Budget update: Second deadline for "one big, beautiful bill" goes off rails, Congressional resistance hardens
A tale of dolls (but not trucks) and hints of sanity from new places, with sudden, very different directives yesterday from the White House, plus a clear tweak from Rome.
Why this matters to women: We’re the family Chief Medical Officers. We coordinate health care for our kids, our parents, and our spouses and partners (and their parents and relatives). We’re Health Info Central for half the ‘hood and for many colleagues at work and in our communities. Together, Medicaid, Medicare and the ACA (“Obamacare”) cover 62% of Americans1, and Speaker Johnson homed in on an 11%+ reduction in Medicaid (or possibly Medicare or even Social Security) without saying it out loud to give the president what he wanted. ACA expansion cuts are also on the table.2 Bottom line for women: The odds are 6 out of 10 that the health coverage of someone(s) we know and love in our communities and our families—kids, aging parents, nieces/nephews—is under threat to advance the president’s spending priorities: border security, increasing defense spending, and making a tax cut permanent that primarily benefits the top 10% of households.3 And then the economy and retirement savings took a nose dive, threatening livelihoods and household budgets along with everything else.
You’ll recall from previous episodes that Speaker Mike Johnson, all over Trump’s “one big, beautiful bill,” set an artificial deadline for budget reconciliation of mid-March. The Senate and the House were leagues apart on that, and while the bill passed in the House, it was by only two votes, and that after significant intervention by the president. Johnson’s excitement about going after entitlement cuts—largely presumed to be Medicaid cuts—was not mirrored in the Senate.
The Senate—smarter about the election track record of parties that reduce healthcare benefits—said no, and everyone stopped, passed a continuing resolution to fund the government through the end of the fiscal year (Sept 30), and took a breath.
Johnson then came up with a the idea of putting a budget bill on the president’s desk by Memorial Day, pushing Congress to get it done now.
But since March, a lot has happened. Things are very different now, and have even changed rapidly in just the past 24 hours with some surprise directives from the White House.
Since the original bill failed in March, tariffs have been enacted, with evidence clarity of strategy…isn’t. The world economy went berserk, stocks plummeted, and the dollar entered danger territory. Backing off of how glorious it will all be, the president switched to talking about economic pain for a [questionable] greater good, with rapidly plummeting support in his own party as the damage continued to roll in. The president’s advice to parents to buy two dolls instead of 304 for their daughters for Christmas didn’t hit well with anyone, including Republicans.
And while there were initially loud noises out of the White House about 70 countries begging for tariff deals, five weeks later the only trade deal that’s been announced is with Britain, announced with fanfare yesterday. That begs the question of whether 70 countries were demanding deals, and/or our ability to get deals done. And while the deal with the UK was celebrated, it appears to be a conceptual bit of smoke and mirrors. The details of the deal haven’t been spelled out and 10% tariffs remain. Even Fox is showing whispers of criticism, and left-leaning media indicate any deal is needed to show progress.
After a burst of orders to beat the tariffs, China, from whom we purchased about $450 billion in goods last year, isn’t getting new orders as a result of the 145% tariff levied on them, and large and small US companies dependent on Chinese product are feeling the impact. Port traffic in April hit record highs with US orders attempting to beat the tariffs, but on April 24, the executive director of the port of Los Angeles said, “Essentially all shipments out of China for major retailers and manufacturers have ceased.” More tariff damage is also passing from prediction to reality. Ford just raised car prices on three models; that will impact the cost of used cars as well on already struggling younger populations.
In another clear sign things aren’t working out, Trump yesterday said he will cut tariffs on China; the rumored cut is to 80% to as low as 50% from the current 145%. When finalized, it will undoubtedly be presented as a US win; watch what’s happening and what China says, not what’s promoted from the White House.5
What else we’ve learned in the meantime: One US president can get the world’s economic attention overnight—and not in a good way. And in only four months, we’ve apparently gone from the healthiest post-pandemic economy in the world to multiple indicators we’re headed for a recession. None of the big promises that were made have come to pass, from ending the Ukraine war to lowering the price of eggs on “Day 1.” DOGE has made quite an impression—particularly on Tesla brand and stock prices.6 After promising $2T in cost savings, DOGE is now saying it found about $165 billion in savings—only it looks like it cost the public about $135 billion to find those savings.
Bottom line: None of the economic news is good. The US economy is now in a worse and much more unstable place than when budget negotiations began in February. That presents a very different picture when talking about both the wisdom of a massive tax cut, and about hitting states with potentially higher costs of Medicaid,7 and hitting Americans with inflation and cutting health care coverage.
But not to worry…celebrate! It’s all good!! And, to prove it, a la Putin and Russia, there are plans for a massive military parade for the 250th anniversary of the Army, which happily falls on Trump’s 79th birthday next month. The Associated Press reported last week that the parade potentially calls for more than 6,600 soldiers, at least 150 vehicles and 50 helicopters—with Fox business estimating the cost between $25 to $45 million.
Onward.
So—where are we now with the budget?
Last month, Johnson set another artificial deadline of Memorial Day to get the big, beautiful bill on the president’s desk. Now that looks impossible, and treasury secretary Bessent’s deadline of July 4 is increasingly doubtful as well.
Republicans in both chambers remain deeply divided over how much to cut spending to offset the cost of extending Trump’s 2017 tax cut, enacting new tax relief, securing the border and boosting defense. Senate majority leader John Thune has argued from the start that Congress should break up Trump’s agenda into two bills: one focused on border security and defense, and the other focused on extending the 2017 tax cuts.
The Senate—which was never on board with massive cuts to Medicaid—has become much more resistant. One GOP senator is calling Trump’s agenda a train wreck.
In the House, where members have experienced … difficult… town halls about all this, Republican resistance to Medicaid cuts is now much more out in the open. And, just in case, messages are being delivered about not touching Social Security, either.
Cracks are starting to show up on the tax cut, both about the amount, and whether it can be made permanent without ballooning the $36 trillion U.S. debt and $1.9 trillion annual deficit.
Red states have figured out they may get caught in the middle on Medicaid, and are starting to lobby members of Congress.
Jasmine Crockett—admittedly not an impartial observer—reports Republicans are “running late and scared” on the budget, and the Washington Post reported last night that Trump is telling Congress to raise taxes on the rich (gift article—no pay wall)—a new twist sure to complicate Republican legislative strategy.
Another contentious issue is showing up, also splitting support: the state and local tax (SALT) deduction available to federal taxpayers. Here’s the debate, and who stands to benefit.
In yet another sign the honeymoon between the White House and Congress may be over, Republican lawmakers are now sending clear messages they will not make DOGE cuts permanent.
Finally, on the religious front, it’s unlikely we will ever know whether/how politics in the US influenced the papal election; the conclaves are notoriously secretive. But recent US political events—ugly immigrant deportations, Catholic convert JD Vance attempting to rewrite Catholic dogma, AI images of Trump as pope, and US conservative Catholics lobbying in Rome—may have tipped the balance on selection of a US cardinal as pope, an unanticipated, historic first. The conclave was relatively short, signifying little dissent, and there appeared to be clear, if subtle, messages to the White House in the selection of Pope Leo XIV.8 Twenty percent of the US population is Catholic—the single-largest religious body in the country, and there are 150 Catholics in Congress. Worldwide, there are 1.4 billion Catholics, and Latin America—the source of much of our immigrant angst—is 54% Catholic. Like other major denominations in a chaotic era of change, Catholics have disagreements about direction, but some of that will be offset by the excitement of the first-ever US pope.
It looks as if…
Republicans are starting to understand the gap between what Trump wants and the reality of pulling it off, not to mention suffering the damage of an unclear, damaging economic strategy and the fear and anxiety of both the people and the states they represent. Trump’s actions yesterday look like he’s getting the picture from Congress and taking some steps to ameliorate the damage. Fixing the economic picture—assuming the damage is reversible—could put Congress collectively back on the offense again. The next couple months are going to be beyond interesting. Watch for what’s happening—not what they say; the clues are all there.
As a country, we can’t decide if healthcare is a right or a privilege, and every time someone talks about a national health system—like the countries that have better healthcare outcomes than we do—“Socialism!” cries and pearl-clutching take over. But with over 60% of the country now covered by Medicare, Medicaid or the ACA exchange, it looks like we’re begrudgingly headed there, passively if not actively.
Johnson has called for a ~$880B cut from the House Energy & Commerce Committee which has broad jurisdiction over healthcare, including Medicare and Medicaid. Johnson didn’t specify where Energy should find that much in cuts, but the only place that much is available is out of Medicaid or … gasp … Medicare. So far, taking it from poor people has outweighed going after reliably Republican Boomer voters. The CBO has been clear there is no way to meet the required cuts without cutting Medicaid, and Trump has been clear that Medicaid and Medicare are not to be touched. (Of course, that was yesterday…)
There are two key issues about the tax cut:
Who benefits: Based on data from the original 2017 tax cut,
Looking at percent of benefit, the Top 5% of US households—those making $450K or this year—will 45% of the benefit of the tax cut. Including the Top 5%, the Top 10% would get 56% of the benefit. The Bottom 80% of income earners would split about 30% of the total value of proposed tax cuts.
In actual dollars, the nonpartisan Tax Policy Center found that households with earnings in the Top 1% would receive an average tax cut of $61,090 in 2025 while the bottom 60% of American households would receive an average tax cut of less than $500. This represents ~3% increase in after-tax income for the Top 1%, compared to less than half a percent (0.4%) increase in after-tax income for the bottom quintile of Americans.
The cost of making the tax cut permanent: Extending the expiring 2017 TCJA would decrease federal tax revenue by $4.5 trillion to $6 trillion through 2034, or more if the economy worsens. This year, the existing tax cut will balloon the highest national debt as a percent of GDP (124%) that the nation has ever seen—higher even as a percent than after the Great Depression and the unanticipated high costs of entering World War II (106%). Note that by 1974, we’d reduced that to only 39% of GDP; in the 50 years since, we’ve managed to triple that. Sometime when you’re bored, take a look at who was president when it increased and decreased. It’s revealing.
There were no recommendations about cutting back on toy cars or trucks for boys. No further comment.
When the AI image of Trump as pope came out over the weekend, a lot of us wondered what that diversion that was intended to cover. Everything happening suddenly this week may be the answer. And in a sure sign it didn’t play well, Trump later disavowed having anything to do with the image that appeared on both Truth Social and the White House feed.
Talk about a business school case study in how to blow up value and brand in less than six months.
The Federal government pays as much as 90% of Medicaid funding in the states, known as “Medicaid expansion.” Forty-one states access those expansion funds, including multiple red states. If that funding goes away, the states will either have to pick up the substantial difference, or deal with angry recipients who will first blame the state, not the DC. See more here.
With a couple thousand years of practice saying, “What were you thinking!?” without saying “What were you thinking!?” … messages from Rome often have subtle but unmistakable layers. Pope Leo XIV—Robert Francis Prevost—a Sox fan—is a native of Chicago, where Democratic politics have long been a thorn in Trump’s side. Prevost was born in South Side Chicago, now predominantly Black, an area for which he and former president Obama share deep loyalties, and the location of Obama’s presidential library. While not all Catholic priests have strong educational backgrounds, the new pope does, with multiple degrees including a doctorate: he’s not one to be taken on casually on matters of Catholic doctrine, as Vance learned.
As a leader of the almost 800-year-old Order of St. Augustine, Prevost spent two decades ministering in Peru, where he holds citizenship and is apparently deeply revered. Prevost won’t be a radical progressive. He is a moderate, and voted in Republican primaries a decade ago, but on matters of foundational church teachings such as social justice, he is crystal clear and has already taken on both Trump and Vance on social media.
For Catholics and Catholic-watchers, all that resonates as messages that the Vatican is not turning back from Francis’ legacy as a cautious but purposeful reformer. You don’t move a millennia-old church in a year or two; like Francis, this pope is unlikely to make either conservatives or progressives entirely happy. Here’s an update from WaPo late last night on his political and social views (gifted article). Neoconservative Bill Kristol at The Bulwark weighed in as well in “An American Pope and the Turn of the Tide,” talking about the election of another non-Italian pope at a difficult time for the US: “It gave us hope in dark times. There was a sense of the West in decline. Could this trend be reversed? … It was reversed, partly thanks to the new pope.”