BBB Can Mean Multiple Things...Not All Are Beautiful - Top 3 Takeaways – May 21st, 2025 - Driven By Braman Motorcars
Takeaway #1: Don’t “F” Around with Medicaid
That was one of the messages received by House Republicans as they met with President Trump over the future of the BBB on Tuesday. Here was the other message delivered publicly by the president after that meeting: We're not touching anything, All I want is one thing. Three words. We don't want any waste, fraud, or abuse. Very simple. Waste, fraud, abuse. Other than that, we're leaving it, Medicare. We're leaving it all. So, one might infer that means the Medicaid work requirements, which is where most of the cost savings is in this bill, will remain in the bill. After all able-bodied people not even doing 20 hours of work, a job search or community service a week – is weak and is most certainly waste, fraud and abuse from where I sit. That is all the Medicaid work requirement called for in the bill is. But about President Trump’s message about “leaving it all” in. There’s a price tag that comes with that kind of spend – an additional $3.3 trillion in debt over the next decade according to the Committe for a Responsible Federal Budget. And to be clear that means – the path we’re already on which had us posting a $1.8 trillion annual deficit – the BBB as currently written would add another $3.3 trillion in estimated debt over that path over the next ten years. The CBO, or Congressional Budget Office, pegged that number at a still higher $3.8 trillion. That’s including a total of $965 billion in savings through the implementation of Medicaid and SNAP work requirements. The BBB has become a Big Bloated Bill during this process and that’s potentially problematic. Not just in terms of whether it will have the votes to pass but also, whether we can afford to continue down the path of the “all of the above” version of the BBB. Moody’s just downgraded the US’s credit rating that brought about an immediate impact on interest rates – including higher mortgage rates which popped above 7% for a 30-year mortgage once again. The impacts of escalating debt are real and if the BBB passes like this, it doesn’t appear likely to help the situation. From Mar-a-Lago to his golf courses, one thing Donald Trump has always been is a spendthrift. But for those in congress who aren’t, what would you do? President Trump’s agenda is within the BBB, but so too is way too much stuff we can’t really afford to do. The fact is that if we don’t “f” around with Medicaid and some other things, we’ll potentially be “fing” around with something much bigger and that’s because...
Takeaway #2: We have both a taxing and spending problem
You’ll often hear from conservatives that we don’t have a taxing problem, we have a spending problem. Except that the fact of the matter is that we have both. Currently only 53% of households pay any net federal income tax. When you only have half of the country trying to foot the bill for the entire country that tends to be a problem. What’s more is that a third of households are also on government assistance programs. So, in other words, you have about half of the households in this country that are trying to not only foot the bill for the entire country, but then also allow about a third of it to profit from it. That in a nutshell illustrates the taxing and spending problem we find ourselves in. It’s basically impossible to do those two things and have the numbers work. And that leads us to the big changes within the BBB. You might have wondered how it is that if DOGE is doing its thing and if Medicaid work requirements, for example, once again become a thing – how is it that the debt and deficit outlook is estimated to become much worse? A big piece of the puzzle is the move to end taxes on tips and overtime. The addition of those two pieces to the existing tax policy will lead to even greater strain on the half of Americans left trying to pay for things. The estimated tax savings on overtime and tips over ten years is $1.7 trillion. That’s great for those receiving the benefit, that’s also a big piece of the growing debt and deficit puzzle. What’s more is that more people who earned overtime and tips that were net federal taxpayers before, would become net beneficiaries of the federal tax system with these changes, further tipping the balance. Conceptionally, I’m all about lower taxes generally, but I also believe that everyone should be paying. There already aren’t enough upper-middle income earners and rich people to pay for half of the country to effectively pay nothing and a third of it to be profiting. A big issue with the BBB is that rather than balancing this dynamic it exacerbates this. This country spends way too much through government assistance programs and it doesn’t have enough of the population paying in to make the numbers work.
Takeaway #3: The Final House Committee
After President Trump’s big push in the tush for House Republicans on Tuesday multiple developments took place. A deal has been reached for an increase in SALT deductions of up to $40,000 (from the current $10,000 threshold) that aims to appease those in the GOP in high tax states like California and New York. The House Rules Committee convened overnight and there’s hope that there could be a vote today. Now that I’ve been able to analyze the BBB’s framework, I understand why some conservative members haven’t been down with the BBB. It would be an awfully tough vote for me – though delivering on President Trump’s agenda remains the most important thing. After all, if we don’t have borders, national security, etc. we don’t have a country. On that note, on Tuesday President Trump announced the U.S.’s version of Israel’s Iron Dome – to be known as the Golden Dome. The total project to provide the nationwide missile defense system is estimated at $175 billion – with initial funding included in the current House version of the BBB. It’s worth noting – that due to President Trump’s tariffs and the timing of income tax payments – on Tuesday, the federal government ran a budget surplus of $258.4 billion in April. The first monthly surplus in three years. The tariff policy is a wildcard that’s not currently factored into long term budget analysis outlooks that could make the picture more ascetically pleasing – if not beautiful.