Bulwark Takes - The Budget Bill from Hell

Episode Date: May 22, 2025

Sam Stein and John Avlon take a close look at the GOP’s chaotic budget bill, with deep Medicaid cuts, Trump-era tax games, and a rushed vote few even understood.

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Just add a packet of Meowgreens. Hey guys, it's me Sam Stein, managing editor at The Bullock. I'm joined by John Avlon. This is fun Hey, man, I'm good for those who don't know you should know by now John hired me at the Daily Beast Back together and really appreciate it John's gonna talk about the budget the beautiful budget bill salt everything involved all he wants to talk about really But before I get into that subscribe to the feed click that button very important All right

So John we've been like trying to schedule this thing for like a day and a half now because it's such a moving target We didn't know when we did right because now I know now we know I But it was just sort of like watching it unfold. I was just It was what I was struck by was how crazy the entire process felt At no point did we really actually see the legislative language until like a few Minutes before the rules committee voted and then like a few hours before the whole house voted totally abnormal stuff But beyond the process I I you know, I'm curious what your you ran for office last cycle

You're in the mix, you know this stuff like what is your takeaway about what the House Republicans, especially the frontliners decided to do here? Look in this bill is a shit show to the extent that nobody knew what was actually in it when they voted and it managed to Simultaneously have massive cuts that will hurt real people where they live there I mean there are automatic Medicare cuts that are set in here in addition to the Medicaid cuts, the food stamps, everything else, but it still blows up the deficit. Usually. Uh, and so those are the big factors. In some ways it's the worst of all worlds. Yes, they passed it barely narrowly. Uh, but, but the fact that it simultaneously guts people who need it most, it shreds the social, the safety net. Uh safety net. And, you know, keeping in mind that like

34% of people on Medicaid are kids, right? And then it simultaneously blows up the deficit, which should codify for anybody with any doubt who stands against suckered beyond the idea that Republicans stand for fiscal responsibility. We got 40 years of test case here. Republicans only care about the deaths and the debt when Democrats are president. But, uh, you know, I think Jillian Ted had a great column about, uh, there's being called the triple B bill, which is also these, right? Exactly. Well, that that's also the downgrade rating. And, uh, you know, so, so this is, you know, and look, it's going to get changed a lot. So that's what I wanted to ask you about.

So I had a theory. I mean, I always thought that they would pass something because I think the desire to notch them. First of all, this is their only big bill, right? Like they're not doing any other. So that combined with Trump's hold over the party, combined with the impending expiration of the tax cuts and the debt ceiling, I thought those factors were enough that they would pass something.

But for a brief moment, for a brief moment, I kind of got a little bit squishy on that because it was very evident to me that the Senate said they were going to change it no matter what. So if you're a frontline House Republican and you're voting and you know that whatever you vote for, the Senate's going to change, that's a tough one to swallow, especially the way you laid it out. Were you surprised that the moderates in the House didn't take a stand on some of the other stuff? I know they did on salt and we can get into that. We'll get there.

But were you surprised by the fact that they didn't go demand further, for instance, less aggressive cuts to Medicaid, for instance? No. And I'm not for two reasons. One, I think on the more painful measures, the cruel measures, I think they think or they can rationalize that the Senate's going to bail them out a bit. Yeah, but they still took the vote, right? They still took the vote and and and and the vote will hurt them. But here's the other thing. I think just again to look at it any sense of perspective the

center, right? Always caves at the end of the day. I got a lot of respect for people like Don Bacon on a lot of fronts. Okay, but but he's an outlier and that he's sort of more principled among what's left of, you know, the credible center-right. Everybody else folds. They speak a good game because of electoral anxiety, but at the end of the day, you know,

they're Trumpers. You know, they'll make different mouth noises around election time if they think it interests them, but they're still in thrall. They're more afraid of a primary than they are of losing a general election, even if they're in swing districts and their followers. They will always cave. That's why there's no spine left on the center-right. So no, I'm not. I think now, of course, the real action is what happens in the Senate and whether that'll gut some of the provisions, including SALTT that these folks fought for and all signs point to yes. So I was going to ask you, what are your expectations for how the

Senate changes this bill? Look, I think they'll probably trim back some of the Medicaid or Medicare cuts. I think work requirements probably not, but they'll make it less of an electoral two by four to the face. That said, the Senate's in some ways... So just to be clear, like the work requirements, they were supposed to go in in 2029. The concession to conservatives was to start them in 2026, right after the midterms, I should say. But that would be a problem, theoretically, politically in 2028. And so perhaps the Senate's like, you know what, let's go back to 2009.

Yeah, or let's put it put it up in 27 or something like that. Something like that. Yeah. Yeah. Yeah. I mean, I think there's there's likely to be be some some delays, you know, of some of the more painful provisions, you know, you might see, you know, if you don't pass this bill or anything like it. First of all, there's a lot of magical thinking. So in terms of the impact on the deficit and the debt, right? Lindsey Graham is trying to look for the Senate parliamentarian

to be a weird nerdy, but really important fight around this stuff because it's a question of what you can make a baseline. But the bond market's not buying the unreality. Talk about that. Because I've been following it from afar. Obviously, they don't have faith that the US is a good place to invest, but what's going on? Okay.

This is what really matters. And it's not just, there's a famous James Carville quote from decades ago in the 90s about it. When he was growing up, he wanted to be a home run hitter or president or Pope. But now when he grows up, he wants to be the bond market because the bond market can intimidate anybody, everybody. Is that real? Is that a real James Carver quote?

Said in a little bit different accent, but yes, it is. Yeah, fair enough. But the point is that the bond market is a financial assessment of the stability of the United States fiscally and politically. And the bond market has been really sending mess to the Trump administration, like the new US does not look like a stable long-term investment. By the way, I mean, you know, a trillion, I think a trillion owned by the Japanese, almost a trillion by the Chinese.

So that can be used as a weapon against us. That's a rational argument why too much debt is dangerous, in addition to the fact that ultimately, you know, the payments on the debt end up crowding out discretionary spending. But the bond market has been sending the message since the Trump administration that the confidence in the full faith and credit and stability of decision making in the United States is going down. And this is a result of the out of the extortionary politics. We saw one of the earliest down earlier downgrades during the Tea Party era. Now Moody's got on board. So all these things make it more expensive,

you know, to finance our debt and the bond market is is sort of undercutting this. They're saying a very clear message. The US does not look like it's built on bedrock now. It does not look like a stable giant and a beacon of freedom and responsibility and liberty and stability. Now, is this mostly related to debt and deficit concerns or is it a combination of that, the tariffs, the erratic political culture, things like that? All of the above. This is not just deficit and debt. We've sustained growing deficit and debt. That's not great. But, you know, a certain amount is reasonable, particularly for the world reserve currency. It's the political instability. That's

the new new the tariffs adding to economic, you know, a sense of economic irresponsibility. And that's incredibly dangerous. You know, we have lived in a world we've taken for granted, the US of the world's reserve the world reserve currency, because we have the safest harbor that may that the markets, you know, are sending the message that's no longer the case. And it's directly the result of these sort of hijacking of our politics by hyperpartisans, particularly on the Trump is weighing in the far right. And so this this budget just compounds that stuff. Right? This budget would just budget just to be clear, I think it would, what are the estimates like three, what was the trillion? Three to five trillion added to the deficit.

They, with respect to taxes that you mentioned how they're going to play cute with the baseline. What they're essentially saying is let's just assume that, you know, we're not, you know, these taxes aren't set to expire this is baseline so we don't have to count it as adding to the to the debt and deficit. It's crazy because let's say yeah yeah because if I were if Democrats tomorrow were to pass a you know enhanced child tax credit but made only one year they could then say well if we just extend it 20 more years, it doesn't

count anything because the baseline is now the enhanced child tax credit. It's just no real way to do actual fiscally responsible. The entire way that the last math worked is that it's sunset in 25. Exactly. I eat this year. So now they're saying, no, no, no, no, no, no, this was always going to go on forever. It's a new baseline. And it sets up a fight for the Senate parliamentarian that a lot of senators behind the scenes are worried about because if you start under, if you start overruling the Senate parliamentarian on things, you're living in a lawless universe. Well, they just, they just did it yesterday on the California mission stuff. So there is precedent that rule overruled the parliamentarian. So there is some scary precedent here, I think

around the watch out that out. Yeah, exactly. All right, let's get to taxes because we'll talk salt and I want to talk about high income earners because there was a period where Steve Bannon and his Zillocore saying Trump should be thinking about actually raising the rates on, I think, I forget, I'm going to mangle it but no, 40%... When it's over 500 or something like that. Yeah, something like that to 40% for those making over 500,000 individually or by family Whatever it is point is he wanted to raise high high rates and Trump balked basically

I mean he flirted with it, but they said no things look and then the salt stuff happens and and and You know, they wanted to extend the the reduction the deduction site, but Ultimately, we got to a place I think where this is somewhat of a conservative tax bill, but I'm curious from your perspective as someone who's in a salt state,

who's run in a salt state, give us your pitch as to why the salt caucus did not get the job done here, if you think that's the case. It absolutely is the case, because if we had done nothing, state and local tax deduction would have been returned. Now, keep in mind, people's ability to deduct their state and local taxes has been part

of the federal income tax law since 1913, since it was kicked off. This is a longstanding precedent. This is not a newfangled idea to give away. The idea is in part double taxation, right? You're being you're being taxed twice in effect. So you should be able to deduct that. But it was done under Trump in 2017. State local tax deduction was taken from, you know, open ended to 10k right per individual on a basis that was basically just it was

purely partisan. So Trump and the Republicans- It's because the blue states have higher state taxes and they want to give it to the blue states. Yes. Correct. So, and they've, and so this was always a political stunt designed to hurt blue states, designed to sort of rub the salt in their wounds, but it ended up creating net tax increases. For example, here on Long Island,

particularly in Suffolk County, but all throughout. And so this is a huge freaking deal, but Republicans have found ways to benefit politically, right? People will move to red states for lower state taxes, and then those congressional seats are gerrymandered, just outright, no debate with any Jews about, you know, fairness or equity. I'm like, okay.

So the a lot of the Republicans from New York have been saying we're going to restore stall. Now keep in mind, it would have been 100% back if these tax cuts had just expired. They just expired, right? 100% back. So anything short of that is still a whack in the face. Right. Now the credit side guard you finished first. They're able to say look, we were able to get it to 40, you know, you know, Bert and family. And that's an improvement for a lot of folks. It faces out at 500. Yes, that's high, but the

regional economies in place. The real deal is, is that a Trump said he was going to eliminate the state and local tax deduction at a campaign stop in the fall of 24. That was always BS. And now it's going to meet the Senate and the Senate doesn't give a damn about this stuff because there basically are no, I mean, two or three blue state, you know, Republican senators. So this is all the things they gave up, you know, like they weren't gonna sign off on a sacking of Medicaid Or or you know cuts to Medicare that

They're saddled with all of that and this thing probably doesn't even have a life expectancy worth buying You know had a lettuce for so it's 40% at 500 K for the new salt under the house bill Which is obviously higher than 10%. The initial offer was 30% not percent. Sorry, sorry. Yeah, sorry. 1000. Yeah, they got it up to 40 K. It was the initial offer 30 K. So that's what they got in the negotiation process. The pushback on this is that well, this is only going to impact incredibly high net worth individuals, right?

And your response, which I think is valid, is that in fact, you know, this is a, you know, what we're talking about New York, California, New Jersey, this is going to actually hit a lot of people with high costs, where they live in high cost neighborhoods, where, you know, prices are astronomical, and this will have a really big impact. And it won't just be high net worth individuals, it would be middle class. And you think even at 40k, that's a problem? Look, I think this is a this is better than 10, which is what they have. Yes, mathematically it is better than 10.

And so let's not let's but don't take this to the bank until we see what the Senate does. And what do you think the Senate's going to rose? Do you think the Senate is going to just do nothing? Keep it at 10? Uh, I don't know what the sun's going to do, but I know they're not well disposed to, I will say you're right about Trump. He flipped completely on this. He promised to get rid of it entirely.

He did. And he said he would work with democratic governors to get rid of it entirely. And this was always transparent BS. Who are you with Democratic governors to get rid of it entirely. This was always transparent BS. Who are you going to trust to get rid of it? The person who took it away? Who lies all the time? Or folks have been saying from the beginning that this is absolutely unjust and unsustainable. And so how would you get the revenues?

Because I think you're with me that you do need to raise tax revenues, right? You have to raise them if you want to bounce budget. Where would you look? All right. First thing I would do is I would close loophole. I'm a big fan actually of tax simplification, interest loopholes thing like carried interest is one of them. But but I'd actually look at like, so let's start with corporate, right? You know, we we had a corporate tax that was too high in the United States. If you look at international competitiveness, you do need to look at our national competitors, we do need pro growth policies, fine. But if the Trump and the last Trump bill, they lowered them lower than what

CEOs were asking for, which is 26%. And they didn't close a single damn loophole. If you're going to lower rates, which you should do, close loop, right? Close loopholes, create simplification, re R&D all day long, we want people to invest in long term value creation, but not stock buybacks, right? I mean, you know, it's just one example. So I'm actually very much in favor of leaner cleaner rates, but you got to do simplification to do it.

And that raises rates. The other thing I think you need to do is recognize that there's a lot of variability in regional economies. And it makes no sense to give someone who's a member of the upper middle class, the working wealthy regionally the same tax rate as someone who's the point 0001%, especially if they can game the system as often occurs. I think, you know, if you were to make the top rate higher, but make it for folks pulling in a million a year, it'd be hard to see politically how you could fight against that. Millionaires, like Yeah, no. In fact, that was a there was a movement.

Not a surtax actually just say if you want to raise the top rate back to 39.7. Okay, to the top margin rate at a much higher level. Not an Elizabeth Warren surtax, but an actual new bracket that says, Okay, yeah, I get we should have tax simplification, we should have much more, you know, a simplified, simplified tax system with, you know, five rates, that's really clear. And with some basic deductibilities, child tax credit, state and local tax deduction, charitable, but keep it simple. And make it harder to gain, make it just. And I think I would actually that would be a relief for folks.

Oh, yeah. And they've been talking about this for they've been talking about conference attacks from forever. It's just not. But you got a system is larded up with lobbyists. And this is where small businesses get screwed to you can't navigate a system. If you that you can't afford to buy on a phalanx of lawyers and accountants. And that's where a lot of righteous frustration comes in So we've got a simpler system with with clear deductions that doesn't penalize small businesses and and and middle-class and upper middle-class folks

All right last question for you because now it goes to the Senate. We know it's gonna get changed this bill You have some suspicions about saltive some suspicions about what they're gonna do with Medicaid either way. It's gonna be different bill. Um, Are you with me that ultimately they'll pass something they just have to ultimately they'll pass something but that's sort of like, you know, uh, you know It's not quite saying the sun's gonna rise in the morning. They gotta pass something, right? Did it I mean look they did not pass the aca repeal like they they've had histories of not passing But but that was that was a one- off that was sort of politically politically different. I don't think this is the same. I mean, you got a debt ceiling coming down the pike and you got to do something.

And you're right. All the ambitious things they were talking about doing are things that could have been considered silver linings, you know, in this circumstance. No one's talking about, you know, immigration reform, they're just talking about more money for the border, for example, right? Yes, they will pass something, I would imagine. But it's gonna look a lot different than what just passed by two votes. And, and so, you know, just like no new voted on this new new what was in it, let's be real clear about that. It's really crazy. It honestly is so crazy.

It was like hours. They just put up a manager's amendment and then within hours they were expected to vote on it. Wild stuff. In the middle of the night, right? Well, at that point it was like 4 a.m. So does that count as night or early morning? It's dark.

Very little good happens between midnight and 5am. I always disagreed with that. I always thought good stuff happened. I'm like, you know, sunlight, you know, outside your own home, Sam, how about that? You know, you got to, I mean, you know, if the sunlight's the best disinfected, if you're trying to push things, you know, big bills. You know, you're trying to buy so back on your I'm pulling this back in you think they'll pass something you think they'll pass on something but I when I say we don't know what will be in it

yet. I mean, no one should act like and this this is this is some kind of baseline but barely. Yeah. Well, and you got to watch the bond market because if it keeps going the way it goes that does impact the way that these lawmakers think it should but I don't know Well, and you got to watch the bond market because if it keeps going the way it goes, that does impact the way that these lawmakers think it should. But I don't know that it will. You can't spin the bond market. We have a policy of unreality, right? We have a political party that accepts unreality as a litmus test for loyalty. And the bond

market's gonna not gonna buy the BS or shut it. Avalon, it's always a pleasure, buddy. YouTube brother talk to you later. Guys, subscribe to the feed. You get this stuff later. Discover the life changing benefits of me out greens for your cat. Ever see your cat slowing down or having health issues and wonder, what can I do to make them better? Well, my friend, add me out greens to your cat's food for 90 days. And I guarantee you'll see changes that will amaze you. Greetings.

I'm naturopathic. Dr. Dennis Black, inventor of Meowgreens and I invite you to take the Meowgreens 90-day challenge. In the first 30 days you'll see shinier coats and increased energy. By day 60 your cat will have a stronger immune system, less shedding, improved joint function, all due to the live nutrients that you've added to their diet. And at 90 days, they're going to have better digestion, reduced inflammation, improved heart health, and you may even have reduced their cancer risk. Fetch a free Jumpstart trial bag for your cat today. Go to TryMeowGreens.com.

Use promo code TRYMEOW. That's TRY-M-E-O-W. You just cover the shipping. You don't have to change your cat's food to improve your cat's health. Just add a packet of Meow Greens.