What would be the projected 10‑year budgetary impact of fully extending the 2017 tax cuts?
Executive summary
Fully extending all expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) would increase federal deficits by roughly $3.4–$4.5 trillion over the next ten years under conventional accounting, with dynamic (macroeconomic) scoring shaving some but not all of that cost; different analysts and baselines drive the spread in estimates and partisan actors press competing narratives about growth offsets and fiscal pain [1] [2] [3]. The long‑run fallout includes higher interest costs and, according to some models, slower growth as debt rises—an argument that intensifies the budgetary consequences beyond the headline revenue loss [2] [4].
1. What the headline numbers say: $3.4T to $4.5T in 10‑year deficit increases
Independent and nonpartisan budget models cluster around multi‑trillion dollar costs for a full, permanent TCJA extension: Penn Wharton estimates a $4.011 trillion increase in primary deficits from 2025–2034 (about $3.83 trillion when including economic feedback) [1], the Tax Foundation’s conventional baseline shows a $4.2 trillion revenue reduction (about $3.5 trillion on a dynamic basis) over ten years [2], while the Bipartisan Policy Center notes that shifting the 10‑year window out a year raises the tab to about $4.5 trillion because of timing effects [3]. The Committee for a Responsible Federal Budget and other watchdogs report slightly lower but still large figures — roughly $3.4 trillion in some scenarios — depending on which corporate provisions are included [5].
2. Why estimates diverge: baselines, windows, and dynamic scoring
Analysts disagree mainly because of methodological choices: whether scoring uses a “current law” baseline that assumes sunsets occur, a “current policy” baseline that treats expirations as de facto permanent, the chosen ten‑year window, and whether macroeconomic feedback is included; proponents of extension often favor current‑policy baselines that make costs appear smaller, while mainstream budget shops typically use current‑law baselines that record large revenue shortfalls when cuts are extended [2] [3]. Dynamic scoring can reduce the headline deficit impact by counting some GDP and revenue gains from lower rates, but even models that include feedback still find a multi‑trillion dollar hit over ten years [1] [2].
3. Interest costs and secondary fiscal damage
The direct revenue shortfall is only part of the story: added borrowing raises net interest payments, magnifying the budgetary impact; analysts report added interest costs on the order of hundreds of billions over the decade—Tax Foundation and other scorers flag roughly $600–$725 billion of extra interest in various packages—meaning the total deficit increase including interest can approach or exceed initial revenue estimates [2] [6]. Over longer horizons the CBO’s and other long‑term models warn that higher debt can crowd out investment, raise rates, and ultimately subtract from growth, amplifying fiscal strain [4].
4. Growth claims versus empirical restraint
Supporters argue that the TCJA’s tax cuts spur growth that partially offsets their cost; the White House Council of Economic Advisers and congressional Republicans point to higher growth and revenue multipliers as reasons extension is affordable [7] [8]. Independent reviews and the CBO, however, find that growth effects are modest and that any near‑term boosts are likely to be outweighed by the drag from larger deficits and interest costs over time—congressional analyses and the Library of Congress studies show much smaller long‑run capital and GDP gains than some proponents claim [9] [10].
5. Politics and tradeoffs: whose priorities and what gets trimmed
The debate is not just technical: extending TCJA privileges particular taxpayers (notably higher‑income households and certain business provisions), so choices about offsets—spending cuts, base‑broadening, or anchoring new revenue—reflect political priorities as much as economics [11] [12]. Analysts uniformly note that making the cuts permanent without offsets would “balloon” deficits by trillions; the practical policy choice is whether to accept that fiscal hit or pair extensions with concrete offsets, a decision that will determine the ultimate budget reality [13] [11].