Republicans, charlatans, say the One Big Beautiful Act OBBA, is really just a continuation of existing policy.

Yeah right. The current TCJA set to expire next year, was budgeted for expiring next year. Now it won’t, and no one in their right mind thought it would.

Republicans purposely underestimated the budget impact in 2017, and now we are in for a repeat play of the same nonsense.

GOP Declares Tax-Cut Extensions ‘Free’ to Obscure Megabill’s Cost

The Wall Street Journal reports GOP Declares Tax-Cut Extensions ‘Free’ to Obscure Megabill’s Cost

Republicans are waving a $3.8 trillion magic wand over their tax-and-spending megabill, declaring that their extensions of expiring tax cuts have no effect on the federal budget.

The unprecedented maneuver is a crucial part of the GOP plan to squeeze permanent tax cuts through Congress on a simple-majority vote in the coming days. Republicans are expected to endorse the accounting move in a procedural vote early Monday.

“Republicans are doing something the Senate has never, never done before—deploying fake math and accounting gimmicks to hide the true cost of their bill,” Senate Minority Leader Chuck Schumer (D., N.Y.) said on the Senate floor on Sunday.

To dodge the Senate filibuster rule, which typically requires 60 votes to advance legislation, Republicans are using the fast-track reconciliation process, which forbids bills from increasing deficits beyond the 10-year budget window and needs only a simple majority.

Rather than use standard congressional accounting, Republicans are saying that extensions of tax cuts set to lapse Dec. 31 don’t count toward budget deficits the same way that new tax cuts do, because they are just continuing current policies

The Senate OBBBA in Charts

The Committee for a Responsible Federal Budget discusses The Senate OBBBA in Charts.

They put an extra B in the OBBBA name, which I drop because bill and act are the same thing. Regardless, it’s a boondoggle.

1. Senate OBBBA Would Increase Annual Deficits by Up to $600 Billion

After 2025 (which is driven by one-time accounting changes), the Senate reconciliation bill would increase deficits every year over the next decade – including by $620 billion in 2027.

2. Senate Bill Adds $3.9 Trillion to Debt as Written, $5.3 Trillion if Permanent

The Senate bill as written would increase debt by $3.9 trillion through 2034, with almost $3.5 trillion of borrowing from the Finance title (taxes and Medicaid), nearly $300 billion of borrowing from other deficit-increasing titles, about $500 billion of savings from deficit-reducing titles, and nearly $700 billion from interest. If various temporary tax cuts and spending increases were made permanent, the bill would add more than $5.3 trillion to the debt.  

3. Debt Could Rise to 130 Percent of GDP

Under the Senate reconciliation bill, debt would rise from 100 percent of Gross Domestic Product (GDP) today to 126 percent by 2034 – compared to 117 percent under current law and 124 percent under the House bill. If the Senate bill is made permanent, debt would reach 130 percent of GDP.

4. The Senate Bill Violates the House Budget Instructions

The House’s budget instructions allow up to $4.5 trillion of net tax cuts contingent on at least $2 trillion of gross spending cuts with a dollar-for-dollar adjustment if the spending cuts fall short. The House-passed OBBBA met these instructions, but the Senate bill would fall roughly $500 billion short – since it only has $1.5 trillion of spending cuts. Recent Byrd-rule guidance could leave the bill $650 billion short or more.

5. The Senate Bill Increases Primary Deficits by $3.3 Trillion

The Senate bill includes $4.5 trillion of net tax cuts, $1.5 trillion of gross spending cuts, and $0.3 trillion of gross spending increases through 2034. It would add $3.3 trillion to primary deficits; including interest costs, it would add $3.9 trillion to deficits.

6. Deficits Would Exceed 7 Percent of GDP under the Senate Bill

Annual deficits would average about 7 percent of GDP per year under the Senate bill, including 7.1 percent in 2027. That’s more than double Secretary Bessent’s proposed fiscal target of 3 percent of GDP, almost 2 percent of GDP above current law, and nearly 1 percent of GDP higher than a simple extension of the Tax Cut and Jobs Act’s (TJCA) individual provisions. If made permanent, deficits would rise to roughly 8 percent of GDP by the end of the budget window.

7. Senate Front-Loads Costs, Back-Loads Savings

Largely due to temporary provisions and arbitrary expirations in the Senate bill, costs are heavily front-loaded. Savings are also somewhat back-loaded due to delayed starts, phase-ins, and natural growth over time. Nearly one-quarter of the deficit increase occurs in 2027, alone.

8. Senate OBBBA Claimed Cost Hides Trillions

The Senate is using a “current policy” baseline gimmick to extend the 2017 Tax Cuts and Jobs Act (TCJA) under reconciliation rules. Specifically, the Senate’s baseline assumes that expiring TCJA provisions are simply extended with no fiscal impact – when in reality those extensions would add trillions to deficits. While CBO scores $508 billion of primary deficit decreases relative to a “current policy” baseline, it scores $3.3 trillion of primary deficit increases relative to current law. And if provisions set to arbitrarily expire under OBBBA are made permanent then the deficit impact would grow further to $4.5 trillion.

9. Either OBBBA Would Add More to Debt Than Recent Laws

Over the past several years, lawmakers have enacted trillions of dollars of deficit increases through different bills (see more in our Debt Thermometer). Either version of the OBBBA would add more to the debt than any of these recent laws. A permanent extension of either OBBBA would add more to the debt than the 2022 CHIPS and Science Act, the Bipartisan Infrastructure Law of 2021, the American Rescue Plan Act of 2021, and the CARES Act of 2020 combined.

10. Interest Costs Approach $2 Trillion Under Senate OBBBA

Because the Senate bill would add $3.3 trillion to primary deficits, it would add an additional $690 billion in interest costs over the next decade. If its expiring provisions were made permanent, that total would grow to more than $800 billion of additional interest costs – resulting in interest payments on the debt approaching $2 trillion annually. Interest on the debt is already projected to near $1 trillion under CBO’s baseline this year and near $1.7 trillion by 2034; under a permanent Senate OBBBA, it would eclipse $1.9 trillion in 2034.

Thanks to the CRFB

The above charts and comments are from the CRFB. Their article has 10 charts, I posted the key ones.

Here’s the key paragraph.

A permanent extension of either OBBBA would add more to the debt than the 2022 CHIPS and Science Act, the Bipartisan Infrastructure Law of 2021, the American Rescue Plan Act of 2021, and the CARES Act of 2020 combined.

And Republicans have every intention of extending the act just like they did the original TCJA.

But hey, don’t worry, this is just an extension of current policy.

Gold Soars to Another New High, What’s the Message?

On May 8, I asked Gold Soars to Another New High, What’s the Message?

Three Messages

1. Gold does not believe the Fed is under control
2. Gold does not believe Congress is under control
3. Gold does not believe Trump is under control

And neither do I.

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