The White House Council of Economic Advisers (CEA) recently released a report asserting that the Senate’s version of the One Big Beautiful Bill Act (OBBBA) could generate between $2.1 and $2.3 trillion in dynamic feedback, with an output boost of 2.4 to 4.9 percent. These projections are significantly higher than those from other estimators, including the Congressional Budget Office (CBO) and the Joint Committee on Taxation, which often find negative dynamic feedback.
Dynamic estimates for OBBBA suggest outcomes ranging from -$860 billion to +$900 billion in dynamic feedback. The CBO’s comprehensive analysis indicates that the House-passed version would increase deficits by $430 billion due to higher interest rates. In contrast, the CEA’s estimate is nearly 2.5 times larger than the next highest projection and over 50 times the average of independent modelers. Their assumption of $4.7 trillion in feedback, considering additional policies, is even more exaggerated.
The CEA’s assumptions disregard the impact of OBBBA on spending and interest costs, overlook the negative consequences of rising national debt, and presume unrealistically high growth effects from tax provisions. By 2028, the CEA predicts a 4.6 to 4.9 percent increase in economic output, whereas other modelers estimate a range of 0.1 to 1.3 percent. For 2034, the CEA projects a 2.4 to 2.7 percent boost, compared to most estimates of around 0.4 percent. This suggests the CEA’s claims may overestimate the bill’s positive economic impact sixfold.
While OBBBA might offer a substantial short-term economic stimulus, its medium-term effects are expected to be limited as higher national debt offsets stronger work and investment incentives. Over the long term, most analyses predict the bill would reduce output. These overly optimistic projections obscure the real deficit implications of enacting OBBBA in its current form. Policymakers should focus on ensuring the bill reduces debt through offsets covering all tax cuts and spending increases.
— news from Committee for a Responsible Federal Budget
— News Original —
CEA’s Fantastical Economic Assumptions
The White House Council of Economic Advisers (CEA) released a report today claiming the Senate’s proposed version of the One Big Beautiful Bill Act (OBBBA) would generate $2.1 to $2.3 trillion of dynamic feedback and boost output by 2.4 to 4.9 percent. These claims are based on fantasy growth assumptions are many times higher than other estimators.
In a coming analysis, we will explain the many flaws in CEA’s analysis. Below, we show how far off CEA’s estimates are from the Congressional Budget Office (CBO), the Joint Committee on Taxation, and five other credible modelers – many which find negative dynamic feedback.
As we have shown before, dynamic estimates find that the OBBBA would produce anywhere from $860 billion of negative dynamic feedback to $900 billion of positive dynamic feedback. The most comprehensive and official dynamic analysis, from CBO, finds the House-passed version of the bill would increase deficits by $430 billion more on a dynamic basis as a result of higher interest rates.
CEA’s claim of $2.1 to $2.3 trillion of dynamic feedback is nearly 2.5 times as large as the next highest estimate, more than 50 times as high as the average of outside modelers, and the opposite sign of CBO and others that conducted a comprehensive analysis of the bill. CEA’s assumption of $4.7 trillion when including additional policies addressing energy and deregulation is even more fantastical.
CEA’s incredible feedback assumptions come from ignoring the effects of OBBBA on spending and interest costs, ignoring the negative impact of rising national debt, and assuming unrealistically high positive growth effects from the tax portions of the bill. By 2028, CEA claims OBBBA would increase the level of economic output by 4.6 to 4.9 percent above baseline estimates – other modelers range from 0.1 to 1.3 percent. In 2034, CEA claims the bill would boost the level of output by 2.4 to 2.7 percent above baseline estimates. Most other modelers estimate it would boost 2034 output by 0.4 percent – with a range of negative 0.1 to positive 1.1 percent. In other words, CEA’s growth claims likely overstate the positive economic impact of the reconciliation bill by six times or more.
While OBBBA is likely to provide a large near-term boost to the economy by providing one-time stimulus, the medium-term effects are likely to be modest – as stronger incentives to work and invest are at least partially offset by the negative impact of a higher national debt. Over the very long term, most modelers estimate the bill would shrink output.
These fantastical assumptions and incredibly optimistic estimates only serve to obfuscate the very real deficit impact of enacting OBBBA in its current form. Instead of attempting to paper over OBBBA’s debt increase with phony analysis, policymakers should work towards ensuring that OBBBA reduces debt with offsets that cover its entire sum of tax cuts and spending increases.
Dynamic Estimates of OBBBA (FY 2025-2034, billions)
Conventional Estimate Dynamic Estimate Dynamic Feedback % Dynamic Feedback GDP Impact (2034) Council of Economic Advisers – Tax Only^ -$4,200 -$2,000 +$2200 52% +2.6% Congressional Budget Office -$2,967 -$3,399 -$432 -15% +0.4% Joint Committee on Taxation – Tax Only^ -$3,819 -$3,716 +$103 3% +0.2%* Yale Budget Lab -$2,677 -$3,538 -$861 -32% -0.1% Penn Wharton Budget Model -$2,787 -$3,198 -$411 -15% +0.4% Tax Foundation – Tax Only^ -$4,695 -$3,790 +$905 19% +1.1%* American Enterprise Institute^ -$2,416 -$2,060 +$356 15% +0.4%* Tax Policy Center – Tax Only^ -$3,798 -$3,584 +$214 6% +0.4%