A Big Bad Mess
The GOP budget bill.

I was going to simply include this in the tab-clearing, but I wanted to highlight a few of things from this Axios piece, Trump’s $4 trillion deficit bomb.
First, there’s this:
The White House Council of Economic Advisers projected that the bill would boost GDP by 4.2% to 5.2% in the short run — a staggering level of growth that goes far beyond the mainstream consensus.
This is just an absurd assertion, but it is in keeping with the long-term fantasies about the growth-inducing powers of tax cuts, especially those for the wealthiest Americans. It is also reflective of the long-term fantasy GDP goals of Trump.
For what it is worth, the Tax Foundation projects the long-term effects on GDP of these proposals to be +0.6% over the next decade.
The Penn Wharton analysis projects the following over a longer period of time.
Over the next 30 years, the House reconciliation bill increases GDP growth slightly, and GDP would be 1.7 percent higher in 2054 than under current law.
Second, the propaganda (i.e., official lies) does continue to flow (emphasis mine).
White House press secretary Karoline Leavitt went as far as to claim that the bill “does not add to the deficit,” and that it would actually save $1.6 trillion through spending cuts and Medicaid work requirements.
The Axios piece notes projected deficits of $3.3 billion to $4 billion.
Third, there’s this.
“This tax bill’s enormity is being underplayed … [It] will cost more than the 2017 tax cuts, the pandemic CARES Act, Biden’s stimulus, and the Inflation Reduction Act combined,” Jessica Riedl, a budget specialist at the conservative Manhattan Institute, told Yahoo Finance.
Allow me to stress that the Manhattan Institute is a very conservative organization.
But it strikes me as especially significant how, as a general matter, discussions about tax cuts never seem to be handled the way material benefits to the public are, even in the mainstream press.
I get it on one level. Spending is about cost while taxes are about revenue, so it seems to many people that they aren’t the same thing. But when it comes to budgeting, they both are relevant to whether the budget is balanced or not. If, at the end of the day, money has to be borrowed to meet the budget, it doesn’t matter if the borrowing is because of more spending or less revenue.
I know it is easy to fall for the notion that tax cuts are just letting people keep more of their money, but it has to be understood as not happening in a vacuum. Letting someone who makes seven figures annually keep more of their income so that people making less than $20k a year lose income as well as access to basic food assistance and health care is a poor moral trade-off.
It is easy to pretend like everyone can be wealthy if they just stop playing X-Box and work hard, but then there is the pesky reality that notes that one can work very hard and still need SNAP and Medicaid.
While we can all agree that things like the CARES Act and the Trump tax cuts add to the deficit, I would note that trying to address the national impacts of a pandemic are in a different governing universe, and indeed a different moral universe, than one in which, as per the Penn Wharton analysis, the distribiutional effects of the BBB go to higher income earners and hurt the poorest.
Rich Americans get a few more dollars to invest and save, while lower-income Americans get cuts to vital services. This is, again, a morally different reason for adding to the debt than investing in local infrastructure or providing tax credits for children that bring them out of poverty (you know, the one that expired).
It is impossible to take any arguments about the debt from Republicans as long as they pretend like tax cuts are freebies, but the scourge of society is spending to make life better for millions of Americans.
I am all for a serious discussion about annual deficits and the accumulated debt, but I learned a long time ago that Republicans, as a group, are not interested in such a discussion.
Just for some combination of comic relief and major frustration, I will end with this.
I would note two things.
- Massie is a Republican from Kentucky.
- The term is “deficit hawk,” not “fiscal hawk,” but whatevs.
Well, Trump is saying he came back from the ME trip with literally trillions in hand (5.1? Or was that how much we have made from the tariffs?) and that line will be echoed by multiple parties, so the budget is already paid off!
Unfortunately, I have a pretty good memory. Trump promised in his first term GDP growth as high as 6%. He never exceeded 2.9%. His record (prior to COVID) placed side by side with Obama’s was pretty much identical to the 8 years of Obama. He added $7.8T in debt. About 20-25% of the entire debt. He’s a fraud. But “We the People” crowd don’t care.
This is the 50 year long wet dream that the MAGA/Republicans have been having.
https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/
And it is the primary cause of the massive inequality we are now seeing – the greatest level of inequality since the Gilded Age.
I believe that explaining this is the way back into office for Democrats, although I do not know how you put it on a bumper sticker to convince the numbskulls.
I should not write this down because it will be used by right wing hardliners to do the opposite (it is hard to understand their thought process) but they are in fact right. Of course the other side of the coin is that we need to raise taxes to raise revenues and they will never accede to that. The point is that deficits are way to high and anything that grows them higher is hypocritical and delusional. I find it amazing that the BBB not only succeeds in eviscerating the safety net but with it increasing the debt. Now I’m not a deficit scold and as I discussed with Gerry Connolly once (RIP)- in normal times, as long a deficit spending percentage is the same as GDP growth, the whole thing results in a wash. We are twice that range now. Let me put it another way, though I believe in spending in social programs, the current level of debt supported spending will harm those programs in the long run (due to sustainability issues).
Proclaiming loudly and often the reality Trump wishes to be perceived.
@Daryl:
I would believe that this is the way back into office for Democrats if I believed that voters gave a flying f*** about the levels of economic inequality of others. Sadly, I believe that voters who cared about the greatest levels of inequality since the Gilded Age wouldn’t have elected Trump in the first place.*
As always, I’ll be happy to be proven wrong in 2026 or 28, or both preferably.
*It’s also possible that voters who are concerned about rising levels of inequality should not defend the economic performance of administrations by citing figures about aggregate economic growth, either. But that’s an additional question.
ETA: In fairness, I should note that voters who DID care did NOT vote for Trump. There were not enough of you. That’s the problem.
AETA: As to convincing numbskulls, I can only cite the great philosopher Ann Wilson: “I can’t sell you what you don’t want to buy.”
Weren’t lower tax rates supposed to increase revenue due to higher GDP growth, or magic or something?
Now now, projecting 4-5% growth is probably an UNDER estimate of the impacts of this. If you are talking about the wealth of the 1% and just calling it GDP that is.
Krugman this morning on sustainability, points out fiscal credibility (lack thereof) is what tanked Liz Truss in the UK
“Krugman”
Long term interest rates increased sharply in the past couple of days, while the dollar weakened significantly (I have been watching closely). These putz clowns in Congress are really playing with fire.
Conservatives always lie about taxes. Always, always, always.
It’s important to understand a basic fact about so-called conservatives. They only believe in two things. 1) More for them. And, 2) Less for anyone not them. Everything else they claim to believe in is bullshit. They don’t believe in Jesus, they don’t believe in the Constitution, they don’t believe in the rule of law, they DGAF about veterans and they are incapable of genuine patriotism and have zero regard for truth. They want more for themselves, and less for anyone who is not them or closely identified with them. They are bad people, greedy, hateful and often rather stupid. The people who call themselves conservatives are the moral equivalents of a tapeworms.
@charontwo:
Perhaps we’ll get lucky and the bond vigilantes will act before this mess becomes law. Spiking interest rates will gain attention.
@Sleeping Dog:
I think what we see so far is just hedging against a possibility, assuming whatever the full House and Senate agree to gets toned down considerably. Because if this thing passes in its current form, I think the bond and currency markets go nuts.
@charontwo:
Better that the markets act sooner than later. If this passes in its present form, it will quite likely mean that congress would need to override a veto to step back from the edge.
@Michael Reynolds:
Pithy. It begs to be quoted for emphasis.
The thing is, the Republicans have since the 1980’s, ie post the closing of the “gold window”, lived in a world where the deficit was essentially trivial, and thus they could indulge their “Laffer Curve” fantasies generally free of external restraint.
Ironically, it is Trump with his silly trariffs and the remarks of adminstration officials about the “overvalued dollar” that have the potential to wreck thae basis of this complacency.
The “global reserve dollar recycling” pattern is NOT a law of nature.
The recent bond markets turmoils should be an indicator that there are limits.
And the thing about bond markets is, you really don’t want to discover those limits the hard way.
(See: Truss, Liz)
Currrent 30-year bond yields are at 5.08% and the trend line continues upward.
The latest MAGA line (which is, arguably, self-contradictory) appears to be that tariffs will provide both a revenue stream and a boost to growth that will enable another deficit splurge on tax cuts. Plus the effect of the Laughable Curve = why worry?
The MAGA equivalent of “modern monetary theory”.
lol.
@charontwo:
Missed this comment before posting.
As ever, Krugman makes my point rather better than I could hope to.
The one point I’d emphasise more than he does, is the potential damage of “Trumponomics”, and the administrations evidenced inclination to play silly buggers with the rule of law, the Fed, and international Treasury/Central Bank co-operation, for the whole “dollar recycling” pattern that has been a crucial aspect of the global economy since the 1940’s.
The amazing thing is the proclivity of MAGA to look back over this period remarkable prosperity and, generally, stability and sustained growth, for the US, and grump about it as being a “rip off” with others getting ahead at their expense.
As if American prosperity was somehow a law of nature.
We Brits could tell you, in the words of another song: “It ain’t necessarily so.”
That’s trillion with a T, people.
We will never have a functional country as long as the primary spokesperson of the US government can make a claim like this from a WH podium without consequence. Considering the influence the government has on the economy – even granting it is less than often supposed – this kind of statement should be fraudulent. It’s not enough for economic experts to refute such a bald faced lie in tonight’s cable news panels or tomorrow’s editorials. Leavitt should have been laughed out of the briefing room.
@Scott F.:
If needed, further proof why Luddite (and @Cracker) aren’t invited to these presentations. Rolling on the floor, laughing hysterically, asking where she buys her drugs (and did she bring enough for everyone) is (in some circles) considered disrespectful and impolite.
@Scott F.:
My theme for the last few days seems to be the Republican bias of the supposedly liberal MSM.
These four measures are in the bill:
– No tax on tips;
– No tax on overtime;
– $1,000 baby bonus to new mothers
– $4,000 to social security recipients.
The first two will not only be atrociously unfair in their outcomes, they practically beg employers and employees to engage in creative tax avoidance. The others are just a waste of money that serve no purpose beyond buying fleeting popularity. They would be terrible policy at any time. For Republicans to adopt them while braying about the existential debt crisis facing America is a new low in right-wingers’ ability to manage the economy.
How the party that blew up the debt and presided over the worst recession since the 30s , came to be considered “the party of fiscal responsibility,” speaks volumes of the effectiveness of propaganda over reality.
@Ken_L:
Prediction: this time next year, if not sooner, there will be an outrageous and mandatory gratuity added to doctor’s, lawyer’s, stock broker’s, mechanic’s, plumber’s, etc., bills, but their base rates won’t go down one bit.
Plus restaurants, hotels, and other hospitality venues will shortchange their employees when it comes to tips.
@Ken_L:
Well I do want to thank the construction workers and air traffic controllers and NICU nurses who’ll be gifting my wife and me with 8000 dollars since we’re on Social Security. Christ. Fucking Republicans.
@Kathy:
Let’s not forget Reagan’s recession. It may not have been “the Great Recession”, but it was a pretty good recession, until W, the worst recession since the 30s.
@Michael Reynolds: Hey! Don’t be so hard on Republicans. They paid my federal and state taxes this year. And only a few days after I ordered the bank transfers. That’s service. Senseless as it may be.