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Donald Trump and the Republicans want you to believe their budget bill is going to cut your taxes and put more money in your pocket. 

They say that if they do not pass the bill being debated now in the Senate, tax cuts passed during the first Trump administration will lapse. They say that will trigger “a massive tax hike” on Americans.

But normal people will see almost no change in their tax bill if those old tax cuts expire. Matter of fact, normal people will see almost no change even if the president signs the new legislation into law. 

Let me put it this way. 

If the bill passes, you will gain $14 a week. 

If the bill fails, you will lose $9 a week.

That’s according to analysis by the Center for American Progress.

Here’s how Bobby Kogan put it to me. (He’s the senior director of federal budget policy there.) He said that what the GOP is “doing [is] percent change in taxes paid, not percent change in after-tax income.” 

That makes their numbers look good, even though they’re bad.

“More than 25 million households making below $100,000 a year would actually not see any change in their taxes at all or would even see their taxes go down if the Trump tax cuts were to expire,” Bobby told me. 

Bobby went on to say: “It is true that the Trump tax cuts gave more than zero dollars to households making below $100,000 a year, but if the tax cuts were to expire, the average household that makes below $100,000 a year would see their taxes go up less than $9 a week.” 

Given that nearly 80 percent of American households make less than $100,000 a year, it’s reasonable to ask who the big beautiful bill is for. 

Not you.

But it would be a mistake to think the budget bill won’t affect you either way. From immigration to energy to health care – the current bill is indistinguishable from a dedicated scheme to make everything more expensive, pushing inflation even higher than it already is. (Inflation rose sharply in May while GDP shrank half a percentage point in the first quarter on the weakness of consumer spending.)

Think of it this way. 

Trump’s big beautiful bill is going to be the ugliest giant sucking sound you have ever heard in your life, as it would take one trillion dollars over 10 years out of the national economy and put it in private hands. 

Not only would cutting that much from Medicaid make millions of people sicker, and as a result make millions of people less productive (set aside for now the fact that many people will die), it would, as GOP nominee Mitt Romney once suggested in 2012, hurt economic growth.

Higher prices, fewer jobs, less growth – or as one Federal Reserve official told Bloomberg TV recently, the question isn’t whether we’re going to see stagflation in the near future, but the magnitude of it.

Maybe worst of all is the deceit. 

As Patrick Watson told me, the president and his Republican Congress have a chance now to fix real problems, not imaginary ones. In the interview below, the senior economic analyst for Mauldin Economics told me that Social Security and Medicare are heading for insolvency. 

“We could avoid that by making relatively modest changes now,” Patrick said. “But they’re not even trying.”

GDP fell faster than previously thought, according to new government data, by .5 percent. That doesn’t seem like a big number to me, but maybe it is. Are we seeing the conditions for a recession?

The economy is clearly slowing, but I don’t think recession is imminent. Unemployment would need to rise more. “Recession” is a scary word and kind of subjective. The NBER committee that declares them looks at many factors. It’s always kind of a judgment call.

In May, inflation rose sharply. Why? The Republicans alleged that government spending under Joe Biden heated up the economy too much. That’s not the case now, but inflation is still rising.

Inflation data has been hard to parse. Energy prices have been volatile, dropping when it looked like tariffs would weaken growth, rising when Israel began bombing Iran, and falling again when the US entered the conflict. Tariff effects aren’t evident yet but will be in a few months. 

The problem for now isn’t rising inflation; it’s that it’s not falling. If it just stays around 3 percent, the Fed has a hard time justifying rate cuts. Higher interest rates affect consumer spending and housing prices. I don’t think government spending is a big factor for now.

The GOP budget bill rearranges society so that a lot of money goes to the top and a lot less goes to the bottom. What are economists like you expecting to happen? What are your chief concerns right now?

It’s a giant bill that does a lot:

• The tax cuts will have very little stimulus effect. They will add more debt to the primarily benefit of the top 10 percent at the cost of cutting important services that help the lower end. 
• The Medicaid cuts will result in hospital closures that reduce employment and overburden the surviving hospitals. 
• More ICE funding will intensify the immigration enforcement, which reduces the labor supply. That’s inflationary. 
• The end of renewable energy subsidies (and in the senate version, new taxes on them) will raise electricity prices. 

The worst part is they’re missing a chance to fix actual problems and instead attacking imaginary ones. Social Security and Medicare are headed toward insolvency in the early 2030s. We could avoid that by making relatively modest changes now. But they’re not even trying.

Another problem: the legislation takes money out of the economy and privatizes it, more or less. I’m thinking here on the Medicaid provision that cuts about a trillion dollars over a decade. I don’t know if that’s inflationary but it’s going to be something bad, right?

Reduced access to healthcare is long-term inflationary, because sick people aren’t productive, and that’s on top of the demographic trends and lower immigration that are also shrinking the workforce. Covid had a similar effect, which is one reason inflation rose in 2021-2022. 

It is true we need to rationalize healthcare. The US spends more money on healthcare, and gets worse results, than any other developed country. This legislation doesn’t do much to help.

Federal Reserve Chair Jerome Powell is holding interest rates steady for now. Yet Trump keeps attacking him, creating conditions for his removal. For us dummies: What would happen if Trump did that? 

Trump wants lower rates so the Treasury won’t need to spend so much on interest. He will then use the savings for tax cuts and spending that rewards his favored groups. But it’s not clear that removing Powell, or keeping Powell but appointing a more dovish successor next year, will do what Trump wants. The chair is just one vote on the committee that sets rates.

But just say Trump gets his way and the Fed cuts short-term rates. 

The likely effect will be to raise long-term rates (ie, mortgages) as happened when they cut last September. The markets won’t like that at all. And it will further weaken the dollar globally.

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