Budget office says Trump's tax law will add $3.4 trillion to deficits, leave 10 million uninsured
More than 10 million people will be uninsured under the law in 2034 because of the law, CBO found, an improvement from an earlier projection that found 11.8 million people losing coverage over the decade.
The release of the CBO analysis Monday comes at the end of a grueling legislative fight, but at the start of a longer political struggle to come as the two parties clash over the law's impact on the economy, healthcare and government programs. Republicans are touting the bill as a tax cut for all Americans, yet a recent AP-NORC poll found about two-thirds of U.S. adults expect the new tax law will help the rich as Democrats attack the legislation.
The bill Trump signed into law on July 4 extended current tax rates for individuals that were set to expire at the end of this year and temporarily created new tax deductions for tips, overtime and auto interest loans for new vehicles assembled in the U.S. Republicans also used the bill to cut future spending on Medicaid and food assistance, and to phase out certain clean energy tax credits more quickly.
Democrats were quick to highlight the CBO's findings.
'Today's report reminds us of something: facts are stubborn and the facts are clear,' said Senate Democratic leader Chuck Schumer. 'The big, ugly betrayal is a loser for the country and will be a loser for the Republicans."
Republicans say the bill was critical to ensure most Americans didn't experience a significant tax increase next year. Trump and Republicans have also insisted that economic growth will exceed the CBO's projections for the next decade, erasing the projected deficits as more revenue comes into the Treasury than anticipated.
Nonpartisan fiscal watchdogs also highlighted the CBO's latest projection. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said there will be a shorter-term 'sugar high' as stimulus makes its way through the economy. But modelers from across the ideological spectrum agree that any sustained economic changes are likely to be modestly beneficial, or negative.
'And not one serious estimate claims this bill will improve our fiscal situation,' MacGuineas said. 'Rather, positive growth effects are likely to be swamped by the effects of higher debt and interest rates.'
The CBO said more than $1 trillion in deficit savings is generated through the health portions of the bill, which includes new work requirements for certain Medicaid beneficiaries in states that expanded the program through the Affordable Care Act.
Some late changes on Medicaid were made to the bill to win over holdouts. One of those changes added a $50 billion fund for rural hospitals.
__
Associated Press writer Mary Clare Jalonick contributed to this report.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
3 minutes ago
- Yahoo
Cathie Wood reveals strategy to outsmart Wall Street
Cathie Wood reveals strategy to outsmart Wall Street originally appeared on TheStreet. Ark Invest CEO Cathie Wood is bagging Ethereum treasury companies, days after she dumped Robinhood and Coinbase stocks. In a tweet on July 26, Wood responded to the sudden demand to unstake Ethereum, asked by Brett Winton, chief futurist at Ark Invest. According to an analysis by Galaxy, Ethereum saw a massive spike in 'unstaking' activity beginning July 16. In just six days, the number of validators trying to exit the Ethereum network's staking system rose from about 1,920 to over 475,000. That's a 24,000% increase — and it caused the average wait time for a validator to unstake their assets to stretch from under an hour to more than eight days. Galaxy believes this wasn't just because of Ethereum's recent price rally or changes from the latest 'Pectra' upgrade — it was largely triggered by a sharp rise in ETH borrow rates, which made popular yield strategies suddenly make sense of this, it helps to understand a few basics. Ethereum uses a system called proof-of-stake, where users known as validators lock up ETH in order to help run the network and earn rewards. This process is called staking. When they want to pull their ETH out — known as unstaking — they enter an exit queue. A validator can only exit once it's approved by the network, which ensures stability. But when everyone rushes to exit at the same time, that queue gets long — just like a crowded bank withdrawal line. What Galaxy found is that a rise in ETH borrowing costs pushed investors to unwind 'looping' strategies (like staking, borrowing ETH against it, and staking again), which made many of them quickly pull out — creating a bottleneck and putting stress on liquid staking tokens like Lido's stETH and others, which are supposed to stay pegged to ETH but briefly slipped below value during the chaos. Wood has a different theory 'Robinhood offering a 2% match for crypto transfers, and VCs and other investors shifting staked ETH into Treasury companies (DATs) to double their money when lockups expire.' She then added, 'As with $MSTR $BMNR, Treasury stocks are a way wirehouse advisors can give clients exposure to BTC and ETH.' Wood's statement comes just days after Ark Invest sold over 30,000 shares of Coinbase worth approximately $12 million, along with more than 11,000 shares of Robinhood, valued at around $1.1 million. The firm also sold shares of Jack Dorsey's Block and its own Bitcoin ETF, ARKB. But what stood out most was Ark's fresh $116 million allocation into BitMine Immersion Technologies — an Ethereum-focused treasury company backed by Peter Thiel. Bitcoin is the best-performing major asset this year, up 78.8% so far — far outpacing silver, gold, and tech stocks. It recently surged past an all-time high of $122,000, cementing its lead. In comparison, silver is up around 29.9%, while the Nasdaq 100 and S&P 500 lag the '2% match' Robinhood launched a crypto deposit match program, offering users a 1% bonus on net crypto transfers. If community deposits exceed $500 million, the match increases to 2%. The offer was valid until July 7, subject to terms and conditions. At the same time, treasury companies like BitMine — which specialize in holding large amounts of ETH — are becoming increasingly popular with VCs and institutional investors. These firms operate similarly to how MicroStrategy stock has become a proxy for Bitcoin exposure. With Ethereum's rising relevance in DeFi, many view these treasury stocks as a bridge between crypto infrastructure and traditional equity markets. Ethereum as a corporate treasury asset According to a Yahoo Finance report, BitMine now holds more than $1 billion in ETH, making it one of the largest public holders of Ethereum. The firm's strategy mirrors the original Bitcoin-treasury play pioneered by companies like MicroStrategy. ETH has climbed over 50% in the past month, and although it remains below its 2021 all-time high of $4,600. Cathie Wood reveals strategy to outsmart Wall Street first appeared on TheStreet on Jul 26, 2025 This story was originally reported by TheStreet on Jul 26, 2025, where it first appeared.
Yahoo
3 minutes ago
- Yahoo
Veteran fund manager points to glaring problem with stocks after rally
Veteran fund manager points to glaring problem with stocks after rally originally appeared on TheStreet. Stock market rally defies gravity, leaves many behind The S&P 500's seemingly unrelenting climb from early April into July 2025 has left many investors shaking their heads. This spring, the stock market lost nearly 20% of its value amid a flurry of newly announced tariffs. Worry that tariff-induced inflation would derail the economy, causing stagflation or recession, was rampant. That worry remains, given that tariffs remain much higher than one year ago and economic data show that the U.S. economy is slowing. Yet stocks have brushed aside concerns since April 9, when President Donald Trump paused many reciprocal tariffs, clearing the way for trade a result, many investors expecting a reckoning have been left stuck on the sidelines, wondering if it's too late to buy. Veteran hedge fund manager Doug Kass understands the feeling. Kass has been professionally managing money since the 1970s, and his long career includes a stint as the research director for Leon Cooperman's Omega Advisors, one of the most famous hedge funds ever. This week, Kass discussed the recent stock market rally and its causes and delivered a stern message on risks every investor should consider after the S&P 500's record-setting run. The stock market's gains have been driven by animal spirits, speculation, and computer algos It used to be that humans on major exchanges, like the New York Stock Exchange, executed trades for other humans. Quaint, right? Now, the stock market's inevitable pops and drops are at the whim of computer programmers who have designed programs to exploit every tick higher or lower, and products developed by money-hungry Wall Street firms, like short-term options, that are designed to capitalize best on greed and fear."In the steel cage match since the market's lows in April, the bulls have been virtually unbeatable — like Muhammad Ali and Hulk Hogan," wrote Doug Kass in a post on TheStreet Pro. "But, as we all know, all the WWF matches were fixed — a feeling that the bears have developed over the last three months as retail, zero days to expiration option traders, and volatility-controlled funds have aggressively bought every dip, contributing to the generation of animal spirits and fear of missing out." The combination has led to momentum fueling momentum for momentum's sake. Computers trading with computers and speculators looking for quick gains from the options market have created a self-fulfilling cycle of upside, creating massive fear of missing out, or FOMO, for those who sold during the downturn or held off on new investments, hoping for a better entry point. The gains have been particularly eye-popping for risky stocks, particularly within emerging industries like crypto, artificial intelligence, space, and quantum computing. Circle Internet () , a stablecoin cryptocurrency player, has gained 132% since its June IPO. CoreWeave () , an AI cloud computing company, is up 165% since April 8. Rocket Lab () , which sends light payloads into low orbit, has gained 188% since its early April lows. And Quantum Computing () is up 278% since its bottom in March. What's one thing those companies share in common? None has turned a profit yet. Problems with U.S. economy may not be ignored forever The S&P 500's 24% gain in 2024 was built on the back of surging spending on artificial intelligence, the promise of earnings growth associated with using AI to streamline business practices and procedures, and the prospect of lower interest rates, thanks to the Federal Reserve shifting from hawkish to dovish monetary policy. So far, the Fed has yet to cut rates in 2025, despite lowering rates by 1% into the end of 2024, creating a headwind. AI spending remains robust, given that Alphabet recently increased its capital expenditure outlook this year to $85 billion from $75 billion. Still, cracks have appeared in the economy that didn't exist last year: Layoffs totaled 247,256 in Q2, according to Challenger, Gray, & Christmas, the most since the Covid pandemic closed businesses in 2020. The unemployment rate is 4.1%, up from 3.4% in 2023. The World Bank estimates U.S. GDP growth will be just 1.4% in 2025, down from 2.8% last year. And let's not forget tariffs, which, while likely to be less than feared in April, still represent a massive tax hike. That economic backdrop is problematic for stocks, especially following their big move higher. "The level of delusion (that tariffs will have no inflationary impact) is now beyond the pale. It simply seems the administration is following the Roy Cohen strategy on inflation and tariffs — in that if you repeat 'The Big Lie' enough (that tariffs aren't raising prices), people will come to believe it," opined Kass. Stock market valuation could create a headwind for stocks So far, markets have ignored the inflationary threat, assuming trade deals will soften the blow and corporations can make up any margin hit either by benefiting from a weaker US Dollar on currency conversion or by cutting costs. Indeed, those betting the U.S. economy will sidestep the worst-case scenario — slow growth with inflation or even recession — have profited valuations on many stocks have surged, and as a result, the S&P 500's forward one-year price to earnings ratio is 22.4, according to FactSet. A P/E ratio that high has historically depressed forward stock market returns. Absent a significant uptick in earnings estimates, now largely expected, stocks could take a breather. "My recent complete sales of numerous longs (in housing, financials, private equity and selected technology) have resulted in an expanded cash war chest, which I want in the time ahead," noted Kass on July 23. "I see about 5x more risk than reward, and I see no "margin of safety." Of course, stocks can go higher and lower than many believe possible, which is why, as John Maynard Keynes said, "The market can remain irrational longer than you can remain solvent." Sitting in cash hasn't been a winning strategy lately, something Kass concedes. "I am often wrong and always in doubt," wrote Kass. Nevertheless, he says, "The fact is, though many in the business media say the opposite, earnings estimates are dropping and not increasing — as equities climb." If so, having some cash to take advantage of any weakness may pan out fund manager points to glaring problem with stocks after rally first appeared on TheStreet on Jul 26, 2025 This story was originally reported by TheStreet on Jul 26, 2025, where it first appeared.
Yahoo
3 minutes ago
- Yahoo
Official fired during Trump's first term appointed president of embattled US Institute of Peace
A senior State Department official who was fired as a speechwriter during President Donald Trump 's first term and has a history of incendiary statements has been appointed to lead the embattled U.S. Institute of Peace. The move to install Darren Beattie as the institute's new acting president is seen as the latest step in the administration's efforts to dismantle the embattled organization, which was founded as an independent, non-profit think tank. It is funded by Congress to promote peace and prevent and end conflicts across the globe. The battle is currently being played out in court. Beattie, who currently serves as the under secretary for public diplomacy at the State Department and will continue on in that role, was fired during Donald Trump's first term after CNN reported that he had spoken at a 2016 conference attended by white nationalists. He defended the speech he delivered as containing nothing objectionable. A former academic who taught at Duke University, Beattie also founded a right-wing website that shared conspiracies about the Jan. 6 attack on the U.S. Capitol, and has a long history of posting inflammatory statements on social media. 'Competent white men must be in charge if you want things to work,' he wrote on October 2024. 'Unfortunately, our entire national ideology is predicated on coddling the feelings of women and minorities, and demoralizing competent white men.' A State Department official confirmed Beattie's appointment by the USIP board of directors, which currently includes Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth. '(W)e look forward to seeing him advance President Trump's America First agenda in this new role,' they said. The USPI has been embroiled in turmoil since Trump moved to dismantle it shortly after taking office as part of his broader effort to shrink the size of the federal government and eliminate independent agencies. Trump issued an executive order in February that targeted the organization and three other agencies for closure. The first attempt by the Department of Government Efficiency, formerly under the command of tech billionaire Elon Musk, to take over its headquarters led to a dramatic standoff. Members of Musk's group returned days later with the FBI and Washington, D.C., Metropolitan Police to help them gain entry. The administration fired most of the institute's board, followed by the mass firing of nearly all of its 300 employees in what they called 'the Friday night massacre.' The institute and many of its board members sued the Trump administration in March, seeking to prevent their removal and to prevent DOGE from taking over the institute's operations. DOGE transferred administrative oversight of the organization's headquarters and assets to the General Services Administration that weekend. District Court Judge Beryl A. Howell overturned those actions in May, concluding that Trump was outside his authority in firing the board and its acting president and that, therefore, all subsequent actions were also moot. Her ruling allowed the institute to regain control of its headquarters in a rare victory for the agencies and organizations that have been caught up in the Trump administration's downsizing. The employees were rehired, although many did not return to work because of the complexity of restarting operations. They received termination orders — for the second time, however, — after an appeals court stayed Howell's order. Most recently, the U.S. Court of Appeals for the D.C. Circuit denied the U.S. Institute of Peace's request for a hearing of the full court to lift the stay of a three-judge panel in June. That stay led to the organization turning its headquarters back over to the Trump Administration. In a statement, George Foote, former counsel for the institute, said Beattie's appointment 'flies in the face of the values at the core of USIP's work and America's commitment to working respectfully with international partners' and also called it 'illegal under Judge Howell's May 19 decision.' 'We are committed to defending that decision against the government's appeal. We are confident that we will succeed on the merits of our case, and we look forward to USIP resuming its essential work in Washington, D.C. and in conflict zones around the world,' he said.
