Effects on Deficits and the Debt of Public Law 119-21 and of Making Certain Tax Policies in the Act Permanent

CBO responds to a request from Senator Merkley for information about how federal deficits and debt held by the public would be affected by Public Law 119-21, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14, and then additionally by making permanent 10 tax provisions that are temporary in that law.

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that over the 2025–2034 period deficits will increase by $3.4 trillion for the legislation as enacted, excluding any macroeconomic or debt‐service effects.

CBO estimates that the additional debt-service costs under the legislation as enacted will total $718 billion over the 10-year period. That change will increase the cumulative effect on the deficit to $4.1 trillion. As a result, and net of any changes in borrowing for federal credit programs, the agency estimates that the legislation will increase debt held by the public at the end of 2034 by 9.5 percentage points relative to CBO's January 2025 baseline budgetary projections of gross domestic product (GDP). Other factors, such as administrative actions affecting tariffs and immigration, also have affected deficits and debt since January 2025 and will be reflected in CBO's next baseline.

P.L. 119-21 made numerous changes to tax provisions and spending programs. Although many of the changes are permanent, some are temporary.

Senator Merkley asked in particular about the additional effects on deficits and the debt of permanently enacting the act's temporary tax provisions. JCT has estimated that making those 10 provisions permanent would increase primary deficits over the 2025–2034 period by an additional $0.8 trillion.

CBO estimates that if those provisions were made permanent, overall debt service costs would total $789 billion over the 10 year period. That change would increase the cumulative effect on the deficit to $5.0 trillion.

As a result, and net of any changes in borrowing for federal credit programs, CBO estimates that debt held by the public at the end of 2034 would increase by 11.5 percentage points relative to the agency's January 2025 projection of GDP.

CBO's estimate of the additional amounts that the Treasury would borrow each year under P.L. 119-21 is determined primarily by the budget deficit. However, other factors, driven mostly by federal credit programs that are not directly included in budget totals, also affect the need to borrow from the public. As required by the Federal Credit Reform Act of 1990, the deficit reflects the net subsidy costs (the expected lifetime costs to the government for loans or loan guarantees) rather than annual cash flows. The estimated increase in debt service and debt held by the public accounts for those changes in cash flows.