- The latest on the Big, Beautiful Bill…
- Republicans put themselves in a pickle over Medicaid…
- Robert Kiyosaki’s latest book shows you the compounding power of weekly income…
Dear Reader,
The Big, Beautiful Bill is once again in the news. And the news is negative.
Zero Hedge:
- The Senate version of President Trump’s Big, Beautiful Bill (BBB) will add nearly $3.3 trillion to US deficits over a decade, according to the latest estimate from the Congressional Budget Office, half a trillion more than the $2.8 trillion in deficit expansion under the House version of the same bill.
- That’s from a starting point with debt to GDP already in excess of 120% and the fiscal deficit sitting close to a peacetime record.
Palms are presently being greased, bellies are being rubbed, backs are being scratched, ears are being pulled… and arms are being twisted.
I do not know which version of the bill will emerge. Yet I do know it will be an enormity.
I know that it will not reduce debt — but increase debt.
Tax Cuts Are Great, BUT
The Big, Beautiful Bill would render the president’s 2017 tax reductions permanent.
I am heart and soul for tax reductions. And the steeper the tax reductions, the greater I am heart and soul for them.
Yet they must be twinned with spending reductions.
The monies that exit the Treasury must equal — or at least substantially approximate — the monies that enter the Treasury.
Else annual deficits pile upon one another… and the nation’s debt attains preposterous dimensions.
What is the present reading? $37 trillion and change?
It’s Not Keynesianism
Many label habitual deficit spending Keynesianism. Yet the label is false.
Lord Keynes merely argued for deficit spending under depressed economic conditions.
Once conditions swung positive, he argued that governments must retire whatever debt they incurred during lean times.
He believed the ledgers must once again balance even.
It is as if the dietician authorizes a brief bout of gluttony to stimulate the metabolism.
Yet he orders that the brief caloric delirium be followed by brisk exercise. The excesses must be worked off.
The United States only gluttonizes. It refuses all exercise.
It passes its days lazing in front of the television… and eating.
Thus the United States has turned from old Keynes.
And so it pegs along in perpetual deficit.
They Don’t Pass Budgets Anymore
Meantime, the Congress of the United States no longer authorizes budgets. It authorizes instead continuing resolutions.
Its central achievements are the kicking of cans, the passing of bucks, the pointing of fingers and the running of mouths.
The subject of Medicaid is prominent in the present budget row.
Here former Republican congressman and budget director — Mr. David Stockman — cites the party’s botching of the Medicaid debate:
- The Democratic rhetoric is that deep cuts in Medicaid will be used to fund tax cuts for the rich. Never mind that sweeping Medicaid reforms are badly needed and fully justified given that the rolls have grown from 40 million to 80 million since the year 2000 alone—even as total Medicaid spending has more than quadrupled and real benefits per recipient have grown by nearly 30%.
- Still, that’s exactly the political pickle that the GOP put itself in when it passed the unpaid for multi-trillion so-called TCJA of 2017. That is, rather than stand behind these corporate and individual tax cuts on a permanent basis with offsetting spending cuts, the cowardly GOP tax writers in December 2017 caused most of the TCJA to expire in December 2025. That enabled the bill to comply with Congressional reconciliation process rules — no long run deficit increase — but it also left on the doorstep of a future Congress a tremendous due bill amounting to $4 trillion of built-in tax increases over the next 10-year budget window.
Can’t Kick the Can Down the Road Anymore
As Mr. Stockman explained: Cowardly Republicans kicked the beer can down the roadway in 2017. Now they have arrived at road’s end. They can kick the can no farther.
More:
- Needless to say, the GOP is now so obsessed with avoiding the massive 2026 tax increase that it planted squarely in the tax code that any spending cut that it can get a consensus for—such as the relatively superficial cuts in Medicaid and food stamps in the Big, Beautiful Bill — will be going not to desperately needed reduction of the baseline deficit, but to paying the due bill on its eight years-ago tax cut.
- And as it does, it will be giving the Dems still another opportunity to demagogue about heartless Republicans taking food stamps and medical insurance from poor people to pay for tax cuts for the rich.
And so it goes in predictable and endless tedium.
I have stated it before. Today I state it again:
If you expect elected officials to make courageous choices guided by sound principle… if it is responsible governing you seek… turn away from Washington.
It is the wrong address.
Brian Maher
for Freedom Financial News
