Washington, D.C. — A new analysis from the Center for American Progress finds that President Donald Trump’s One Big Beautiful Bill Act has dramatically worsened the nation’s long-term fiscal outlook.
According to the analysis, the law increased the nation’s fiscal gap—a key measure of long-term debt sustainability—from 1.6 percent of gross domestic product (GDP) to 2.4 percent of GDP. The fiscal gap represents the average annual policy adjustment needed over the next 30 years to prevent debt from rising further as a percentage of the economy. The law increased the amount of primary deficit reduction needed to stabilize the debt ratio by nearly 50 percent.
“The ‘Big Beautiful Bill’ put the nation on a significantly more dangerous fiscal path,” said Jared Bernstein, senior fellow at CAP and co-author of the report. “The amount of deficit reduction needed just to stabilize the debt has surged. That raises the risk of higher borrowing costs, pushing the wrong way on affordability, as well as fewer public investments in the future.”
Key findings from the analysis include:
- The fiscal gap jumped nearly 50 percent. Before the law, stabilizing the debt required average annual primary deficit reductions of 1.6 percent of GDP. After enactment, that figure rose to 2.4 percent.
- Making temporary provisions permanent would worsen the outlook further. If expiring tax and spending provisions of the Big Beautiful Bill are extended, the fiscal gap would climb to roughly 2.9 percent of GDP, leaving the fiscal outlook three-quarters worse than before its enactment.
- Tariffs only partially offset the damage, and at a cost. While new tariffs may generate federal revenue, they function as taxes on imports that raise prices for American consumers and businesses. Even if left in place permanently, tariffs would cover only part of the law’s added debt and would reduce real household incomes.
- Long-term revenue weakness is the central driver. Federal revenues as a percentage of GDP remain well below Clinton-era levels, largely due to decades of tax cuts tilted toward the wealthy, while spending has largely followed previously projected paths and is in fact now projected to fall below previous projections in the future.
- Higher debt raises interest rates. Increased borrowing could crowd out investments in infrastructure, education, and workforce development, while also making life less affordable due to higher borrowing costs for families and businesses.
The report warns that the United States now faces a higher likelihood of a “debt event,” where investors demand significantly higher interest rates to hold U.S. debt. Even a gradual rise in rates would slow economic growth, dampen wage gains, and force more federal dollars toward debt service instead of public investments.
Read the full analysis: “President Trump’s ‘Big Beautiful Bill’ Raises the Fiscal Gap to 2.4 Percent” by Jared Bernstein and Bobby Kogan
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].