The Congressional Budget Office (CBO) estimates that the One Big Beautiful Bill Act—the GOP-backed reconciliation package—would lead to a net increase in resources to households nationwide over the next decade, but at the cost of a $3.8 trillion increase in the federal deficit.
However, CBO says these benefits will come at a price: the deficit will rise, and households in the bottom 10 percent of the income spectrum would experience net losses because the government-funded benefits they stand to lose exceed the value of the tax cuts they'll get.
“CBO estimates that household resources would decrease by an amount equal to about 2 percent of income in the lowest decile (10th) of the income distribution in 2027 and 4 percent in 2033, mainly as a result of losses of in-kind transfers, such as Medicaid and SNAP [Supplemental Nutrition Assistance Program],” Philip Swagel, CBO director, wrote in the analysis.
“By contrast, resources would increase by 4 percent for the top 10 percent of earners in 2027 and 2 percent in 2033, “mainly because of reductions in the taxes they owe,” Swagel added.
“When you allow Americans from every walk of life to keep more of their income, you lift millions out of poverty, just as we witnessed in President Trump’s first term,” Arrington said. “Democrats measure success by how many people are stuck on the welfare rolls; Republicans measure success by how many Americans are lifted off of them.”
He said the CBO report misleadingly interprets the bill as a giveaway to the wealthy at the expense of the poor.
Arrington said that the bill’s tax changes would be especially favorable to low- and middle-income households by raising the standard deduction, expanding the child tax credit, eliminating taxes on tips and overtime, and providing tax relief for seniors—policies that Republicans say will improve after-tax income across the board.
In absolute dollar terms, the largest tax benefits accrue to the wealthiest households, while lower- and middle-income households receive larger tax cuts as a percentage of income.
JCT found that 75.3 percent of those earning $1 million or more would get a tax cut under the bill in 2027, compared to 97.6 percent of those earning less than $15,000. The highest share (93.2 percent) of households to get a tax decrease greater than $500 are those earning $200,000-$500,000.
The bill would make permanent the income and estate tax cuts from Trump’s first term, exempt tip and overtime pay from taxation, and temporarily boost the standard deduction and child tax credit. To offset the projected $3.8 trillion revenue loss, Republicans propose repealing clean energy credits and tightening Medicaid and SNAP, or food stamps, with expanded work rules for both.
