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Yahoo
5 days ago
- Business
- Yahoo
How GOP megabill fuels debt for future generations
President Trump's newly passed One Big Beautiful Bill Act will, by most conventional estimates, add trillions to America's national debt to pay for permanent tax cuts. Republicans insist the bill will unleash economic activity that offsets any lost tax revenue, but few economists agree. The consequences could be severe for future generations. A growing debt could make borrowing more expensive in the long term, force policymakers to make painful cuts to spending and social services down the road, slow economic growth and eventually push the nation toward a debt crisis, economists say. Republicans have historically been among the loudest worriers about the national debt. The House Freedom Caucus blasted GOP senators for increasing deficit spending in the final version of the 'big, beautiful bill.' 'The Senate isn't listening—their version adds over $1T to the deficit, completely ignoring the House framework,' Freedom Caucus member Rep. Keith Self (R-Texas) wrote June 30, before voting for it a few days later. 'This isn't just reckless—it's fiscally criminal,' he added. Self and other fiscal hawks said they received assurances from Trump that helped them come around on the bill. To move the bill through the Senate's budget reconciliation process, GOP leadership also used a budgetary sleight-of-hand to argue that the bill didn't balloon deficits, but reduced them. 'Let me be very clear: It reduces the deficit. When you have an honest assessment of what current law is, this is a reduction in deficits over 10 years,' White House Office of Management and Budget Director Russell Vought asserted on Fox News in the days leading up to the bill's passage. The nonpartisan Congressional Budget Office (CBO), meanwhile, estimated the bill would add $3.4 trillion to the country's debt burden over the next decade. The Committee for a Responsible Federal Budget estimated $4.1 trillion, and the conservative Cato Institute projected $6 trillion. 'This bill will likely turn out to be the single most expensive legislation since the 1960s,' said Jessica Riedl, an economist and fellow at the Manhattan Institute. 'It is one of the most irresponsible bills in memory.' How we got here The federal government has long spent more than it has earned, forcing it to borrow money by issuing bonds and other securities, which earn reliable interest for investors. At the end of 2024, the national debt held by individuals, businesses and other members of the public was about $28.1 billion, or just under 98 percent of the country's annual gross domestic product (GDP). That's different from the commonly quoted gross debt of $36 trillion, which includes intragovernmental debt — money one part of the federal government owes to another part, such as the trust funds that supply Social Security. This gross debt is used to determine when the government is near the national debt limit, a ceiling that has become a political football in recent years. Economists often prefer to measure the debt held by the public relative to GDP, rather than in absolute terms, because that better describes the country's ability to keep up with payments. The debt has grown significantly relative to GDP in the last five years, largely as a result of trillions of dollars in federal relief spending during the COVID-19 pandemic. The yearly cost of interest on the debt is also substantial, accounting for about 16 percent of total federal spending in fiscal 2025. Even before the 'big, beautiful bill' came into the picture, economists warned long-term spending on that trajectory was unsustainable. The new legislation includes about $4 trillion in tax cuts and new spending, partly offset by $1.1 trillion in net spending reductions. 'There may be a very short-run positive economic effect, but the long-run impact will be much worse,' Dominik Lett, a policy analyst at the Cato Institute, said of the megabill. 'We are particularly damning future generations.' Downstream borrowing effects As the United States borrows more money, interest rates on government bonds generally rise to incentivize investors to buy more debt. That, in turn, increases the cost of borrowing for everyday forms of consumer and business lending. Factoring in the impacts of the megabill, the Yale Budget Lab projected the yield on 10-year Treasury bonds — a key indicator of investor sentiment — would rise an additional 1.2 percentage points by 2054, compared to if the bill didn't pass. That would push up costs on mortgages, commercial real estate loans, and other kinds of borrowing, said Ernie Tedeschi, an economist at the lab and a member of former President Biden's Council of Economic Advisers. In five years, the interest on a mortgage from the median 2024 home price — based on a $413,000 loan with a 20 percent down payment — could go up an additional $1,100 due to the bill, Tedeschi estimated. In 30 years, the bill would add $4,000 to such a mortgage's interest. 'I think that Americans, having gone through periods, first of inflation, higher prices, during the pandemic, and then higher interest rates later on in the pandemic, appreciate that higher interest rates are not a remote concern for them, or something that only affects the financial sector,' he said. 'That's a kitchen table issue,' he added. Increased government borrowing could also disincentivize other types of investment, said Ben Harris, an economist at the Brookings Institution. 'You'll have so many Americans and foreigners, people who would have invested the United States, buying up the debt rather than investing other productive things — everything from technology to health care, everything that really makes us a productive country — that will now be going will be directed towards paying off our our debt,' he said. The CBO estimated at the beginning of this year that the debt would reach 166 percent of the GDP by 2054. Several estimates say the bill could push that ratio even higher. The Yale Budget Lab projects that the debt-to-GDP ratio in 2054 will be 179.1 percent when factoring in the megabill. Some Democrats and Republicans have called to eliminate the country's debt ceiling entirely, arguing that the laws of economic gravity don't apply to U.S. debt given the scale and resiliency of American commerce. Economists aren't so sure, given the rate at which the debt is outpacing the growth of the economy. 'Long-term, we risk a full debt crisis,' Riedl said. 'At some point, the bond market will not be able to supply that much lending at plausible interest rates. A debt crisis would likely begin with the bond market panicking over the government's borrowing demands, which can hurt the market and drastically raise interest rates until Washington commits to drastic deficit reduction.' Tough choices ahead Some budget hawks have dreamed of a balanced budget, where Washington would spend only as much as it earns in a fiscal year. However, that would require massive cuts to spending or significant tax hikes, both of which would be politically perilous. Several economists estimated that stabilizing the debt with respect to GDP would take at least $10 trillion in deficit reduction over the next 10 years — 'a tall order,' Tedeschi said. 'To put that in perspective, the most controversial cuts to Medicaid [in the megabill], that even Republicans in Congress were debating and not all of them were comfortable with, never got higher than $900 billion in a decade,' he said. Among the biggest single line items driving the debt are Social Security and Medicare, the federal health insurance program for seniors. Debt hawks have long looked to cutting those programs as a way to reduce deficits. 'Closing these deficits could require doubling middle class taxes or essentially eviscerating Social Security, Medicare and defense,' Riedl said. Social Security and Medicare are both marching toward insolvency on current trajectories, with estimates that funds will start running short within the next decade. The megabill slightly accelerates this timeline, according to an estimate by the Committee for a Responsible Federal Budget. That could force Congress to make tough decisions about raising taxes or cutting benefits as soon as 2032. 'If we have more taxes to close larger Social Security and Medicare shortfalls, those will likely be done through the payroll tax,' said Robert Greenstein, a visiting fellow at the Brookings Institution. 'Almost certainly part of the gap will be filled by Social Security benefit cuts, which would now be somewhat larger than they otherwise would be. And those cuts would affect people in future generations.' The megabill does reduce taxes for some Americans, particularly those high on the income scale. But it is still likely to decrease GDP in the long run compared to baseline policy assumptions: 0.3 percent less in 10 years and 4.6 percent in 30 years, according to analysis from the University of Pennsylvania's Wharton School. 'The more we borrow now, the harder those decisions will be in the future,' added Lett, of the Cato Institute. 'So if people think the changes in the bill are already draconian, it will make the future changes necessary even worse.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hill
10-07-2025
- Business
- The Hill
How GOP megabill fuels debt for future generations
President Trump's newly passed One Big Beautiful Bill Act will, by most conventional estimates, add trillions to America's national debt to pay for permanent tax cuts. Republicans insist the bill will unleash economic activity that offsets any lost tax revenue, but few economists agree. The consequences could be severe for future generations. A growing debt could make borrowing more expensive in the long term, force policymakers to make painful cuts to spending and social services down the road, slow economic growth and eventually push the nation towards a debt crisis, economists say. Republicans have historically been among the loudest worriers about the national debt. The House Freedom caucus blasted GOP senators for increasing deficit spending in the final version of the 'big, beautiful bill.' 'The Senate isn't listening—their version adds over $1T to the deficit, completely ignoring the House framework,' wrote Freedom Caucus member Rep. Keith Self (R-Texas) on June 30, before voting for it a few days later. 'This isn't just reckless—it's fiscally criminal,' he added. Self and other fiscal hawks said they received assurances from Trump that helped them come around on the bill. To move the bill through the Senate's budget reconciliation process, GOP leadership also used a budgetary sleight-of-hand to argue that the bill didn't balloon deficits, but reduced them. 'Let me be very clear: it reduces the deficit. When you have an honest assessment of what current law is, this is a reduction in deficits over ten years,' White House budget chief Russ Vought asserted on Fox News in the days leading up to the bill's passage. The nonpartisan Congressional Budget Office, meanwhile, estimated the bill would add $3.4 trillion to the country's debt burden over the next decade. The Committee for a Responsible Federal Budget estimated $4.1 trillion and the conservative Cato Institute projected $6 trillion. 'This bill will likely turn out to be the single most expensive legislation since the 1960s,' said Jessica Riedl, an economist and fellow at the Manhattan Institute. 'It is one of the most irresponsible bills in memory.' The federal government has long spent more than it has earned, forcing it to borrow money by issuing bonds and other securities, which earn reliable interest for investors. At the end of 2024, the national debt held by individuals, businesses, and other members of the public was about $28.1 billion, or just under 98 percent of the country's annual gross domestic product (GDP). That's different from the commonly quoted gross debt of $36 trillion, which includes intragovernmental debt — money one part of the federal government owes to another part, such as the trust funds that supply Social Security. This gross debt is used to determine when the government is near the national debt limit, a ceiling that has become a political football in recent years. Economists often prefer to measure the debt held by the public relative to GDP, rather than in absolute terms, because that better describes the country's ability to keep up with payments. The debt has grown significantly relative to GDP in the last five years, largely as a result of trillions of dollars in federal relief spending during the COVID-19 pandemic. The yearly cost of interest on the debt is also substantial, accounting for about 16 percent of total federal spending in the 2025 fiscal year. Even before the 'big, beautiful bill' came into the picture, economists warned long-term spending on that trajectory was unsustainable. The new legislation includes about $4 trillion in tax cuts and new spending, partly offset by $1.1 trillion in net spending reductions. 'There may be a very short-run positive economic effect, but the long-run impact will be much worse,' said Dominik Lett, a policy analyst at the Cato Institute, of the megabill. 'We are particularly damning future generations.' As the United States borrows more money, interest rates on government bonds generally rise to incentivize investors to buy more debt. That, in turn, increases the cost of borrowing for everyday forms of consumer and business lending. Factoring in the impacts of the megabill, the Yale Budget Lab projected that the yield on 10-year Treasury bonds — a key indicator of investor sentiment — would rise an additional 1.2 percentage points by 2054, compared to if the bill didn't pass. That would push up costs on mortgages, commercial real estate loans, and other kinds of borrowing, said Ernie Tedeschi, an economist at the lab and a member of former President Biden's Council of Economic Advisors. In five years, the interest on a mortgage on a typical house in 2024 — based on a $413,000 loan with a 20 percent down payment — could go up an additional $1,100 every year due to the bill, Tedeschi estimated. In 30 years, the bill would add $4,000 a year to that mortgage's interest. 'I think that Americans, having gone through periods, first of inflation, higher prices, during the pandemic, and then higher interest rates later on in the pandemic, appreciate that higher interest rates are not a remote concern for them, or something that only affects the financial sector,' he said. 'That's a kitchen table issue,' he added. Increased government borrowing could also disincentivize other types of investment, said Ben Harris, an economist at the Brookings Institution. 'You'll have so many Americans and foreigners, people who would have invested the United States, buying up the debt rather than investing other productive things — everything from technology to health care, everything that really makes us a productive country — that will now be going will be directed towards paying off our our debt,' he said. The CBO estimated at the beginning of this year that the debt would reach 166 percent of the GDP by 2054. Several estimates say the bill could push that ratio even higher. The Yale Budget Lab projects that the debt-to-GDP ratio in 2054 will be 179.1 percent when factoring in the megabill. Some Democrats and Republicans have called to eliminate the country's debt ceiling entirely, arguing that the laws of economic gravity don't apply to U.S. debt given the scale and resiliency of American commerce. Economists aren't so sure, given the rate at which the debt is outpacing the growth of the economy. 'Long-term, we risk a full debt crisis,' Riedl said. 'At some point, the bond market will not be able to supply that much lending at plausible interest rates. A debt crisis would likely begin with the bond market panicking over the government's borrowing demands, which can hurt the market and drastically raise interest rates until Washington commits to drastic deficit reduction.' Some budget hawks have dreamed of a balanced budget, where Washington would spend only as much as it earns in a fiscal year. However, that would require massive cuts to spending or significant tax hikes, both of which would be politically perilous. Several economists estimated that stabilizing the debt with respect to GDP would take at least $10 trillion in deficit reduction over the next ten years — 'a tall order,' Tedeschi said. 'To put that in perspective, the most controversial cuts to Medicaid [in the megabill], that even Republicans in Congress were debating and not all of them were comfortable with, never got higher than $900 billion in a decade,' he said. Among the biggest single line items driving the debt are Social Security and Medicare, the federal health insurance program for seniors. Debt hawks have long looked to cutting those programs as a way to reduce deficits. 'Closing these deficits could require doubling middle class taxes or essentially eviscerating Social Security, Medicare and defense,' Riedl said. Social Security and Medicare are both marching toward insolvency on current trajectories, with estimates that funds will start running short within the next decade. The megabill slightly accelerates this timeline, according to an estimate by the Committee for a Responsible Federal Budget. That could force Congress to make tough decisions about raising taxes or cutting benefits as soon as 2032. 'If we have more taxes to close larger Social Security and Medicare shortfalls, those will likely be done through the payroll tax,' said Robert Greenstein, a visiting fellow at the Brookings Institution. 'Almost certainly part of the gap will be filled by Social Security benefit cuts, which would now be somewhat larger than they otherwise would be. And those cuts would affect people in future generations.' The megabill does reduce taxes for some Americans, particularly those high on the income scale. But it is still likely to decrease GDP in the long run compared to baseline policy assumptions: 0.3 percent less in 10 years and 4.6 percent in 30 years, according to analysis from the University of Pennsylvania's Wharton School. 'The more we borrow now, the harder those decisions will be in the future,' added Lett. 'So if people think the changes in the bill are already draconian, it will make the future changes necessary even worse.'
CBS News
06-07-2025
- Business
- CBS News
Texas Representatives react to President Trump's "One Big Beautiful Bill" becoming law
President Trump and Republicans in Congress are celebrating this holiday weekend after both the House and Senate passed what they call the "One Big Beautiful Bill." The President signed the legislation into law at the White House Friday. All Texas Republicans in the House along with Senators John Cornyn and Ted Cruz voted for it. Democrats who serve in Congress voted against the measure and call it "One Ugly Bill." The new law came after lengthy debates among Republicans in the House and Senate. The law includes $4.5 trillion dollars in tax cuts, which extends and makes the existing tax rates and brackets permanent. New provisions include no tax on tips and overtime, which are capped and temporary. The child tax credit increases from $2,000 to $2,200. There's also a $930 billion dollar cut over a decade to the growth of Medicaid. The Congressional Budget Office estimates nearly 12 million recipients will lose Medicaid coverage by 2034 because they may not comply with new work requirements. In an interview for Eye On Politics, Republican U.S. Representative Keith Self of McKinney, said the cuts in growth to Medicaid are necessary to sustain the program for the poor, disabled, and pregnant women. He said Medicaid wasn't designed for able-bodied adults. "This is a Covid provision that still lingers today. You can cash your government check, play your video games," said Self. "You should be in the economy, working, contributing to the economy, knowing the dignity and the value of work. And yet, some able-bodied adults are on Medicaid, simply cashing their government check when they could be working. That's the majority of what you're talking about there." Self also told CBS News Texas he's also not pleased that there are people who are in the country illegally who are on Medicaid. "The illegals are supposed to come off of Medicaid, but there is also no teeth to the Senate bill. There was teeth in the House bill." Democrats serving in Congress from Texas participated in a virtual news conference the day before Thursday's vote. Democratic U.S. Representative Jasmine Crockett of Dallas said, "The reason we're fighting against this isn't because it's been proposed by Republicans, but because it's going to bring harm, not only to our constituents but frankly a lot of that harm is going to be directed to their own constituents." U.S. Representative Marc Veasey, D-Fort Worth said, "Republicans are putting the needs of Trump in front of their own constituents. This is going to be something I believe that we're going to dig ourselves from underneath for a long time to come." The legislation also spends $350 billion for border security and national security. It also includes $13.5 billion dollars so states like Texas can be reimbursed for their border security efforts. The CBO estimates deficits will rise by nearly $3.3 trillion dollars over the next ten years, but Republicans dispute that saying that doesn't account for the economic growth that will result from the business tax cuts. Democrats have said they believe this new law will give them an opportunity to win the majority in the 2026 midterm elections. When asked about that, Congressman Self said, "The economy will be the issue. I believe it normally is on most elections. So the results of the big, beautiful bill, it if happens fast, remember that's the mistake they made in 2017, they didn't pass it til December. There was not enough time to impact the midterm elections this time. We've passed it to the President's desk by the 4th of July, six months earlier. So now we hope that the impact of the big, beautiful bill in every aspect has more time to take effect and people will be feeling better about themselves, their pocketbook, their jobs in generally America as a whole."
Yahoo
03-07-2025
- Politics
- Yahoo
GOP holdouts stall Trump agenda into the night, with outcome uncertain
The GOP's 'big, beautiful bill' hit a wall late Wednesday night when a group of hard-line conservatives and moderate Republicans combined forces to stall the sprawling package. Lawmakers returned to the House chamber at 9:30 p.m. EDT — after an hours-long delay — to hold a procedural vote that would open up debate on the megabill and tee up a vote on final passage. The effort, however, stopped in its tracks after three hard-line conservatives — Reps. Keith Self (R-Texas), Andrew Clyde (R-Ga.) and Victoria Spartz (R-Ind.) — voted against the rule, along with centrist Republican Rep. Brian Fitzpatrick (Pa.). Nine other Republicans declined to vote altogether, denying Republican leaders the majority needed to open debate on the megabill. With all Democrats opposing the package, the vote remained stuck at 207-216 for a time, before Rep. David Valadao (R-Calif.) voted to support the measure shortly after 11 p.m. That momentum in favor of the bill was quickly negated, however, when Rep. Thomas Massie (R-Ky.), who voted against the megabill in the House last month, switched his vote on the rule from 'yes' to 'no,' setting GOP leaders back some more. As of just before midnight, the vote stood at 207-217, with five GOP 'no' votes and eight Republicans not yet having voted. Those eight were: Reps. Josh Brecheen (R-Okla.), Tim Burchett (R-Tenn.), Eric Burlison (R-Mo.), Michael Cloud (R-Texas), Andy Harris (R-Md.), Bob Onder (R-Mo.), Scott Perry (R-Pa.) and Chip Roy (R-Texas) had not yet voted as of 11:45 p.m. The impasse has forced Speaker Mike Johnson (R-La.) into a game of chicken, with leaders vowing to hold the vote open indefinitely in an effort to force the holdouts into a change of heart. 'I'll keep it open as long as it takes to make sure we've got everybody here and accounted for and all the questions answered,' Johnson told Fox News's Sean Hannity just before 11 p.m. 'I made that commitment to my members.' 'This is part of the process,' he added. 'We are tying up some loose ends. We had a Senate bill that was sent over that was modified from the House version. We liked the House version better, no surprise about that, and we had reached a very delicate balance on it, so it's taken a little while to go through the changes and to have everybody fully process that and figure out what that means for them and their districts.' Live updates: Republicans hold open critical vote on Trump megabill in dramatic scene The Speaker said he spoke to three of the GOP 'no' votes, calling some of their positions a 'placeholder.' 'I've spoken to 'three of the four, I'm trying to find the fourth one,' Johnson said. 'But a couple of those are still waiting for some of those questions to be answered, and they're just sort of putting placeholders on the board, and I think they're open for conversation. Everybody's here in good faith, everybody wants to get to yes, everybody wants to deliver this agenda for the people, and we're going to give them every opportunity to do that.' The logjam did not come as a complete surprise. Shortly before leaders called the procedural vote, a handful of hard-line conservatives announced they would not vote on the effort if top lawmakers called the referendum Wednesday, contending they needed more time to receive clarity about the policy details of the package — and, perhaps, ease their qualms and win their votes. Johnson, however, tried to call their bluff, convening the vote despite the threats. Some Republicans, including Rep. Ralph Norman (R-S.C.), relented on their initial opposition, supporting the procedural vote after hours of bashing the bill throughout the day Wednesday. 'We got clarification of what's going to be enforced,' Norman told reporters. 'We got clarification on how the IRAs are going to be dealt with. We got clarification on the tax cuts. And still we'll be meeting tomorrow on the specifics of it. But no, I feel comfortable with this.' It is unclear what leaders will do next. As the clock approached midnight, lawmakers of both parties were milling around the chamber even as the vote tally remained frozen. Johnson said Trump offered Wednesday night to call the remaining holdouts to try to get them on board. 'He has been, in fact, he called me most recently about an hour ago and said, 'Who else needs to have a discussion? I'm ready to get on the phone.' And I said, 'Mr. President, you've done your job and we'll do ours here,'' Johnson told Hannity. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Washington Post
03-07-2025
- Business
- Washington Post
The last gasp of small-government conservatism
Texas Republican Keith Self, a putative deficit hawk affiliated with the hard-right House Freedom Caucus, was categorical in his opposition to the Senate-passed 'Big, Beautiful Bill,' which will add about $4 trillion to the federal debt. 'The Senate's version of the BBB is morally and fiscally bankrupt,' he proclaimed on X at 6:50 pm on Wednesday.
