The CBO estimated that the lower marginal tax rates on income would increase the labor supply by 0.6% over the next decade.
The nonpartisan Congressional Budget Office (CBO) released a new dynamic analysis that found Republicans' "big beautiful bill" would raise budget deficits by over $300 billion more than in its previous analysis, which estimated it would widen deficits by $2.4 trillion over a decade.
The CBO found that the House-passed version of the legislation would raise federal budget deficits by a total of $2.77 trillion over the next decade using a dynamic analysis that takes into account the impact of policies on the economy.
The net deficit comes from revenue reductions of more than $3.5 trillion over a decade due to tax cuts, exceeding spending reductions of $774 billion in that period under the House-passed version of the One Big Beautiful Bill Act.
The CBO estimated that an increase in economic output would reduce primary budget deficits by $85 billion over the next decade – although higher interest rates coupled with larger deficits would increase interest payments on the baseline projection of federal debt by $441 billion over that period.
Interest rates on 10-year Treasury notes are projected to rise by an average of 14 basis points (a basis point is one one-hundredth of a percentage point) over the next decade. Inflation would also increase by a small amount through 2030 relative to the CBO's baseline from January 2025.
The CBO also estimated that real GDP that removes the effects of inflation would increase by an average of 0.5% over the 2025-2034 period.