New Budget Bill Projected to Add Trillions to U.S. Debt, Economist Says Economy Won't Immediately Break

A recently enacted federal budget bill, signed into law last week by President Donald Trump, is projected to add trillions of dollars to the national debt over the next decade. Despite the significant increase in borrowing, Bloomberg Opinion columnist Allison Schrager argues that the legislation, while substantial, is unlikely to cause an immediate economic collapse.

The bill, often referred to as the "One Big Beautiful Bill," primarily extends key provisions of the 2017 Tax Cuts and Jobs Act. Analysts estimate it will add between $3.3 trillion and $5 trillion to the federal government's debt over the next 10 years. Beyond the tax cut extensions, the legislation introduces new measures, including eliminating taxes on tips and overtime pay, making interest on car loans tax-deductible, and increasing the cap on state and local tax (SALT) deductions.

In a tweet, Bloomberg Opinion, referencing Schrager, stated, "> Ignore all the hyperbole... The budget bill Trump signed into law last week is just another in a long line of big bills that add to the debt and won't break the economy, at least not yet." Schrager elaborated in her column that the bill is neither as dire as its critics claim nor as transformative as its proponents suggest, viewing it as a typical large-scale legislative package.

Schrager's analysis highlights both beneficial and problematic aspects of the bill. Positive elements include making permanent certain provisions of the 2017 tax law, such as the increased standard deduction and full expensing for corporate research and investment, which she suggests could foster growth. Conversely, she points to regressive and expensive measures like the new tax exemptions and the increased SALT cap. A controversial component includes cuts to Medicaid through work requirements, which the Congressional Budget Office estimated could remove 11.8 million people from health insurance, though Schrager expresses skepticism about the accuracy of this projection.

The economist also underscored that the bill represents a missed opportunity to address the nation's escalating debt crisis. With the era of near-zero interest rates concluded, borrowing costs have increased, making the growing debt more fiscally challenging. Schrager contends that while the bill contributes to a "slow-moving disaster" of accumulating debt, it fails to introduce the comprehensive tax and entitlement reforms necessary for long-term fiscal stability.