The Big, Beautiful Bill is almost law. Will it deliver?

Politico

2 days ago

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Quick Fix
The Senate finally passed President Donald Trump's 'big, beautiful bill.' Even though House leaders are hopping mad, they're still working overtime to try to pass the measure in time for the president's July 4 deadline.
The question then will be whether Trump's signature legislative accomplishment can live up to the White House's hype.
'Our Country is going to explode with Massive Growth, even more than it already has since I was Re-Elected,' Trump posted on Truth Social shortly after Vice President JD Vance cast the tiebreaking vote to send the bill back to the House.
Trump is banking that the tax breaks included in the megabill will unlock private investment and boost consumer spending, kicking off an extraordinary economic expansion that will help pay down deficits and provide relief from the tumult triggered by his trade and immigration policies. But as the legislation inches closer to his desk, the consensus view among budget and economic forecasters is that the administration has overstated the case on what the bill can actually deliver.
'It's very clear from the mainstream analysis that this bill will have only a modest impact on economic output,' said Kyle Pomerleau, a federal tax policy senior fellow at the right-leaning American Enterprise Institute. 'They can bet on significant economic growth, but it's not going to be the result of this bill.'
Stephen Miran, the chair of Trump's Council of Economic Advisers, has projected that the legislation will lift gross domestic product by a whopping 4.6 to 4.9 percent over the next four years — and by 2.4 to 2.7 percent by 2034. Those estimates are way out of step with those of think tanks, as well as earlier projections by the nonpartisan Congressional Budget Office and Joint Committee on Taxation.
Budget analysts and policy wonks say the CEA's work relies on optimistic assumptions — and opaque methodology — while disregarding potential negative effects from provisions that reduce after-tax income or scale back investment credits. They say the analysis books trillions in revenue from growth pegged to Trump's energy and regulatory policies, while ignoring risks that high tariffs and immigration restrictions pose to output.
Tepid growth would be particularly problematic given the bill's likely effect on federal deficits —much to the chagrin of GOP budget hawks — which would put even more upward pressure on borrowing costs.
The CEA's analysis presents the bill as a 'a magic money machine — and a big one,' said William McBride, the chief economist and Stephen J. Entin Fellow in Economics at the nonpartisan Tax Foundation. He said the CEA's work is 'misleading' and 'likely to confuse a lot of people, including lawmakers.'
Miran, a former Treasury economist and top investment strategist at Hudson Bay Capital Management, has often provided intellectual heft to the administration's case for an agenda that has few defenders among mainstream .economists. He authored an influential paper during the transition that was viewed as a blueprint for the president's economic policies, and the White House has repeatedly leaned on his team's analysis to make a case for why the legislation is critical to the president's pro-growth goals.
To be sure, economic forecasts are often imprecise or incorrect. Trump officials are quick to point out how the economy has already outperformed expectations during his first few months back in office. And in an appearance on CNBC's Squawk Box on Tuesday, Miran was critical of Congressional Budget Office projections of the megabill's long-term effects, claiming that they failed to adequately account for policies that would boost private investment and the supply of labor.
The White House did not respond to a request for comment.
But the gap between Miran's projections and those of the CBO, Joint Committee on Taxation and outside groups is still eye-popping. Pomerleau's estimate of the bill's effects puts GDP just 0.3 percent higher in the long run if the measure is signed into law. The Tax Foundation also anticipates modest growth. A Penn Wharton Budget Model estimate published shortly after the Senate bill's passage on Tuesday anticipates negative GDP growth over the next 10 years — with low- and moderate-income households bearing substantial losses. Ignacio González, an assistant professor of economics and co-director of the Institute for Macroeconomic and Policy Analysis at American University, also anticipates that the big, beautiful bill will result in a slight decline in long-term GDP.
'The CEA analysis is just not very good,' Pomerleau said. 'It's not accounting for enough, and it's making unwarranted assumptions.'
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Driving the Day
All eyes on the House …. ADP will release its private sector employment report for June at 8:15 a.m. … Acting CFTC Chair Caroline Pham will participate in a fireside chat at City & Financial Global's City Week 2025 at 9:45 a.m. …
Are you going to be in New York on July 15? — A few colleagues and I will be at the Glasshouse Chelsea that afternoon for a POLITICO and Breakwater Strategy event on how policy uncertainty has upended the investment world. We'll be chatting with policy and industry experts about geopolitical realignment, fundamental shifts in how governments engage with the private sector, and how technological advancements are affecting productivity and value creation. Tickets are limited, but if you're interested in attending, reach out to our events team at [e-mail] for details.
More on O-Triple B — The changes made by the Senate could face significant pushback from 'dozens of House Republican holdouts who are wary that the bill doesn't deliver on key promises they've made to their constituents,' Meredith Lee Hill reports.
— Here's Sen. Lisa Murkowski after she cast a critical 'yes' vote: 'I had to look on balance, because the people in my state are the ones that I put first,' the Alaska Republican said, per Lisa Kashinsky. 'We do not have a perfect bill by any stretch of the imagination. My hope is that the House is going to look at this and recognize that we're not there yet.'
— Brian Faler has a great piece of analysis on how the bill may have made it easier for undocumented immigrants to invest in 'Trump Accounts' — new $1,000 savings vehicles for children born between 2024 and 2028.
— The Senate ultimately scrapped a controversial excise tax that would have applied to certain wind and solar projects placed into service after 2027, Kelsey Tamborrino and James Bikales report. But the bill also terminates clean electricity investment and production tax credits for wind and solar projects placed in service after 2027 for certain projects.
Fed File
Powell says the quiet part — Federal Reserve Chair Jerome Powell said the central bank was on track to lower interest rates before Trump's tariffs took effect, Victoria Guida reports. The president has hammered Powell repeatedly over rate cuts — even acknowledging that his public pressure may complicate the Fed chair's ability to do so.
There's a take — In a note to clients on Tuesday, economist Ed Yardeni hypothesized that there's a 'method to President Donald Trump's madness regarding Fed Chair Jerome Powell.'
'Trump has been hammering Powell almost daily recently because doing so is very effectively hammering the foreign-exchange value of the dollar,' he wrote. 'Trump wants a weaker dollar to boost US exports and depress US imports. He has said that he favored a weaker dollar many times in the past, but now he has found a way to achieve that: by beating up on Powell.'
— The dollar has fallen by roughly 11 percent against a basket of foreign currencies this year.
Trade
How tariffs are hitting the mid-market — New research from JPMorgan Chase Institute has determined that mid-market firms — businesses with annual revenue between $10 million and $1 billion — are overexposed to high-tariff countries. Depending on where tariffs ultimately land, those firms could face direct tariff costs ranging from $29.6 billion to $187.7 billion.
Jobs report
Celia Winslow was named the next president and chief executive officer of the The American Financial Services Association. Winslow, who's been with the consumer credit industry organization for almost two decades, succeeds outgoing president and CEO Bill Himpler.
Hadley Ott is now a research economist at the Council of Economic Advisors. He most recently was a policy analyst at MacIver Institute and an intern for the Center for Immigration Studies.