A new analysis from the Congressional Budget Office (CBO) warns that Republicans’ massive tax bill could lead to hundreds of billions in cuts to Medicare over the next 10 years.
CBO analysts, in a letter (PDF) to key Democratic senators Friday, dug into the potential impact the One Big Beautiful Bill Act could have on federal programs under the Statutory Pay‑As‑You‑Go Act of 2010, which requires that new legislation enacted by Congress be budget neutral and is enforced under automatic cuts known as “sequestration.”
The letter notes that reductions in Medicare spending would be limited to $45 billion in 2026, with about $370 billion to be sequestered from the federal budget. That rate would remain in effect for future years, according to the letter.
CBO estimates that if the Office of Management and Budget ordered a $415 billion sequestration each year until 2029 and then $339 billion annually between 2030 and 2034, cuts in Medicare spending would total $491 billion between 2027 and 2034.
The nonpartisan budget office notes that similar cuts would also extend to other federal entitlement programs.
“After accounting for the reduction in Medicare spending, the required reduction in spending for other programs would exceed the estimated amount of resources available to those programs in each year over the 2027–2034 period,” the CBO said in the letter.
Congress has generally been able to avoid triggering sequestration through legislation and has averted those cuts under both Republican and Democratic administrations since its passage in 2010.
The bill codifies massive cuts to Medicaid in the next decade, and the CBO has previously estimated that it could add trillions to the national debt.