Few Thoughts

Bullet Points:

** Will the Democrats Eliminate the Hogg? (Newsweek) Is there some way that the Republicans can vote to keep him in leadership at the DNC? Hogg said, “The DNC has pledged to remove me, and this vote has provided an avenue to fast-track that effort.”

** Tariffs act as one-time price shocks: they raise the price of specific imported goods, but do not increase the overall money supply or demand in the economy. This means that while relative prices shift (e.g., imported goods become more expensive), the general price level does not rise sustainably unless accompanied by monetary expansion. Tariffs can reduce overall demand by taxing consumption, dampening inflationary pressure elsewhere. So, while tariffs can temporarily raise prices in targeted sectors, they are not inflationary in the classical monetary sense unless reinforced by broader demand growth or loose monetary policy.

** UK Assisted Suicide – The DEI agenda has taken a sinister turn. The UK’s assisted-suicide bill will prioritise making death more ‘accessible’ for disabled, homeless, and transgender people. You can’t get much more progressive than that. The first report callously sets out the financial savings that might be made when terminally ill patients can opt to kill themselves. It estimates that the NHS could save up to £ 10 million in ‘unutilised healthcare’ within the first year of the law coming into effect. After a decade, it could save up to £ 59 million. The second report is the Equality Impact Assessment (EQIA), which makes for bizarre and chilling reading. The civil servants who wrote this were not, as you might have hoped, concerned with protecting the disabled or mentally ill from wrongful deaths, nor with preventing a disproportionate number of suicides among those from a lower socioeconomic status or ethnic-minority background. Instead, they were worried about the barriers that might prevent people from these disadvantaged groups from accessing an assisted-dying service.

** “Society corrupts the best of us. It is a little unfair to criticize someone for not sharing the enlightenment of a later epoch. Still, it is also profoundly saddening that such prejudices were so pervasive. The question raises nagging uncertainties about which of the conventional truths of our age will be considered unforgivable bigotry by the next.” – Sagan

A Big Beautiful Bill?

Senator Ron Johnson: The “One Big Beautiful Bill” that Congress is working on is certainly big, but beauty is in the eye of the beholder. Too often, the reality of these budget debates gets obscured in details, politically charged issues, and demagoguery. Let me clarify the current discussion by focusing on essential facts and numbers.

In fiscal 2019, federal outlays totaled $4.45 trillion, or 20.6% of gross domestic product. This year, according to the Congressional Budget Office’s January 2025 projection, total expenditure will be $7.03 trillion, or 23.3% of GDP. That’s a 58% increase over six years.

The CBO projects federal outlays will total $89.3 trillion across fiscal 2026-35. Much of the blame goes to pandemic spending, but lockdowns are long over. There’s nothing now to justify this abnormal level of government spending. Pathetically, Congress is having difficulty agreeing on a reduction of even $1.5 trillion from that 10-year amount. That’s a 1.68% cut—a little more than a rounding error. I guess that much of that minuscule decrease will be backloaded to the end of the 10 years Congress is now budgeting, increasing the probability that those savings will never be realized.

Other than during World War II, the increase in spending we’ve experienced over the past six years is unprecedented. After the war, Congress and President Truman understood the importance of returning spending to normal levels. In 1941, total outlays were $13.7 billion, or 11.7% of GDP. They peaked in 1945 at $92.7 billion, or 41% of GDP. That was a 577% increase, 10 times as large as what we experienced with the pandemic. Yet by 1948, federal outlays were $29.8 billion and back to a little over 11% of GDP. Under every scenario, federal debt continues to skyrocket from almost $37 trillion. The CBO’s current projection adds around $22 trillion over the next 10 years, resulting in total debt of approximately $59 trillion—134% of GDP—in 2035. That projection assumes an automatic tax increase will occur in 2026 when provisions of the 2017 tax cuts expire, increasing revenue from 17.1% of GDP in fiscal 2025 to an average of 18.1% over the next 10 years.

With the CBO projecting a 10-year GDP of $373 trillion, that 1% increase represents $3.7 trillion of additional revenue and lower debt. No one can accurately predict the dynamic economic effects of changes in tax law, tariffs, and the current trade war. But by repealing the automatic tax increase, adding $1.5 trillion in additional tax cuts, pumping around $340 billion into additional border and defense spending, and reducing other spending by at most $1.5 trillion, the One Big Beautiful Bill will almost certainly add to our deficits and debt. I doubt Mr. Trump’s voters expect us to continue spending at President Biden’s levels, which led to the inflation they elected Republicans last year to stop. I doubt, too, that Trump voters will be elated to see the GOP embrace Democratic policies and priorities—including ObamaCare, which seems to have found new life under the name “Medicaid expansion.”And I can’t imagine that they want Republicans to increase annual deficits. I can’t support this bill as it’s currently being discussed, and I doubt it will pass the Senate. It’s also why I’m asking the president and congressional leaders to reconsider a multistep strategy on budget reconciliation. By immediately passing a bill based on the Senate’s original budget resolution, we can fund border security and defense priorities and bank $850 billion in real spending reductions.

The next step would be to pass a bill that extends current tax law to prevent the automatic 2026 tax increase, and avoids default by including a smaller increase in the debt ceiling that maintains the pressure and leverage to achieve future spending reductions. With those goals achieved, sufficient incentive would remain to address President Trump’s tax proposals focusing on working men and women and the already-expired business tax provisions of his 2017 tax law. It would also give us the time to simplify and rationalize the tax code, and go line by line through the entire federal budget to uncover, expose, and eliminate the hundreds of billions of dollars of waste, fraud, and abuse that the DOGE effort has shown exists. If we don’t, America is headed off a cliff.”

** ** ** ** 

On Monday, the House GOP released a draft of the bill, which confirms several core policy pillars previously signaled by leadership.

Among the most consequential is a 5% remittance tax on international money transfers, designed to fund border security. The tax includes a new refundable credit for verified U.S. senders and strict compliance rules. In essence, President. Trump will make the Mexicans living in the US pay for border security. It tickles me. It does.

In a significant rollback of Biden-era environmental policy, the bill would terminate or phase out numerous clean energy tax credits, including residential solar, new energy-efficient homes, and hydrogen production, with sharp limits on components sourced from “prohibited foreign entities”—primarily targeting Chinese supply chains.

The legislation also introduces a new federal income tax deduction for qualified tips and overtime compensation through 2028, aimed at working-class earners. These benefits explicitly exclude high earners, service-sector owners, and nontraditional tipping industries, and require both the employee and spouse to have Social Security numbers to qualify, adding a compliance hurdle that could reignite partisan fights over ID requirements. I don’t see why having identification is such a problematic thing for democrats. I know that they claim that minorities and women are too ‘stupid’ to have identification, but every minority and female that I’ve ever met in the US has identification.

Beyond those provisions, the bill extends provisions from the 2017 Trump tax law, including the higher estate and gift tax exemptions and the limitation on the deduction of state and local taxes (SALT), with a modified $30,000 cap for individuals that phases down for high earners. This could fuel renewed conflict with blue-state Republicans (California and New York) still pushing for full repeal.

The bill further includes a new cap on the tax benefit of itemized deductions, revives limitations on casualty loss and moving expense deductions, and eliminates miscellaneous itemized deductions—provisions likely to draw sharp resistance from Democrats, particularly those representing high-cost-of-living states.”