What a fiscal joke the Republican party has become.
Please note Trump Says No Cuts to Medicaid.
Senate Republicans are plowing ahead with their plans for trillions of dollars in tax-cut extensions and new breaks, nearing a crucial budget vote to advance President Trump’s legislative agenda just as his trade plans have triggered a sharp downturn on Wall Street.
There is, however, no guarantee the House and Senate can agree on a budget. Hard-right House conservatives are balking at endorsing the Senate’s minimal spending-cut floors and higher debt limit.
The Senate budget would lock in just $4 billion in spending cuts and aim higher in the actual bill. Senate Republicans who back significant spending reductions, including Rick Scott of Florida and Ron Johnson of Wisconsin, said they were comfortable advancing the budget now after getting White House assurances that Trump supports spending cuts.
The House, meanwhile, backs smaller tax cuts of $4 trillion to $4.5 trillion and calls for at least $1.5 trillion in spending reductions.
One of the biggest flashpoints ahead is Medicaid, the health-insurance program covering more than 70 million low-income and middle-income people. The House budget assigns most of its spending cuts—$880 billion—to the committee that handles Medicaid. Lawmakers have been talking about creating work requirements and reducing the federal government’s share of costs, pushing more responsibility to states.
But some GOP senators are wary of Medicaid cuts. Sen. Josh Hawley (R., Mo.), said he spoke with Trump on Thursday and that the president committed not to sign any bill that cuts Medicaid benefits.
Sen. Susan Collins (R., Maine) said the $880 billion target was a problem.
“I don’t see how you can get to that amount without cutting Medicaid benefits,” she said. “The last thing I want to do is to cut Medicaid for vulnerable people who are disabled or are seniors or cannot work.”
The Spending Cut Proposals
- House Version: The House wants $1.5 trillion in cuts with $880 billion from Medicaid
- Senate Version: The Senate budget would lock in just $4 billion in spending cuts and aim higher in the actual bill. But an $880 billion Medicaid target is a problem.
- Trump Version: $0 cuts to Medicaid
Do You Believe in Magic?
Somehow, Senate cuts of a mere $4 billion will mesh with the House version of $1.5 trillion dependent on an $880 billion cut to Medicaid that Trump says won’t happen at all.
Cutting $880 billion from Medicaid and cutting nothing from Medicaid may sound contradictory.
However, contradictions and Trump cannot and do not exist as I have explained before.
The resolution is the same as before. Believe in magic.
Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
On March 12, I commented Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
Lutnick: “We’re going to make the External Revenue Service replace the Internal Revenue Service.”
By “External Revenue Service” Commerce Secretary Howard Lutnick means tariffs.
Reciprocal Tariffs
We have an annual trade deficit of $918 billion.
Team Trump proposes $918 billion in “reciprocal tariffs” to make the trade deficit go away.
But to balance the budget and eliminate personal income taxes, Trump would need to collect $7 trillion in tariffs on a net trade deficit of $918 billion.
I would love to hear a detailed explanation of exactly how that works.
Are you ready for that miracle? Me too. But wait, there are still more benefits to this amazing deal.
Trumps Claims
- Tariffs will increase revenue enough to balance the budget
- Tariffs will bring manufacturing back to the US
- Tariffs will reduce inflation
- Tariffs will increase exports
Conflicting Economic Madness
Points 1 and 2 conflict. Tariffs cannot simultaneously bring back manufacturing and raise enough revenue to balance the budget.
Points 2 and 3 conflict. Since the US is the world’s highest cost producer of goods thanks to unions, tariffs will not reduce inflation.
Points 2 and 4 conflict. Since the US is one of the world’s highest cost producer of goods, and other countries will retaliate, tariffs will not increase exports.
You may be struggling with this math, but not me.
We resolve the dilemma by stating contradictions and Trump are illogical in nature and cannot exist.
Thus, we can have our cake, eat it too, and gather 20 baskets of leftovers to feed the poor.
It’s magic.
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Trump will get his rate cuts by causing a global recession.
April 2 was Trump’s proclaimed “Liberation Day”.
Global recessions are so liberating.
The administration contradicts regularly. If tariffs are to be negotiated away. How can they last long enough to replace the IRS or help develop domestic industry?
Even if one believes tariffs will benefit the USA economy in the long run, the short run looks terrible with large uncertainty about economic growth, stock prices, and cost of living. Tariffs are not a hill to die on. The 2022 midterms will be here soon. A recession will doom Trump’s entire agenda.
I do not understand the purpose of the tariffs. I have seen various explanations from improved trade agreements, USA investment, and replacement of the income tax. The only way that Trump can avoid a dramatic failure is to focus on improved trade agreements and investments. Emphasize elimination of tariffs in exchange for reciprocal decreases and USA investment.
No problem Mish. All the new republicans and old dinos and rinos have to do is make the income tax cap, currently 168000 a year. for FICA monthly payroll taxes on the middle class that pays for social security, medicare, and medicare 0, nada. That way millionaires and migrating billionaires, like Musk and felon George Sorros, now with new gold cards for corporate persons and NGOs getting 2 billion dollar federal grants to play politics, get to pay their fair monthly payroll/corporate income share at 6.2% of gross income from all sources into social security instead of essentially zip. Funding problem solved.
The $880 billion cuts to Medicaid and the cuts proposed are over 10 years. In FY24 the federal outlay for Medicaid was just over $900 billion. So that is less than a 10% cut on annual basis. It is simple to do. Eliminate Medicaid for able-bodied adults. except for pregnant women. I have been studying Medicaid in Idaho for years, the program is a mess. Having a shared federal-state program drives the worst outcomes because states don’t care as much about the cost since the feds pick up the majority of costs in most states.
All while more and more people age into the system
God knows the conservatives hate the OLDS. And the SICK. And the DISABLED. And the GAYS. And the ATHEISTS. And the people of COLOR. And WOMEN. Jesus is most likely deeply disappointed in his Christians.
You got that wrong,, we’re talking about Medicaid,, Medicare is for old folk…
Medicaid needs SERIOUS restructuring. 1. You must work 30 hours per week. 2 You do NOT get free health care. There must be some type of cost sharing. I pay almost $1,000 month in premium for medical insurance with a $3,200 deductible. If you want health insurance get a job that offers that benefit. Many people don’t work just so they can free load off the tax payers for free benefits (housing, health care, food stamps, etc.)
How do you work 30 hours a week if you’re in the hospital. Do you just lay outside and die?
She’s an ass
Oh Laura… bless your heart
Don’t breed if you can’t feed.
Welcome to the high-stakes world of congressional negotiations, where behind-the-scenes deals and hidden agendas clash with public appearances and political optics. It’s nothing new, but if you keep your eyes open, you might just learn something.
The West sanctioned the wazoo of Russia. The result was economic decline in the West and Russia becoming the fourth largest economy by PPP. Now the US sanctioned the rest of the world, so the likelihood result will be analogous: economic decline in the US and economic growth in the rest of the world.
Russia is going on 4 years of being unable to take Ukraine. That speaks volumes.
Lets face it: the cuts to the workforce are just ‘smoke and mirrors’ to hide the coming tax cut (4 trillion dollars), although they’ll argue that this is just an extension of the 2017 tax cut. (How much did the Trump family make out from the 2017 cut? I once read 5 billion (but I haven’t verified this so feel free to provide another figure). How much did your family make out from the tax cuts, assuming you are not a mega millionare?
The basic problem is that, after years of Fox news and Repub efforts, nothing is valued unless one can make money off of it. Any efforts by government agencies to regulate private interests or that may interfere with the actions of corporate and wealthy interests, is called socialism.
The question is: when are the dim-witted magas going to realize they’ve been had?
How stupid do these people think we are? No need to answer that.
You must be thinking of yourself.
You almost got it.
Mish can continue to fight the rear guard action all he wants, it should be obvious what will be out coming in the near future from Trump administration.
It will start with announcements about the level of Fraud involved in major Government sponsored programs. This will be followed up with arrests of Fraudsters.
Things such as Biden fast tracking illegals into Social Security and medicaid running up huge costs to fund people who never paid in a dime are going to get highlighted.
There is no need for cutting, only verifying that people receiving benefits are truly entitled to them.
Same as the broken record defense of Globalization. the results are in after 4 decades and more of globalization. That 35 trillion dollars of Federal debt and a consumer with maxed out credit did not come about due to happenstance.
25% of the total us debt was added during his last term… do we really expect things to be any different this time?
My friend’s abscessed abdominal drain scar recurred 4 times because of doctors not prescribing the basics, namely packing the wound until it healed from the inside out. One of the lance and drain trips to Cedars Sinai ER $19k. Final lance, drain and pack with instructions that solved the issue by one of the best surgeons in LA in his office(took him less than 15 min to lance, drain, pack, and bandage) $600. Medicare and supplemental insurance paid for all. This is an example how over medication occurs for both profit and and avoiding legal liability but the getting the basics done right can be difficult.
At this point we should have some sort of standardized procedures and associated cost to try to get a handle on the unnecessary or overdone medical work. I had another friend spend millions of taxpayer money after 80 from complications of a shoulder replacement surgery she never should have been authorized for. She only lived 9 months after the surgery with terrible quality of life.
People freaked out about death panels last time. I don’t think they’ll go for it this time.
Malpractice
This is because our medical system is utterly broken and an example of the grift program that has now permeated the US
The entire US healthcare/insurance/pharma industry is such a giant cluster of fraud, collusion and misdirection that arguing about how to pay for it is almost beside the point. You can get an invoice for $116k that – once processed by insurance – can be paid in full for $14k. Been there, done that. The nominal (uninsured) price for pharmaceuticals in the US can be 10 or more times the price in other countries. Until market disorders like that are terminated, no real solution can be found. If no real solution is attempted, we might as well go Single Payer. The cartels will have brought it on themselves. We’ll have mediocre care for all, but 95% of health is lifestyle anyway.
If there are no popular welfare programs, a few are getting the money. In the case of the US, the proles were indoctrinated that popular welfare is socialism, but cooperate welfare is capitalism. If there are taxes, it’s already socialism. Then, the only question is who’s benefiting from it.
This is funny if nothing. Does Trump even know what DOGE is doing ? He sounds more like his senile predecessor these days.
They both have soup for brains. Trump’s is just full of uppers, so he talks faster and more.
“Dr. Yves” is all over that today.
“House Version: The House wants $1.5 trillion in cuts with $880 billion from Medicaid”. Since $880B is more than the entire federal annual spending on Medicaid, obviously this proposal is over some number of years. What is that time frame? 5 years? 10 years? Asking in earnest.
This is typically over 10 years
It’s interesting that Federal programs that benefit people are often discussed in terms of a 10-year window but the military budget (nearing $1 TRILLION annually) is ALWAYS discussed as a single year expense.
U.S. Constitution, Article I, Section 8: “The Congress shall have Power … To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years ….”
There is a lot of abuse in the medicaid program. Work requirements for welfare, which medicaid is a component of should be required. Clinton did it but Obama rescinded it. That’s because Clinton was a racist. Anyway, I believe a single payer system would resolve this . To get Medicaid (free low income insurance) your income must be below a certain threshold. Many people deliberately maintain that to stay on the tits of the system .
Here is a thought. I by my healh care insurance and you buy yours. Let charities take care off the poor. In other words get the government out of it
Did you get that line from a Christmas Carol?
Actually I was fine with that until Obomination Care. I liked my health insurance but couldn’t keep it, he FUBB;d the entire system with his bullshit plan. My premiums doubled and my deductible was 15k, WTF. I hate that asshole.
Your state probably gummed it up. Mine was flawless. Excellent, high quality care, fantastic coverage. And my Medicare has been flawless. Down to this day. How’s that for real world experience, versus all these contrived discussions of fraud, somewhere in the sky.
I love the phrase “tax cuts.” It means the government won’t take as much money from you. By force, if necessary.
This is only if you are rich. You need to specify “tax cuts for ME”
Article seen today (sorry, didn’t keep the link): 45 percent of the tax cuts benefits go to taxpayers with $450,000+ income annually. No need to guess the strong correlation of those folks with the top 1 percent in wealth who already own 30% of all private wealth. Once they rug-pull the remaining peasants of welfare statism (by passing a “tax cut” bill that destabilizes US finances ever further, bolstering the case for radical long term total rug pull), we will know who the masters and the abject servants really are, on a permanent, dynastic family basis.
Once certain parties got their heads back on after the confusion of the Great Depression and New Deal, they swore among them, this kind of thing will never happen to us again. They pulled together their money and expertise and rolled up their sleeves. And it took decades, but they can now sense being on the threshold of total reversal of the 20th century, total oligarchy, total mass disenfranchisement.
A Nation of Slaves
Trump is causing short term Pain for America that hopefully leads to long term Gain.
Could this Economic Reset backfire and then we end up where we started?
Things could end up similar to when Coca‑Cola tried to recreate Coke with a brand new Taste back in 1985? That idea totally backfired and the public outcry got Coke to bring back the old time Flavour– within just a few months.
Old coke never came back in the US. It still has fructose instead of sugar.
You can still get it with sugar in Mexico, and it’s better.
Just another bait and switch.
Way to trivialize what is happening now.
I think a more apt comparison might be the collapse of globalization that preceded a couple little things called WW1, global Great Depression and WW2. So do we need to relearn those lessons?
Because of Liberation Day, the underlying short- and medium-term growth outlook for the US economy (and the global economy) is now much worse than it was before 4/2. I don’t understand how Congress can do budgeting with a growth baseline that is no longer relevant. Let the CBO first figure out the 4/2 disaster, and then let’s discuss the tax increases and spending cuts needed to diffuse the fiscal time bomb.
First get the illegals off Medicare. Tariffs will be a near term hardship and we need to help working Americans. Midterms are coming soon. Tariffs have the unions voting MAGA. Trump is proposing a $5,000 tax rebate to help working Americans with tariff inflation until higher paid jobs return. Hopefully they will understand the hardship is temporary, and the future is bright. Vote MAGA for the midterms. The lucky 10% who own 88% of stocks should feel the same way. American corporations that relocate manufacturing jobs to America have a great future in a booming economy. Time is on our side.
Do you really believe the garbage you write or are you baiting the unwary on here?
He’s a Russian troll. Pretending to be a capitalist.
Through all this you’ll notice bond rates have plummetted and, for a debtor nation whose Fed wasn’t lowering, this will be one upside to the chaos. Oh if only housing prices fell 12.% since Nov 5th. Recessions can fix lots of issues, painfully, if we let them ever happen.
Income taxes constitute approximately 49% of annual federal revenue. Another 35% comes from payroll taxes which will remain even if the income tax would be eliminated. The rest comes from corporate taxes, and miscellaneous fees and taxes, so tariffs would just have to cover 49% to match current revenue amounts.
I’ve lost a significant$$in my “roth ira”.That was my pension for a safety cushion. Being “83”. yrs.Young.Good luck in seeing my life@ 93.My wife being “76”.Going for another operation.Had .Knee replacements.’ In her shoulder.Now a rotor cuff tear operation.No children “debt free somewhat. But.owning a house&2 cars.We’re greatfull.To be retired.We do look forward to our Soc.Security check’s.Our income is under 44500 a yr.Still can enjoy a “gym membership.We don’t go out to restaurant’s or spend foolishly.We don’t want to be exploited.I have a android phone.15.00 a month.Not addicted to it.Scared of sammers.
At your age I am surprised your Roth was not more in bonds rather than equities to minimize risk.
5 years ago …
Who was posting videos of Chinese Covid ‘patients’ wildly writhing around on the hospital floors and gurneys before an agonizing ‘death’? Who was posting videos of the Chinese government welding doors shut to lock-in the occupants?
Pepperidge Farm Remembers
Those harrowing times when non-respiratory therapists learned about ventilators and non-scientists learned how to pronounce R0 (r-naught, since this platform doesn’t correctly display subscripts in comments)
https://www.thecity.nyc/2020/04/06/how-nyc-s-emergency-ventilator-stockpile-ended-up-on-the-auction-block/
Only to find out that forcing respiratory illness deeper into the lungs was a poor choice, especially when there weren’t enough trained personnel to operate the machinery. Perhaps they will be restocking when the next crisis comes, since it’s the most expensive way to prepare:
“City officials auctioned off nearly $225 million worth of surplus COVID-19 medical equipment and safety gear for just $500,000 — or a paltry 0.2 cents on the dollar, according to a stunning report Tuesday.
The bargain-basement sales included nearly 3,000 mechanical ventilators that cost taxpayers $12 million but were unloaded as “non-functioning medical equipment for scrap metal” at a rock-bottom price of just $24,600 on Jan. 24, according to nonprofit news website The City.”
https://nypost.com/2023/02/21/nyc-sells-224-5m-worth-of-covid-19-supplies-for-just-500k/
Thanks Mish! Great read as always!
My thoughts are two #1 with the tariffs 8f left in place inflation by September might be in the 8 to 9% range, second since you have high inflation and a slow economy you create the pain for the united states economy. Similar to the stagflation that I got to l8ve though in an earlier time.
It seems that Trump wants to go down in history and be remembered at this point I have no doubt that will happen.
I was talking to a friend that works for a rental car company and they just canceled a 800 car order because of the tariffs.
The fun has begun