Washington, D.C. — At the end of 2025, large portions of the Trump tax cuts, which disproportionately reduced taxes for rich households and wealthy heirs, are set to expire. A new Center for American Progress analysis finds that if Congress renews the Trump tax cuts, the fiscal gap will grow from 2.1 percent of GDP to 3.3 percent of GDP, making debt ratio stabilization 54 percent harder.
Using the Congressional Budget Office’s most recent projections, this analysis examines how permanently extending the Trump tax cuts would dramatically increase the debt ratio and make stabilizing it significantly more difficult. Some key takeaways include:
- The fiscal gap is 2.1 percent of gross domestic product (GDP), meaning that primary deficits would have to be reduced by an average of 2.1 percentage points of GDP every year for the next 30 years for net debt in 2054 to equal its current level as a percentage of GDP.
- Permanently extending the Trump tax cuts would increase the fiscal gap to 3.3 percent of GDP. This would make stabilizing debt as a percentage of GDP 54 percent harder.
“The 2025 expiration of large portions of the Trump tax cuts is now the largest unknown in the fiscal space,” said Bobby Kogan, senior director of Federal Budget Policy and co-author of the column. “Extending these tax cuts would disproportionately help wealthy households once again and make it even more difficult to stabilize debt as a percentage of GDP. Congress must not renew these tax cuts and instead must create a more equitable tax system and raise revenue to invest in the well-being of American families and communities.”
Read the column: “Permanently Extending the Trump Tax Cuts Would Increase Upward Pressure on the Debt Ratio by More Than 50 Percent” by Bobby Kogan and Jessica Vela
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