From our Budget Breakdown series highlighting problems in fiscal policy to inform the 2025 tax and budget debate.
PPI warned last week that Republicans’ “Big Beautiful Bill” was shaping up to repeat and compound many of the problems that doomed Joe Biden’s “Build Back Better” plan in 2021, such as bloating the legislation with a partisan wishlist and relying on budget gimmicks to mask its outrageous costs. But as House Republicans unveiled and began marking up legislative text this week, the details proved to be even worse than anticipated.
Republican lawmakers eagerly packed their big budget bill with niche giveaways and unrelated policies. To name just a few examples: there’s a $5,000 tax credit for conservative education activists to subsidize private (often religious) school enrollment, a tax break for gym memberships that mostly benefits the wealthy, and the seemingly random addition of “MAGA” savings accounts. And that’s just the Ways and Means Committee — other committees have tacked on their own miscellaneous riders, from a partisan rewrite of the farm bill in the Agriculture Committee to a moratorium on subnational AI regulation in the Energy and Commerce Committee.
They also relied on even more budget gimmicks than expected to hide the legislation’s true cost. It was widely anticipated that Trump’s many campaign proposals, such as exempting auto loan interest payments, overtime income, and tips from income taxes, would be made temporary to lower the bill’s sticker price. But the bill included several additional tax cuts, such as an enhanced Child Tax Credit (for everyone but low-income families) and a larger standard deduction, which are also set to expire after only a few years.
In reality, Republicans don’t intend to allow any of these provisions to ever expire. They used the same tactic to reduce the scored cost of the Tax Cuts and Jobs Act (TCJA) in 2017, only to now argue that preventing the scheduled expiration of that bill’s tax cuts should cost nothing at all because they are not creating “new” tax cuts. As a result, the debt impact of Republicans’ BBB would be substantially higher than they claim. While the “official” cost of the bill’s tax cuts is roughly $3.8 trillion over 10 years, they would actually cost around $5.3 trillion — plus as much as $900 billion in interest costs — if enacted permanently.
These problems are only likely to grow worse as Republicans make changes needed to win over uncommitted votes. Blue-state Republicans in the House are demanding a far greater increase to the $10,000 cap on State and Local Tax (SALT) deductions than the $30,000 level included in the bill, which they called an “insulting” offer. A critical mass of members in both the House and Senate have opposed the bill’s rollback of clean-energy tax credits from the Inflation Reduction Act, which they say will kill emerging technologies and cost their constituents jobs. Many oppose the bill’s deep Medicaid cuts that would leave 7.6 million more Americans uninsured — with one senator referring to them as “morally wrong and politically suicidal.” Meanwhile, Conservative hardliners in both the House and Senate are still demanding deeper spending cuts that might be more fiscally responsible but could make the bill even more difficult for swing-district Republicans to support.
Ironically, Republicans are repeating the same mistakes that helped sink President Biden’s BBB plan in 2021. That bill also relied on arbitrary expiration dates to cram in a disjointed wishlist of policy priorities, even if they risked exacerbating budget deficits and inflation. As a result, the version that passed the House in 2021 lacked a clear strategy and made it easier for critical lawmakers to walk away when inflation continued to worsen. Yet Republicans have taken this playbook to an even greater extreme by proposing a bill that would add roughly three times as much to the annual budget deficit in its worst year as Biden’s BBB would have — despite the fact that inflation remains a pressing concern for voters.
If Republicans continue down this road, their BBB could very well fall apart entirely as Biden’s did. However, if they do successfully manage to jam their partisan megabill through Congress, the fallout would be substantially worse: stuffing the tax code with a myriad of giveaways, cutting critical social services for working families, and risking another round of inflation by blowing up the budget deficit – leaving Americans to pay the price for years to come.
Uncapping the SALT deduction would provide nearly three-quarters of the benefits to households making over $430,000, with an average annual tax cut of roughly $140,000 for the top 0.1% of households.
