Pictures of the Worst Budget Bill of my Lifetime (and I'm old).

It's still not over, which tells you how bad this bill is. Even a few of today's Rs are...for now...balking.

Before diving into the pictorial weeds, let me share some 40K-up takes on the big, ugly budget bill.

—I’ve been doing this work for decades, and I’ve never seen a budget proposal this awful. The worst part is the transfer of resources from the poor to the rich—cutting health coverage and food support (Medicaid and SNAP)—to partially offset the next worse part of the bill.

—It will add, by my (and many others) estimation, $5 trillion over 10 years to the nation’s debt. As I’ve written in recent days, disembodied trillions are hard to contextualize, but this takes our debt to unprecedented heights at a time when interest rates, and therefore debt service, are facing upward pressures. The fact that the usual debt perma-hawks are screaming about this is expected. But a lot of perma-doves are also ringing alarms.

—The bill abandons the working class, making their lives more expensive, less healthy, and less upwardly mobile, through diminished health coverage, rural hospital closures, less student aid, a dirtier environment, more expensive energy costs, and, if we include the tariffs—a highly regressive tax—higher prices.

—Even though it’s hard for busy people to track all the minutiae, the arcane processes, the facts and the lies (Sen. Thune: “This bill will lower the deficit.”), the people know how bad this is. It is consistently underwater in polls and the more people learn about it, the further it sinks.

As noted, the legislation has not yet been passed. There are a few holdouts in the Senate—Trump can lose 3 R Senate votes, but no more. Should the bill pass the Senate, it goes to the House where Rs from both chambers have to agree on the final bill, which then goes to Trump to sign.

I’m not going to handicap the outcome, other than to say hope stays alive until the deal is done, though R’s usually fold in these situations. But then there’s this:

I could be wrong—economist, not pollster—but I believe the Rs will pay for this. Yes, they’ve tried to frontload the tax goodies and backload the support cuts, but this is highly, highly radical policy, cutting popular programs, including those creating jobs and lowering energy costs, through cuts—and new taxes; see below—in the production of renewable energy. All while exacerbating income and wealth inequality.

If you believe, as I do, and as history clearly supports, in the public’s “thermostatic” reaction to such overreach—the idea that voters react negatively to straying too far from the status quo; they’ll vote to bring down the temp and reestablish room temperature, as it were, when policy gets too hot—then they’ll pay for this.

Of course, that won’t happen alone. It will be up to us to not only track the damage but to—equally, if not more importantly—point to a better way.

Now, a few figures that I found useful. If you have ones you think help explain this beast, add links in the comments. I won’t repeat Bobby K’s figures that I put in Sunday’s post, which portray the cuts in Medicaid and SNAP, but if you haven’t eyeballed them, please do so now.

This one, from the NYT, shows how the tax cut extensions, dominate the field.

This CRFB figure is particularly important because it adds the cost of making allegedly temporary tax cuts permanent (this is where my $5 trillion estimate comes from). Pretending tax cuts are temporary is one of the oldest tricks in the book. It gets you the less expensive score you need, but when the expiration comes around you blast anyone who supports it as being for “a massive tax increase!” That’s exactly what got us into this current mess, as most of the original Trump tax cuts were allegedly temporary.

Next, from the Yale Budget Lab, here’s the impact of the bill’s deficit-financing on the debt-to-GDP ratio.

Two points about the above figure. First, it requires historical context. Below you see the long history of publicly-held gov’t debt as a share of GDP. My point is that the forecast above takes the debt to unprecedented levels. And for what? We hit the previous record in WWII for the cause of defeating fascism. If we hit a new one, it will be for the cause of taking health coverage from the poor to further enrich the wealthy.

I can’t think of a more potent example of how far our nation has devolved.

The second, more prosaic point, is the one I made yesterday. Based on rules of thumb, a percentage point added to the debt ratio pushes up interest rates by 2-hundreths of a percentage point (aka 2 basis points). Going out 10 years, the YBL figure shows about a 30 ppt increase in the debt ratio, implying a 60 basis point addition to interest rates. Using the House version of bill, which adds about a $1 trillion less to deficit over a decade (meaning the bar chart below is an underestimate), the Budget Lab took a stab at what these rate hikes mean for average folks:

If you just look at the impact of the tax changes, you get a partial sense of how skewed this bill is. “Partial” because the tax changes alone ignore the service cuts (the income losses associated with losing Medicaid, SNAP). Still, the figure below, from CBPP, shows the extent to which the tax changes exacerbate after-tax income inequality. Those in the top 1% get ~$63,000 compared to $70 in the bottom fifth. And again, that $70 goes negative when you factor in the losses from the spending cuts (it goes even more negative if you add in tariff impacts).

I’ll stop here because I have many other things to get to, including prepping for today’s episode of Let’s Do Lunch, with my guest, the great economist, and old friend, Jason Furman. Tune in at noon at the Contrarian site. We’ll definitely be talking about the budget bill, but will be sure to answer lots of other questions as well.

One last thing, something I alluded to above, included here because a) it is so egregious that even the Chamber of Commerce and anti-renewable-energy advocates are saying this one goes too far, and b) it’s the kind of overreach that I believe triggers thermostatic backlash.

It’s not just that the Senate bill disinvests in renewable energy production by repealing subsidies legislated under the prior administration.

But the latest version of the Senate bill would go much further. It would impose a steep penalty on all new wind and solar farms that come online after 2027 — even if they didn’t receive federal subsidies — unless they follow complicated and potentially unworkable requirements to disentangle their supply chains from China. Since China dominates global supply chains, that measure could affect a large number of companies.

These Republican legislators are truly out of control, mindlessly doing the bidding of a president who is driven by a fact-free longing for a distant age, while delivering big money to their donors at the expense of economically vulnerable people.

The near-term question is will this pass. If the answer to that question is yes, then the longer-term question is how quickly can we elevate the damage it will do in the interest of defeating those who supported it so that we may quickly introduce and implement a new and very different policy agenda.