Let’s discuss OBBA as written vs nearly guaranteed to happen.
Republicans charlatans say the One Big Beautiful Act OBBA is really just a continuation of existing policy.
Yeah right. The current TCJA set to expire next year was budgeted for expiring next year. Now it won’t and no one in their right mind thought it would.
Republicans purposely underestimated the budget impact in 2017 and now we are in for a repeat play of the same nonsense.
GOP Declares Tax-Cut Extensions ‘Free’ to Obscure Megabill’s Cost
The Wall Street Journal reports GOP Declares Tax-Cut Extensions ‘Free’ to Obscure Megabill’s Cost
Republicans are waving a $3.8 trillion magic wand over their tax-and-spending megabill, declaring that their extensions of expiring tax cuts have no effect on the federal budget.
The unprecedented maneuver is a crucial part of the GOP plan to squeeze permanent tax cuts through Congress on a simple-majority vote in the coming days. Republicans are expected to endorse the accounting move in a procedural vote early Monday.
“Republicans are doing something the Senate has never, never done before—deploying fake math and accounting gimmicks to hide the true cost of their bill,” Senate Minority Leader Chuck Schumer (D., N.Y.) said on the Senate floor on Sunday.
To dodge the Senate filibuster rule, which typically requires 60 votes to advance legislation, Republicans are using the fast-track reconciliation process, which forbids bills from increasing deficits beyond the 10-year budget window and needs only a simple majority.
Rather than use standard congressional accounting, Republicans are saying that extensions of tax cuts set to lapse Dec. 31 don’t count toward budget deficits the same way that new tax cuts do, because they are just continuing current policies
The Senate OBBBA in Charts
The Committee for a Responsible Federal Budget discusses The Senate OBBBA in Charts.
They put an extra B in the OBBBA name which I drop because bill and act are the same thing. Regardless it’s a boondoggle.
1. Senate OBBBA Would Increase Annual Deficits by Up to $600 Billion
After 2025 (which is driven by one-time accounting changes), the Senate reconciliation bill would increase deficits every year over the next decade – including by $620 billion in 2027.
2. Senate Bill Adds $3.9 Trillion to Debt as Written, $5.3 Trillion if Permanent
The Senate bill as written would increase debt by $3.9 trillion through 2034, with almost $3.5 trillion of borrowing from the Finance title (taxes and Medicaid), nearly $300 billion of borrowing from other deficit-increasing titles, about $500 billion of savings from deficit-reducing titles, and nearly $700 billion from interest. If various temporary tax cuts and spending increases were made permanent, the bill would add more than $5.3 trillion to the debt.
3. Debt Could Rise to 130 Percent of GDP
Under the Senate reconciliation bill, debt would rise from 100 percent of Gross Domestic Product (GDP) today to 126 percent by 2034 – compared to 117 percent under current law and 124 percent under the House bill. If the Senate bill is made permanent, debt would reach 130 percent of GDP.
4. The Senate Bill Violates the House Budget Instructions
The House’s budget instructions allow up to $4.5 trillion of net tax cuts contingent on at least $2 trillion of gross spending cuts with a dollar-for-dollar adjustment if the spending cuts fall short. The House-passed OBBBA met these instructions, but the Senate bill would fall roughly $500 billion short – since it only has $1.5 trillion of spending cuts. Recent Byrd-rule guidance could leave the bill $650 billion short or more.
5. The Senate Bill Increases Primary Deficits by $3.3 Trillion
The Senate bill includes $4.5 trillion of net tax cuts, $1.5 trillion of gross spending cuts, and $0.3 trillion of gross spending increases through 2034. It would add $3.3 trillion to primary deficits; including interest costs, it would add $3.9 trillion to deficits.
6. Deficits Would Exceed 7 Percent of GDP under the Senate Bill
Annual deficits would average about 7 percent of GDP per year under the Senate bill, including 7.1 percent in 2027. That’s more than double Secretary Bessent’s proposed fiscal target of 3 percent of GDP, almost 2 percent of GDP above current law, and nearly 1 percent of GDP higher than a simple extension of the Tax Cut and Jobs Act’s (TJCA) individual provisions. If made permanent, deficits would rise to roughly 8 percent of GDP by the end of the budget window.
7. Senate Front-Loads Costs, Back-Loads Savings
Largely due to temporary provisions and arbitrary expirations in the Senate bill, costs are heavily front-loaded. Savings are also somewhat back-loaded due to delayed starts, phase-ins, and natural growth over time. Nearly one-quarter of the deficit increase occurs in 2027, alone.
8. Senate OBBBA Claimed Cost Hides Trillions
The Senate is using a “current policy” baseline gimmick to extend the 2017 Tax Cuts and Jobs Act (TCJA) under reconciliation rules. Specifically, the Senate’s baseline assumes that expiring TCJA provisions are simply extended with no fiscal impact – when in reality those extensions would add trillions to deficits. While CBO scores $508 billion of primary deficit decreases relative to a “current policy” baseline, it scores $3.3 trillion of primary deficit increases relative to current law. And if provisions set to arbitrarily expire under OBBBA are made permanent then the deficit impact would grow further to $4.5 trillion.
9. Either OBBBA Would Add More to Debt Than Recent Laws
Over the past several years, lawmakers have enacted trillions of dollars of deficit increases through different bills (see more in our Debt Thermometer). Either version of the OBBBA would add more to the debt than any of these recent laws. A permanent extension of either OBBBA would add more to the debt than the 2022 CHIPS and Science Act, the Bipartisan Infrastructure Law of 2021, the American Rescue Plan Act of 2021, and the CARES Act of 2020 combined.
10. Interest Costs Approach $2 Trillion Under Senate OBBBA
Because the Senate bill would add $3.3 trillion to primary deficits, it would add an additional $690 billion in interest costs over the next decade. If its expiring provisions were made permanent, that total would grow to more than $800 billion of additional interest costs – resulting in interest payments on the debt approaching $2 trillion annually. Interest on the debt is already projected to near $1 trillion under CBO’s baseline this year and near $1.7 trillion by 2034; under a permanent Senate OBBBA, it would eclipse $1.9 trillion in 2034.
Thanks to the CRFB
The above charts and comments are from the CRFB. Their article has 10 charts, I posted the key ones.
Here’s the key paragraph.
A permanent extension of either OBBBA would add more to the debt than the 2022 CHIPS and Science Act, the Bipartisan Infrastructure Law of 2021, the American Rescue Plan Act of 2021, and the CARES Act of 2020 combined.
And Republicans have every intention of extending the act just like they did the original TCJA.
But hey, don’t worry, this is just an extension of current policy.
Gold Soars to Another New High, What’s the Message?
On May 8, I asked Gold Soars to Another New High, What’s the Message?
Three Messages
- Gold does not believe the Fed is under control
- Gold does not believe Congress is under control
- Gold does not believe Trump is under control
And neither do I.
This bill is the perfect example for why bills should be single topic; there is too much opportunity for shenanigans that wildly push cost up to satisfy special interests.
Mish, You still haven’t learned the difference between a promise and asset. The national debt today stands at $37 Trillion and it is 123% of GDP, today.
Your point above is missleading to the point of treason. Your quote below:
3. Debt Could Rise to 130 Percent of GDP
Under the Senate reconciliation bill, debt would rise from 100 percent of Gross Domestic Product (GDP) today to 126 percent by 2034 – compared to 117 percent under current law and 124 percent under the House bill. If the Senate bill is made permanent, debt would reach 130 percent of GDP.
Mish followers every where, please help me wake Mish up on this issue and comment or vote below. My numbers can be varified almost anywhere but the fastest check of both figures is at: https://www.usdebtclock.org/
“misleading to the point of treason” LOL
First, can you read? Mish is quoting the points made by the Committee for a Responsible Federal Budget – to which he linked. So your issue is with someone else!
Second, that statistic comes from the fact that the federal debt is regularly stated within such discussions (https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/) as the publicly-held debt which is $28.95T. The rest is held by the government itself. So $28.95T is what we taxpayers would owe if we wanted to pay off the debt today out of our yearly ‘earnings’ (GDP) which is about a 100% ratio.
Don’t agree with the statistics? Take it up with the US Treasury which provides these numbers itself.
But at least try to research the statistics and methodology critically a little yourself before posting silly rants. You might be more believable next time
I agree with your discussion, but should SSA decide to call in its debt, where will the funds come from? There is no account holding them nor collateral backing the debt, therefore in a time of need, the government would need to tax its citizens, borrow the funds (again), or have the fed print the money. If what I just stated is true, then debt held by the public is the $37 trillion figure even if the amount above $28.95 trillion is via indirect means.
Maybe another way to look at it is who is the government owing the debt to itself? The US citizen.
Read Part 3. again. Here is a copy:
3. Debt Could Rise to 130 Percent of GDP
Under the Senate reconciliation bill, debt would rise from 100 percent of Gross Domestic Product (GDP) today to 126 percent by 2034 – compared to 117 percent under current law and 124 percent under the House bill.
The point is that Mish seems to warn us that a GDP to National Debt ratio of 126% by 2034 would be dangerous. My point is that the ratio is already 123% and just adding this issue to the list of nine not is not a clear warning that this is an easy to see disaster.
Democratic voters have been “Gaslighted” into beleaving things like Clinton’s “Budget Surplus” were real” and Intragovernmental Debt doesn’t count.
https://www.usdebtclock.org/ has the debt and ratio right and Mish needs go clearly on record stating that is.
Debt and Deficits are NOT relative to GDP.
GDP is turn over. If you have a shop, you don’t service debt from your turn over, but from earnings. For the government that is tax revenue.
Some businesses, like grocery stores, have gigantic turn over compared to earnings, because they can use their capital to buy another pound of cheese or butter over and over again. But it is only their margin minus all other costs annually that goes to earnings. They cannot use the hundreds of pounds of butter to service their debts because they need to buy, stock, and sell the butter, so that provides no measure of how much debt they could service.
Expressing debt and deficits as a ratio of tax revenue gives you an entirely different picture, and also positions the USA completely differently when comparing to other nations.
“GDP is turn over” LOL
GDP (Gross Domestic Product) is the value of what we produce annually within the US and a commonly quoted economic indicator. Producers (including workers) receive the dollar value of that product, thus it is “earnings” and is why debt and deficits are quoted as a ratio of GDP.
You might want to know that if you’re commenting on an economics blog
Rather than looking at the granular, looking at the mountain provides some insight that needs to be applied to our fiscal mess. In 1971 the last dollar link to gold was removed by executive order signed by President Nixon. In 1971 GDP was $1.,088 billion, or measured by gold at $35 per ounce, 31 billion ounces. Government debt has exploded since then increasing nearly every year but so has GDP rising to $29,962 billion but measured in gold at $3,400 per ounce, 8.72 billion ounces. By growing government, which spends resources on non-income producing ventures, we have drastically shrunk our economy as measured in a constant value gold rather than using the wasting asset we call the dollar. GDP data from data taken from:
https://fred.stlouisfed.org/series/GDP/
I support leaving the Trump tax cut in place because raising taxes does not raise revenue to government by nearly as much as purported and eliminates the potential for those resource to be invested in profitable ventures by the private sector. Nearly ll the arm waving about benefits of raising taxes can be debunked the graph in the attached link:
Federal Receipts as Percent of Gross Domestic Product (FYFRGDA188S) | FRED | St. Louis Fed
The major point is the private sector is where real economic growth occurs, and growing government is a drag on the economy. For the long term, government has to repair our fiscal mess by spending less than revenue. Trying to fix it with increased taxes only allows government and its debt to grow which is a drain on the economy. This is why lowering interest rates may be a short-term benefit, but it would be a long-term economic drag of much greater consequence. President Trump is wrong to badger the federal reserve for lower rates. He should be excoriating them for destroying the dollar. Among the many obvious dollar problems, using it as measuring tool has become nearly worthless.
Gold is up over $50 today as Fish’s point about the belief is our central banks is evident. I’m a big in allocating 10% of my total assets to gold mining stocks, crypto and physically backed ETF’s like Sprott as I like having my monetary assets in a liquid form.
A little physical gold and some silver is reasonable as well.
But high quality, dividend paying mining stocks float my boat.
Good morning MIsh,
I left a reply for PapaDave on the EV thread and it has links ~ so it is appropriately awaiting moderation. Could you take a minute to check it out?
Thanks!
Frosty
Trump’s solution to the rising interest rates on the debt is not lower the debt but to pressure the FED to further debase the dollar by artificially lowering the interest rates. And since the vast majority of people have no understanding of how this work, including most likely Trump himself, his fan base cheers. When it all collapses under its own pressure the masses will ask ‘what happened’?
As Hemingway said …….gradually then suddenly
The Big and Ugly didn’t pass. SPX will gobble 1000 points going down. Tax collection will rise. A call of duty: the Fed will do whatever to prevent recession before JP retires. Booster #1: rates will stay down, below the inflation rate. Booster #2: later this year, or next the Big and Beautiful will pass. Booster #3: trillions will pour in. Booster #4: higher wages, higher tax collection.. With more cash in its coffer than ever before debt will fall. This dynamic engine: lower rates, a smaller gov, tariffs and higher tax collection – will chew up the deficit and debt. The risk: it’s a bomb that can bomb itself !
Can we now say there is no difference in the two parties when it comes to meeting financial milestones of a sustainable government?
No difference!!!
We’ve been there for a while. It’s just a matter of whether people are willing to accept it or be ostriches.
I don’t agree that there is “no difference”. In fact, each party is worse than the other party. The Republicans are worse than the Democrats, while the Democrats are worse than the Republicans. Also, the Democrats are worse than the Republicans, while the Republicans are worse than the Democrats.
As long as foreign entities (from people to governments) are dumb enough to trade real goods (that people put blood sweat and tears in) for freshly minted dollars (press of a button), then as a whole the USA is winning, right?
When the dollar finally starts loosing value quicker and quicker, losers are those who foolishly bought dollars and treasuries selling valuable stuff. USA will have gotten a lot of stuff for free, essentially.
Whoa there Mish, that’s a whole lotta mulla. How are you guys gonna pay for it? Don’t forget the retirees needing more and more money stuffed into social security and medicare. And then there’s those wars over yonder. What could go wrong?
Let me know how it works out!
They wont pay for it, they are now at a point where they just might as well keep going till they default, no different to many countries through history. The US is bankrupt!
I have to look with a jaundiced eye at any essay that declares the US debt =100% of GDP. US GDP is $29 trillion; Federal debt is $37 trillion. Almost 128% of GDP presently. (Excluding what is owed to SS is dishonest.)
It’s even worse than that, GDP is not $29 trillion, that includes so much fraud & price gauging seen nowhere else in the world. GDP first of all is a stupid non existent measure filled with BS. Even if you use a honest meaning calculation of GDP the US is not $29 trillion, not even $20 trillion & that’s with $2 trillion deficits & money creation in the form of debt at unsafe & historically abnormal levels which will soon lead to massive defaults.
In essence, they are extending the 2017 tax cuts (which the Dems would largely have done had they been in power) and keeping the grotesque level of spending inherited from the Biden apparatus, richly funding the Swamp and increasing spending on the military-industrial complex.
You are making it too complicated: The Uniparty is spending hideously more than they should because they are corrupt. That’s the problem.
A nice attempt to shift blame, but the math is clear: this is a bill that grows the deficit at an unprecented pace. And it is 100% done by republicans. Now, would democrats also grow the deficit? Not unlikely. But did they run on an agenda of cutting the deficit? No. And would they have all the borrowed money go to the already rich at expense of the poor? Again, no.
This is a monster of a spending bill and it is worse than what Biden ever did.
Tech billionaire Elon Musk issued a stark warning on X today, saying any lawmaker who votes in favor of Trump’s bill “will lose their primary next year if it is the last thing I do on this Earth.”
I thought we heard the last from Musk after he ran off with 10 gigabytes of federal data sucked out the back door and failing to deliver those $5000 DOGE checks.
Musk talks out of his back door, he can’t formulate a coherent sentence, he’s dumb himself, he’s one of em himself, super grifter.
Musk will be charged with some petty crime and be striped of his citizenship.
https://www.theguardian.com/us-news/2025/jun/30/trump-birthright-citizenship-naturalized-citizens
And with SCOTUS egging on Trump there’s nothing anyone can do about it.
First they came for the…. well you know the story…
Got exit strategy?
That is one powerful statement!
I’d give you ten thumbs up if I could. Musk is walking on thin ice with this vindictive and pathological narcissist!
Heck! Should I think twice about speaking my truth and observations?
With Trump having assembled a massive deportation system and prisons, they will have ordinary Americans to detain at Trumps whim.
Can gas chambers and furnaces be far behind?
“I Will Be Dictator On Day One” Donald J. Trump
Maybe enough Republicans will kill it.
This has to be a joke, get with the programme will ya!
Most members of the House can be explained by the Peter Principle – they’ve risen to their own level of incompetence. They earn $174k, and are reimbursed for travel, meals and lodging in DC. Plus their own parking spot and people kissing their asses. I can understand why they cling to their job. It’s the best gig they could get.
Senators are usually multi-millionaires. You’d think they might care less about retaining their position and might do what they know is right once in a while. On the other hand, senators are more famous, so that goes to their heads.
We need to move the Capitol to Nome, Alaska so that they don’t like the job so much.
They can sell their soul to cling to a job, but they can’t cling on to life & they don’t have much left in the tank. They can grift till their demise but can’t buy their salvation. Term limits & age limits can do a lot to stop their nefarious activities.
The average of a US Senator is 64 according to the goggle.
We really do need to term limit and age limit all elected officials.
86/47
Many have indicated that no bill, at this point, is the better solution to this “shell game.”
No shit Sherlock!
The gangsters are no longer in the street, they’re in Gov, in congress, in the Senate & in the banks.
As it always was and will be.
86/47
Got gold?
If ya think when this ship goes down they wont take ya gold ya delusional, they did it before & will do it again, you’ll get $35 an ounce for it.
Not much, but I do have high quality mining stocks that pay dividends and are leveraged to the price of gold.
If we start to use physical gold, it means the social fabric has been torn and that is a world of pain and suffering.
For the love of decency, please kill the bill. Now they’re changing the bill minute by minute to make Murkowski happy. And there is no way to allow the House members 72 hours to read the bill before voting before July 4, as there is no final text.
Watch the craven weasel Mike Johnson break that promise. This is an embarrassment.
Not an embarrassment, it’s pantomime for the public, this bill was written a long time ago & the politicians are just actors & propagandists.
OMG! Not another “We have to pass it so we can see what’s in it” charade.
We’ve repeatedly had a chance to oppose or stop these bills when we’re voting at the ballot box. Americans seem to have sadly forgotten that if we dont maintain a good thing (a decent nation), maintain meaning elect sensible responsible policy makers, we will lose it. The one party for a balanced budget, Libertarian, gets 1% of the vote while the enormous deficits and debts parties get 99% of the vote.