Latest news with #USDeficit
The Independent
05-07-2025
- Business
- The Independent
The real risk to Trump from his big beautiful bill won't come from Elon Musk
With the bang of a wooden gavel, the House of Representatives gave Donald Trump the stunning victory he wanted after intimidating the hell out of any Republican congressmen or women who flirted with the idea of defying the president's wishes. You can only imagine that 3,000 miles east of Washington a man in Downing Street looked on with helpless envy, because this week has really been a tale of two cities. In London, Keir Starmer has had to suffer the ignominy of his backbenchers shredding his authority by sticking two fingers up at him repeatedly as though he were some hapless supply teacher brought into an inner London comprehensive for the day. The MPs forced concession after concession over a welfare bill that has been so gutted that an extra £5bn will need to be found to stop the ballooning of our deficit. While in Washington DC, the president's 'One Big, Beautiful Bill' – the OBBB – will add a staggering, eye-popping, head-spinning, jaw-dropping, nausea-inducing three trillion dollars to the US deficit and yet lawmakers decided – without too many qualms – that keeping on Trump's right side was more important than any considerations about the massive economic risks this legislation represents. There was, it should be noted, a strong countervailing force in all this, and that was Elon Musk. The OBBB is what led to his and Trump's nuclear-tipped spat, with the tech tycoon railing against its economic incontinence. Not only that, Musk threatened any Republican lawmaker who voted for it. And has threatened to set up a new political party to – in effect – destroy the Republicans. With the passage of the bill we have at least one question resolved. In the battle of 'who do you fear the most' – the richest man in the world, or the most powerful man in the world – Trump has come out on top. The wee, timorous beasties of the GOP caucus would rather incur the ire of Musk than the wrath of Trump. It remains to be seen whether the Tesla boss will make good on his promise to run candidates against those who backed the president's bill – assuming he gets the chance, after Trump said this week he'd be looking at deporting Musk. So what is this piece of legislation that will now get signed with much fanfare? Well, for a start it is what in the US they call a compendium bill, or omnibus bill. It is not a law just dealing with one thing. It is sprawling. This is a mega piece of legislation. It will bring tax cuts to America's wealthiest; it contains provisions to funnel money towards border security and the Pentagon. And it will take away health provision and free school meals from America's poorest. Think of it as the Robin Hood principle in reverse – it steals from the poor and gives to the rich. Let's go through some of the measures. It will strip healthcare away from 17 million Americans through cuts to Medicaid, the federal government programme that gives coverage to the poorest in America. It will raise healthcare premiums for older adults who benefit from 'Obamacare'. It will take food assistance away from three million Americans and will eliminate school meal access to more than 18 million youngsters. All this to fund tax cuts where the beneficiaries will be the very wealthiest in US society. There are Maga voices who've broken ranks. The uber-Trump supporting senator from Missouri, Josh Hawley, has spoken out passionately against the cuts to Medicaid, and how it will hit people in his state hard. So what did he do when it came to actually voting on the measure? Can you guess? Do you need another clue? Or what about the 'moderate' Republican from Alaska, Lisa Murkowski? She couldn't have been more eloquent. This was a bill, she pronounced, that would not serve Americans' best interests, that it was deeply flawed and was being rushed through to meet a totally arbitrary deadline set by the president of the Fourth of July. It was not fit to be passed in its present form. And, yes, you've guessed it – she voted for it too, just like Senator Hawley. In her bizarre self-justifying statement after voting for the measure, Senator Murkowski said: 'My sincere hope is that this is not the final product. This bill needs more work across chambers and is not ready for the president's desk. We need to work together to get this right." But, of course, by voting for it, she has ensured that the bill has gone straight to the Resolute Desk in the Oval Office for signature. Though kudos to North Carolina senator Thom Tillis, who not only lambasted the bill but has announced he won't run again for office, such is his disgust. And a couple of other Republican senators also split from the president. Nevertheless, this is a massive legislative win for Trump, and a lovely win for all the billionaires who backed him and donated to his campaign and who will now enjoy even lower tax bills. But isn't that to confuse two things? The financial firepower of wealthy donors may have helped Trump get elected. But it was the votes of millions of ordinary Americans – blue-collar workers in record numbers – who elected him and put him in the White House. How are they going to feel about this? An effective Democratic Party (a phrase that feels slightly oxymoronic) would be –should be – making hay. There is one other thing, though, about timing. The tax cuts will come into effect immediately and, yes, while the wealthiest will gain most, a lot of middle-class Americans will gain too. But the politically perilous cuts to Medicaid and the like are being deferred until the beginning of 2027. In other words, just after the November midterms, where Trump's control of both houses would be at stake. This White House is not stupid.
Sky News
03-07-2025
- Business
- Sky News
Veteran Democrat Jack Lew expresses dismay at US deficit but blames Joe Biden too
Why you can trust Sky News Jack Lew is as decorated as they come when it comes to US economic leaders from the Democratic side of the aisle having served as President Obama's treasury secretary, and before that as his director of the office for management of the budget (OMB), a role he also held in the Clinton White House, when he was instrumental in the administration balancing the budget in the late 1990s - the last time that has happened. As President Trump's "one big, beautiful bill" makes its way through Congress, Mr Lew expressed dismay at the direction of the US deficit. "The simple rule that in good economic times you ought to come as close to paying your bills in the current sense as possible, certainly not running a deficit more than 3% of GDP, is the right rule." "Then in a bad time, you don't worry about nickels and dimes. You don't worry about a COVID response or a financial crisis response," Mr Lew said on The Master Investor Podcast with Wilfred Frost. "What you can't do is never worry about it because then the hole just gets deeper and deeper and deeper. And that's why we're now looking at a deficit that is going to grow to 6% of GDP with this bill. That's terrible." 2:24 Of course, the deficit, having leapt during COVID-19 at the end of the first Trump administration, did stay elevated through the recent Biden administration, when Lew served as ambassador to Israel, and he said he felt that Biden's Build Back Better Bill was not a great decision. "The reality, the political reality at the time when there was a bill that in my own view was too large, it gave cash to people who were already working at a time when there was a concern about inflation," Mr Lew said. "The political reality was you couldn't get Democrats and Republicans to vote for something without that. If you asked me at the time was the risk of the economy not recovering great enough to take that on, I would have said you can't afford not to come out of COVID strong. "So I didn't think it was a great decision, but I don't think there was an alternative other than doing nothing, and we've seen from experience that the US recovered stronger and better than other countries from COVID, and the inflation is running its way through the system." Need for compromise Giving insights on how to balance the budget, he spoke about the need for political compromise. "I've always been able to convince most of the wisdom and the benefit of the compromise. And I work for presidents who were able and willing to make that case. "As in everything else in life, relationships matter deeply. Having a counterpart that you know and that you've worked with in the past and knows that they can trust you and you can trust them gives you the freedom to explore ideas that might actually work, but if they were prematurely made public, would be potentially very painful to either or both sides. So you have to have a space that you can talk about middle grounds in that isn't totally off limits or poisoned." Ruefully, he added, "there's no bipartisan conversations going on". An economy 'doing ok' Despite being down beat about the Trump administration's economic policies he acknowledged that "the US economy is actually doing ok", and was reassured that despite a 10% fall in the dollar so far this year, which he puts down to "policy chaos in the US", the bond market appeared calm to him - for now at least. "The economy is not yet in a place where it's in distress." But, "I think we have to be careful. Right now, I think we're in a place where there's no alternative to the dollar, which is why you're not seeing more departure from the dollar", he added. "The renminbi is not in a place where it's fully convertible and market-controlled. There's not enough high-rated European debt to meaningfully replace the dollar. "Japan mostly is a domestic lending and borrowing market. So I have always been of the view that the fact that it's not there now does not mean we should take for granted that the US dominance will be perpetual."
Yahoo
03-07-2025
- Business
- Yahoo
Fact-checking three key claims about Trump's mega-bill
President Donald Trump's flagship piece of legislation - which he's labelled the "big beautiful bill" - has faced major objections from Democrats as well as from some Republicans. It has been subject to tense negotiations amid questions about how much it could cost and its proposed cuts to some US welfare schemes. Elon Musk has also weighed in, repeating threats to form a new political party if the "insane spending bill passes". BBC Verify has looked at claims made about the bill's possible impact in three key areas - the US national finances, medical cover, and taxes. The White House has said the bill "reduces deficits by over $2 trillion" - but senior Democrats have insisted it would actually add trillions. BBC Verify has examined various independent studies about the bill's impact and interviewed six tax experts who all agreed that it would increase the national deficit. The deficit is what happens when the US government spends more than it collects through taxes and other forms of revenue. Musk criticised lawmakers who "voted for the biggest debt increase in history" when it was being passed in the US Senate. The debt is the overall sum of money owed by the government - essentially the accumulation of past budget deficits - which means it has to borrow money and pay interest on this. Trump's mega-bill heads for final vote in overnight US House session A look at the key items in Trump's sprawling budget bill 'Our food doesn't even last the month' - Americans brace for Trump's welfare cuts The US national debt is currently about $36tn (£26tn) - of which about $29tn is money owed by the government to investors around the world. Larger deficits and a bigger debt can theoretically result in higher interest rates - the idea being that investors worry more about a country's capacity to pay its debts as those rise and they therefore demand higher interest payments. That can feed into higher interest rates for consumers which make things like housing and cars less affordable, and restrict business investment and therefore productivity and jobs. The current version of the bill is estimated to add about $3.3tn (£2.4tn) to the US deficit over the next 10 years, despite an initial economic boost, according to estimates from the Congressional Budget Office (CBO) - the government agency which provides independent analysis of spending. The CBO said the spending cuts proposed in the bill would be outweighed by the tax cuts. An analysis from the Tax Foundation think tank concluded that the bill "would increase economic output but worsen deficits". It projects that the bill would increase the level of US GDP by around 1% after 10 years relative to where it would otherwise be, but that it would also add $3.6tn (£2.6tn) to the deficit over the same period. Some banks have said they are in favour of the bill - with the American Bankers Association writing an open letter to lawmakers saying it provides "much needed tax relief" which would boost the economy. The experts BBC Verify spoke to said although the bill may provide some economic growth, its cost would be significantly more than this boost. "Most analysis finds that the bill will produce a small, temporary, short-lived boost – but that over time the bill will actually be a drag on the economy," says Bobby Kogan, a federal budget expert at the Center for American Progress, a nonpartisan policy institute. And Mark Zandi, an economist at the financial consultancy Moody's Analytics, says: "It will result in continued massive budget deficits, and a high and rising debt load." "We're cutting $1.7 trillion in this bill and you're not gonna feel any of it. Your Medicaid is left alone. It's left the same," Trump claimed at an event about the bill last week. However, various studies show there will be significant reductions to Medicaid under the bill. Medicaid is the government-run scheme which provides healthcare insurance for about 71 million low-income adults, children, pregnant women, elderly adults and people with disabilities. Analysis by the Kaiser Family Foundation (KFF) - an independent health policy research group - found that the bill would cut $1tn (£729bn) from future Medicaid spending over the next 10 years. The White House has said the bill "removes illegal aliens, enforces work requirements, and protects Medicaid for the truly vulnerable". The CBO estimates that nearly 12 million Americans would lose health insurance by 2034 under the terms of the Senate bill - with just 1.4 million of these being people "without verified citizenship, nationality, or satisfactory immigration status". "The largest Medicaid cut in American history came in President Reagan's first year in office… These Medicaid cuts would be at least four times the size," said Mr Kogan. Trump has repeatedly said that not passing the bill would lead to massive tax rises on Americans - in part because the tax cuts passed during his first-term in office are due to expire at the end of this year. "If it's not approved, your taxes will go up by 68%," the president said last week. We asked the White House for the calculations behind Trump's claim - they responded saying the bill "prevents the largest tax hike in history" but didn't answer our question on where the specific figure comes from. The Tax Policy Center estimates that not extending tax cuts introduced under Trump in 2017 would lead to a hike of 7.5% on average. The body also says roughly 60% of tax payers would have to contribute more if they expire. "The 68% figure is incorrect… It could be roughly drawn from a count of taxpayers that would see an increase in taxes, as opposed to an estimate of the actual tax increase," says Elena Patel, a tax policy expert and assistant professor at the University of Utah's business school. Overall, the tax changes in the bill would benefit wealthier Americans more than those on lower incomes, according to the Tax Policy Center analysis. About 60% of the benefits would go to those making above $217,000 (£158,000), it found. "There is no question that this bill will result in a massive redistribution from the poorest to the richest," says Ms Patel. What do you want BBC Verify to investigate?
BBC News
03-07-2025
- Business
- BBC News
Fact-checking three key claims about Trump's mega-bill
President Donald Trump's flagship piece of legislation - which he's labelled the "big beautiful bill" - has faced major objections from Democrats as well as from some has been subject to tense negotiations amid questions about how much it could cost and its proposed cuts to some US welfare Musk has also weighed in, repeating threats to form a new political party if the "insane spending bill passes".BBC Verify has looked at claims made about the bill's possible impact in three key areas - the US national finances, medical cover, and taxes. How much would the bill cost? The White House has said the bill "reduces deficits by over $2 trillion" - but senior Democrats have insisted it would actually add Verify has examined various independent studies about the bill's impact and interviewed six tax experts who all agreed that it would increase the national deficit is what happens when the US government spends more than it collects through taxes and other forms of criticised lawmakers who "voted for the biggest debt increase in history" when it was being passed in the US debt is the overall sum of money owed by the government - essentially the accumulation of past budget deficits - which means it has to borrow money and pay interest on mega-bill heads for final vote in overnight US House sessionA look at the key items in Trump's sprawling budget bill'Our food doesn't even last the month' - Americans brace for Trump's welfare cutsThe US national debt is currently about $36tn (£26tn) - of which about $29tn is money owed by the government to investors around the deficits and a bigger debt can theoretically result in higher interest rates - the idea being that investors worry more about a country's capacity to pay its debts as those rise and they therefore demand higher interest can feed into higher interest rates for consumers which make things like housing and cars less affordable, and restrict business investment and therefore productivity and current version of the bill is estimated to add about $3.3tn (£2.4tn) to the US deficit over the next 10 years, despite an initial economic boost, according to estimates from the Congressional Budget Office (CBO) - the government agency which provides independent analysis of spending. The CBO said the spending cuts proposed in the bill would be outweighed by the tax analysis from the Tax Foundation think tank concluded that the bill "would increase economic output but worsen deficits". It projects that the bill would increase the level of US GDP by around 1% after 10 years relative to where it would otherwise be, but that it would also add $3.6tn (£2.6tn) to the deficit over the same banks have said they are in favour of the bill - with the American Bankers Association writing an open letter to lawmakers saying it provides "much needed tax relief" which would boost the experts BBC Verify spoke to said although the bill may provide some economic growth, its cost would be significantly more than this boost."Most analysis finds that the bill will produce a small, temporary, short-lived boost – but that over time the bill will actually be a drag on the economy," says Bobby Kogan, a federal budget expert at the Center for American Progress, a nonpartisan policy Mark Zandi, an economist at the financial consultancy Moody's Analytics, says: "It will result in continued massive budget deficits, and a high and rising debt load." What impact would the bill have on Medicaid? "We're cutting $1.7 trillion in this bill and you're not gonna feel any of it. Your Medicaid is left alone. It's left the same," Trump claimed at an event about the bill last various studies show there will be significant reductions to Medicaid under the is the government-run scheme which provides healthcare insurance for about 71 million low-income adults, children, pregnant women, elderly adults and people with by the Kaiser Family Foundation (KFF) - an independent health policy research group - found that the bill would cut $1tn (£729bn) from future Medicaid spending over the next 10 White House has said the bill "removes illegal aliens, enforces work requirements, and protects Medicaid for the truly vulnerable".The CBO estimates that nearly 12 million Americans would lose health insurance by 2034 under the terms of the Senate bill - with just 1.4 million of these being people "without verified citizenship, nationality, or satisfactory immigration status"."The largest Medicaid cut in American history came in President Reagan's first year in office… These Medicaid cuts would be at least four times the size," said Mr Kogan. What about the impact on taxes? Trump has repeatedly said that not passing the bill would lead to massive tax rises on Americans - in part because the tax cuts passed during his first-term in office are due to expire at the end of this year."If it's not approved, your taxes will go up by 68%," the president said last asked the White House for the calculations behind Trump's claim - they responded saying the bill "prevents the largest tax hike in history" but didn't answer our question on where the specific figure comes from. The Tax Policy Center estimates that not extending tax cuts introduced under Trump in 2017 would lead to a hike of 7.5% on body also says roughly 60% of tax payers would have to contribute more if they expire."The 68% figure is incorrect… It could be roughly drawn from a count of taxpayers that would see an increase in taxes, as opposed to an estimate of the actual tax increase," says Elena Patel, a tax policy expert and assistant professor at the University of Utah's business the tax changes in the bill would benefit wealthier Americans more than those on lower incomes, according to the Tax Policy Center analysis. About 60% of the benefits would go to those making above $217,000 (£158,000), it found."There is no question that this bill will result in a massive redistribution from the poorest to the richest," says Ms Patel. What do you want BBC Verify to investigate?
Bloomberg
01-07-2025
- Business
- Bloomberg
'Taking From The Poor Giving to the Rich:' Sarin on Tax Bill
Natasha Sarin, President & Co-Founder of the Budget Lab at Yale University, talks about how the current Tax Bill will benefit the wealthy, add to the US deficit, and states that over the long run the tax cuts from this legislation will slow the economy. Sarin speaks with Kailey Leinz on the late edition of Bloomberg's 'Balance of Power.' (Source: Bloomberg)
