Donald Trump’s “big, beautiful bill” has a PR problem. Specifically, some Republicans — both on the Hill and off — don’t find it very beautiful.
Earlier this week, a plainly bitter, possibly high, Elon Musk derided Trump’s signature legislation as a “massive, outrageous, disgusting abomination.” As the architect of DOGE, a manifestly distasteful monstrosity in its own right, he’d know.
Although eminently qualified to identify the repugnant, Musk’s a jilted ex-boyfriend in this equation, so you can take his assessment with a grain of salt. Or with a handful of pills and mushrooms (allegedy).
You can take everything Ron Johnson says with a grain of salt too (albeit probably not with any ketamine in Ron’s case), but for whatever it’s worth, Johnson called Trump’s bill “grotesque” and “immoral” during a CNBC cameo on Wednesday.
Here again, we’re talking about a man who’s qualified to opine. Ron’s on-the-record remarks about the events of January 6, 2021, make him an authority on the “grotesque” and “immoral,” and that’s to say nothing of what he might’ve said (or done) off the record.
Suffice to say Trump doesn’t have universal GOP buy-in for his “big, beautiful bill,” and the optics were made worse Wednesday when the CBO’s scoring showed the legislation would add $2.416 trillion to the deficit over a decade.
The simple chart above shows the modeled evolution over time. I should emphasize, these are estimates. Forecasts. For the Margin Call fans among you: “Projected losses. The projected losses, Will.”
The pushback against CBO scoring’s always the same, and it’s even more predictable here because supply-side legislation always leans on the same argument no matter how many times it’s disproven. Here’s the pushback: The CBO could be wrong and they’re anyway not accounting for the boost to economic activity from the tax cuts and other business-friendly measures.
The Trump administration’s also arguing that a lot of, and maybe all, the red ink can be recouped in the form of tariff revenue. In a letter to the Senate also dated Wednesday, the CBO said tariff hikes as implemented from January through mid-May would reduce the deficit by $3 trillion over a decade ($2.5 trillion of that comes directly from tariff collection, and half a trillion from saved interest on debt that wouldn’t need to be issued).
In the same tariff letter, the CBO said the $3 trillion figure would probably be closer to $2.8 trillion after accounting for the negative impact of the levies (and specifically counter-measures adopted by America’s trade partners) on the US economy.
I don’t think I’m being a partisan to suggest taking that $2.8 trillion for granted (in the course of arguing that in fact, Trump’s big, beautiful bill is costless) might be a fool’s errand. For one thing, the tariffs are being challenged in court. For another, the proposed tariff rates change every few days depending on what side of the bed Trump wakes up on. And while acknowledging the very real possibility that the GOP will figure a way for Trump to seek a third term, the odds he i) stays president for another decade and ii) maintains the tariffs analyzed by the CBO for that entire 10-year period, are vanishingly small.
If you read the tariff letter, CBO Director Phillip Swagel says — just not in so many words — that it’s impossible to estimate tariff revenue out to 2035. “Because the US has implemented no increases in tariffs of this size in many decades, there is little relevant empirical evidence on their effects,” he said, cautioning the Senate that the CBO’s estimates are “subject to significant uncertainty, in part because the Administration could change how the tariff policies are administered.”
In addition, Swagel gently noted that it’s difficult to ascertain how consumers are likely to react in the event very large tariffs are sustained for a very long time. “Tariff increases of this magnitude could induce consumers and businesses to change their behavior faster than anticipated, which would cause revenues to be lower than CBO projects,” he remarked. And on and on.
Bottom line: Trump’s got too much sway among the GOP — where that means the sway of a dictator — for this “massive, outrageous, disgusting abomination” not to pass, but it’s a bad piece of legislation, and not necessarily because it swells the deficit. Deficits don’t matter in the US, or at least they didn’t until very recently.
Rather, the bill’s bad for the same reasons the 2017 tax cuts were bad: The benefits accrue disproportionately, albeit by no means exclusively, to the very well-off. And because in pursuit of “savings,” it risks leaving 11 million people without health insurance, threatens food benefits for 1.3 million people, disincentives green energy projects and so on.
And for what? So a lot of people who don’t need tax cuts (and in the interest of fairness, some people who do) can keep paying lower taxes. And so Trump can claim for himself a legislative victory while arguing, implausibly, that tariffs and growth will make up for the associated budget shortfall.
“Grotesque” and “immoral” indeed. Just not for the reasons Republicans in opposition are inclined to cite.
Quick note: For about 5 minutes, a draft version of this article was published. The final version differs a little bit, where that means it’s more polished towards the end. So if you read this piece in the initial minutes after it was published, maybe re-read it.
Any MBA student can explain why increased consumer taxes reduces consumption and therefore the projected windfall from said taxes. Death spirals becomes us.
The math doesn’t work but you know what will happen in 4 years? The media will ramp up their ‘blame everything on the democrats’ machine again and convince the electorate that everything that is wrong with the country they caused from a position of no power. All of this while sane-washing a moron and providing a microphone and camera for the plainly bullsh*t lies that Republicans spout.
It’s exhausting living in a corporate owned propaganda echo chamber.
Tariffs are just a (huge!) sales tax. We will have cut income taxes on the wealthiest and replaced some of that lost revenue with the most regressive of taxes (sales tax). Brilliant. Why can’t Democrats come up with some messaging that speaks to this?
I am not speaking to your comment specifically, but I keep hearing that the democrats need to come up with better messaging. How is this going to work with the both siderism of the press? I think we need to work the facts and how the world works into our everyday conversations because I don’t think people will hear it otherwise. I know it is hard for people that work for a living to risk the loss of paying customers, but for people like me that make a living from the impersonal financial markets, have no kids, and are just generally unsociable, the possibility of people avoiding me as I walk down the street isn’t all bad. I guess I better get to it
One reason is that they are being physically and psychically threatened by the powers that be in DC. Actually threatened with arrest, deportation, and various other evil misdeeds.
Are you opposed to the idea of DOGE or just the implementation under Musk? Both parties share blame for this insane deficit and national debt and there needs to be a paradigm shift. DOGE and tariffs are probably not the way, but what’s the solution?
Republicans bill primarily just doesn’t increase taxes by keeping existing tax cuts in place (with other stuff sure).
Does anyone actually believe Democrats would be any better? Last I checked the deficit has grown much more under Dem control. They do the exact same sht as Republicans, except funnel more money to inefficient ideological programs instead of cutting taxes. Take something as basic as education, when you spend more than ever and half the junior high kids in America read at a 4th grade level, we have a serious fkn problem that demands serious solutions. The fantasy that it’s all about resources is just that, fantasy.
Regardless of whoever passes the budget, entitlement programs are still a ticking time bomb and none of these clowns are going to save us.
Florida could be a model state for budget management but no, we all need to think California is the successful model because reasons reasons MAGA. They both think they are somehow enlightened yet receive half the info or a personalized media editorial spin on the news. Pure hubris.
I didn’t really believe this before but given what I know now, our only hope is superintelligence (which ironically also introduces a non-zero possibility of extinction).
“Last I checked the deficit has grown much more under Dem control.”
Well, you’re not checkin’ very hard, which is to say you haven’t even looked. I suppose it depends on what you mean by “control,” but that quote from you seems to suggest there is no “last time you checked.”
And more generally, this comment of yours is just a long, irritable piece of GOP propaganda.
I should remove it, but I won’t because I’d rather it just sit there and testify to its own silliness in perpetuity.
Thanks H, really, thanks! I’m so discouraged. I live with a lot of BAS in Orange County, CA. So many of my neighbors, actually tell me, anything that has no price can have no value. American has lost its shadow, let’s hope we can help them find sunlight…..good luck in my life time!
per student spending at schools is funded 50% by municipal property taxes, so as you can imagine, there is a lot of variation depending on district. Guess which districts have the highest per student spend? Guess which districts have the “best outcomes” for students (higher ed success / socioeconomic outcomes)? Obviously claiming that schools are the mechanism in this outcome is simplistic at best and probably wrong (and this logic cuts both ways), but claiming that the amount of money we spend on education has no effect is also simplistic at best given how much variation there is and how many variables influence academic and socioeconomic achievement, not to mention the regional differences in how public education is instituted. Using the whole country as a sample is wicked noisy.
This bro-fallout between Trump and Elon (the Adderall addicted, father of 14, among other notorious character flaws- not traits) is hilarious and further cementing Republican in-party disfunction- which will be providing even more entertainment!
Furthermore, with everything going on- it is becoming more and more certain than Republicans will absolutely lose the midterms. Trump will seal the loss (not the “deal”) of the midterms with increasing patronizing (not patriotic) and insulting public calls for Powell to drop rates (this gross overreach will turn off any remaining intelligent republican voters). The midterm loss will primarily happen, however, because Trump has “f**** up” the economy (pardon my French).
Then, in 3.5 years, Trump will step aside and agree not to run for a third term…..several billion dollars richer. Shortly after he leaves office, he will announce that he and his family members sold all of their Trump coins during the last year of his presidency; and are safely invested in SPY. Trump coins will tank and the SEC will investigate. Trump will shave his head to avoid being noticed. Melania will file for divorce.
Now, if I can just turn myself “off” from following all of this nonsense!
I can only guess that Trump’s endgame in his mind is to make America’s economy bigger. He’s front loaded all the costs on his citizens with the payoff for those same citizens many years down the road and of low probability. I’m no stable genius, but that’s not going to happen. The question is how and when is the economy going to acknowledge failure. I can’t find any economic theory that thinks a whole nation of consumers is going to just absorb across the board price increases without looking for alternatives.
In fact the probability that this will cause a cascading recession is more likely. You can’t raise taxes, cut benefits, and eliminate the cheapest available workforce and expect the economy to grow. Tax cuts and benefits elimination reduces consumption which reduces hiring. The increased cost of the workforce due to the elimination of the ultra-cheap migrant workforce you sent off to El Salvador and reversed the migration of will exacerbate those costs.
As job eliminations pile up the available jobs will decline and then you end up with a stagflation economy that you can’t get out from under because you’re beholden to the ideals that your very big brain is good at business and your cult will never turn on you. Europe and Asia for the win.