education and Workforce, Energy and Commerce, Financial Services, Natural Resources, Oversight and Government Reform, and Transportation and Infrastructure were all instructed to produce savings. The Committees on Armed Services, Homeland Security, and Judiciary were instructed to make investments in national defense and border security. The Committee on Ways and Means was instructed to make changes to tax policy. Compared to the official baseline:

• The savings committees reduce outlays by $1.5 trillion and increase revenues by $31 billion.[1]
• The investments committees increase outlays by $297 billion and increase revenues by $64 billion.
• The tax committee reduces outlays by $11 billion and reduces revenues by $3.8 billion.

Official Baseline – With House Budget Committee’s Dynamic Growth Assumptions

The House Budget Committee “estimates that economic growth will average 2.6 percent over ten years—generating a substantial $2.6 trillion in deficit reduction.”

One Big Beautiful Bill As Passed by the House – HBC Dynamic Assumption
	2025	2026	2027	2028	2029	2030	2031	2032	3033	3034	2025 - 2034
Outlays	-198	7	5	-33	-49	-87	-123	-151	-175	-193	-998
Revenues	-72	-455	-474	-424	-263	-9	126	144	143	213	-1,070
Deficit	-126	463	479	390	213	-79	-249	-295	-318	-406	72
In billions of dollars. Source: Author Calculations based on Congressional Budget Office.

The bill would increase net interest costs by $256 billion, after taking the Budget Committee’s assumed dynamic revenues into account. Taking the House Budget Committee's dynamic assumptions and the resulting net interest costs into account, the One Big Beautiful Bill as passed by the House would reduce outlays by $1 trillion, reduce revenues by $1 trillion, and increase the deficit by $72 billion over the FY 2025 – 2034 period.

Current Policy Baseline

Compared to an estimated current policy baseline that assumes an extension of the expiring TCJA provisions, the One Big Beautiful Bill as passed by the House would reduce outlays by $1.4 trillion, increase revenues by $176 billion, and reduce the deficit by $1.6 trillion over the FY 2025 – 2034 period.

One Big Beautiful Bill As Passed by the House – Current Policy Scoring
	2025	2026	2027	2028	2029	2030	2031	2032	3033	3034	2025 - 2034
Outlays	-197	3	-31	-85	-111	-150	-180	-199	-212	-219	-1,381
Revenues	-9	-272	-108	-116	-37	142	206	168	105	97	176
Deficit	-188	275	76	31	-74	-292	-386	-367	-318	-315	-1,557
In billions of dollars. Source: Author Calculations based on Congressional Budget Office.

Compared to current policy:

• The savings committees reduce outlays by $1.5 trillion and increase revenues by $31 billion.
• The investments committees increase outlays by $297 billion and increase revenues by $64 billion.
• The tax committee reduces outlays by $138 billion and increases revenues by $81 billion.

The figures are based on an assumption that temporary tax reductions in the bill would expire in 2028 as scheduled by the legislation. Extending these policies permanently would reduce revenues and increase deficits by about $1.4 trillion by 2034. [1] The effects of interactions between committees are allocated to the Savings Committees.