WASHINGTON – A sweeping tax cut bill passed by House Republicans in May is projected to balloon the national debt by trillions of dollars, potentially jeopardizing its passage in the Senate.

The Committee for a Responsible Federal Budget estimates the bill would add approximately $3.1 trillion to the national debt over the next decade, reaching a total of $53 trillion when accounting for interest.The Penn Wharton budget Model projects an even higher figure of $3.8 trillion, factoring in both interest and broader economic impacts.

Rep. Thomas Massie of Kentucky, one of only two Republicans to vote against the bill, described it as a “debt bomb ticking” that “dramatically increases deficits in the near term.”

“congress can do funny math – fantasy math – if it wants,” Massie said on the House floor on May 22. “But bond investors don’t.”

Several Republican Senators have also expressed reservations about the billS potential impact on the national debt and other aspects of the legislation.

“The math doesn’t realy add up,” Sen. rand Paul, R-Kentucky, said Sunday on CBS.

This legislation arrives as interest payments on U.S.debt have exceeded national defense spending, becoming the second-largest expenditure behind Social Security.The federal debt,measured as a percentage of gross domestic product,is currently at a record high.

While the rising national debt may seem abstract to the average person, economists warn it can significantly affect household finances.

“I don’t think most consumers think about it at all,” said Tim quinlan, senior economist at Wells Fargo Economics. “They think, ‘It doesn’t really impact me.’ But I think the truth is, it absolutely dose.”

Consumer loans Would Become More Expensive

A significantly higher U.S. debt burden would likely lead to increased costs for consumers financing homes, cars, and other common purchases, according to Mark Zandi, chief economist at Moody’s.

“That’s the key link back to us as consumers, businesspeople and investors: The prospect that all this borrowing, the rising debt load, mean higher interest rates,” he said.

The House bill includes approximately $4 trillion in tax cuts for households, with the majority benefiting wealthy individuals. To partially offset these cuts, the bill proposes reductions in spending for safety-net programs like Medicaid and food assistance for lower-income individuals.

Some Republicans and White House officials contend that President trump’s tariff policies would compensate for a substantial portion of the tax cuts.

Though, economists argue that tariffs are an unreliable source of revenue, as future presidents can reverse them, and courts may strike them down.

how Rising Debt Impacts Treasury yields

Ultimately, higher interest rates for consumers are linked to perceptions of U.S. debt levels and their impact on U.S. Treasury bonds.

Common forms of consumer borrowing, such as mortgages and auto loans, are priced based on yields for U.S. Treasury bonds,notably the 10-year Treasury.

Yields (interest rates) for long-term treasury bonds are primarily determined by market forces, fluctuating based on investor supply and demand.

The U.S. relies on Treasury bonds to finance its operations, as the government’s annual tax revenue is insufficient to cover its expenses, resulting in a “budget deficit.” The government repays Treasury investors with interest.

If the Republican bill were to increase the U.S. debt and deficit by trillions of dollars,it would likely alarm investors,potentially reducing demand for Treasuries,economists suggest.

Investors would likely demand higher interest rates to compensate for the increased risk that the U.S.government may not meet its debt obligations in the future.

Interest rates tied to the 10-year Treasury “also have to go up because of the higher risk being taken,” said Philip Chao, chief investment officer and certified financial planner at Experiential Wealth based in Cabin John, Maryland.

Moody’s downgraded the U.S.’ sovereign credit rating in May, citing the growing burden of the federal budget deficit and indicating a greater credit risk for investors.Bond yields rose following the proclamation.

How Debt May Impact Consumer Borrowing

Zandi offered a general guideline to illustrate the potential impact of a higher debt burden on consumers: for every 1-point increase in the debt-to-GDP ratio, the 10-year Treasury yield rises by approximately 0.02 percentage points.

For instance, if the ratio were to increase from its current level of around 100% to 130%, the 10-year Treasury yield would increase by about 0.6 percentage points, according to Zandi. This would push the yield to over 5% relative to current levels of around 4.5%, he noted.

“It’s a big deal,” Zandi said.

A fixed 30-year mortgage would increase from nearly 7% to approximately 7.6%, all other factors being equal, potentially making homeownership even more “out of reach,” particularly for prospective first-time buyers, he explained.

The debt-to-GDP ratio would surge from approximately 101% at the end of 2025 to an estimated 148% by 2034 under the House legislation as currently drafted,according to Kent Smetters,an economist and faculty director for the Penn Wharton Budget Model.

Bond Investors Face Potential Losses

It’s not just consumer borrowers who would be affected; certain investors could also experiance losses,experts cautioned.

When Treasury yields rise, prices for existing bondholders decline. Their current Treasury bonds become less valuable, negatively impacting investment portfolios.

“If the market interest rate has gone up, your bond has depreciated,” Chao said. “Your net worth has gone down.”

The market for long-term Treasury bonds has experienced increased volatility amid investor concerns, prompting some experts to suggest shorter-term bonds.

Conversely, those purchasing new bonds may benefit from the opportunity to earn a higher rate, he added.

‘Pouring Gasoline on the Fire’

the cost of consumer financing has already roughly doubled in recent years, according to Quinlan of Wells Fargo.

The average 10-year Treasury yield was approximately 2.1% from 2012 to 2022, compared to about 4.1% from 2023 to the present, he noted.

Of course, the U.S. debt burden is just one of many factors influencing Treasury investors and yields, Quinlan pointed out. Such as, Treasury investors drove yields sharply higher as they rushed for the exits after Trump announced a series of country-specific tariffs in april, as they questioned the safe-haven status of U.S. assets.

“But it’s not going out on to much of a limb to suggest financial markets the last couple years have grown increasingly concerned about debt levels,” Quinlan said.

Even without any new legislation, the U.S. debt burden is projected to increase, economists noted. The debt-to-GDP ratio would rise to 138% even if Republicans do not pass any new laws, according to Smetters.

Though, the House legislation would be “pouring gasoline on the fire,” Chao stated.

“It’s adding to the problems we already have,” Chao said. “And this is why the bond market is not happy with it,” he concluded.