Since we last checked in, the House officially passed its version of The One Big Beautiful Bill (OBBB). Let’s just say, the reviews have been mixed! In our statement, AV’s President and CEO Kelli Rhee put it succinctly: “America cannot afford to ‘extend and pretend,’ relying on short-term extensions and budget gimmicks that threaten long-term stability.”
The bond markets seem to agree with us. So does Moody’s, which joined the rest of the major credit agencies in downgrading the U.S. credit rating. In plain English: America’s fiscal future is looking shakier than ever, and major investors now have serious doubts we’ll pay back our debts. Ouch.
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FROM PORK TO PRIORITIES
OBBB isn’t exactly a masterclass in what to do with limited fiscal space. But with the bill now in the Senate’s hands, there’s a real chance—and a real obligation—to clean it up. That means ditching the special-interest giveaways and swapping in permanent, evidence-based, pro-growth policies that are actually worth the price tag.
We’ve made it easy: here’s a handy list of all the pork buried in the House bill. And don’t forget—earlier this year, we flagged plenty of smart ways to cut spending and close tax loopholes. The Senate has options. Time to use them.
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Charging Tax Cuts to the National Credit Card: What Could Go Wrong?
Meanwhile, we rounded up some eye-opening research that spells out exactly what happens when lawmakers try to finance tax cuts without commensurate savings.
Here’s what’s in store if they do:
Long story short: Short-term tax gimmicks mean long-term financial headaches. But rather than point fingers, we came up with a plan to fix it. The Senate should take the House bill, make the most pro-growth pieces permanent, and pay for it by scrapping wasteful giveaways, including those built into the current bill and others, like the round-tripping loophole, tax preference for stock buybacks over dividends, and wasteful health care spending.
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This Week: You're Virtually Invited
Tuesday, June 10, 2 p.m. ET: Impoundment – remember that from civics class? Once a non-issue, it’s suddenly a red-hot topic thanks to DOGE and OMB pushing legal boundaries. On Tuesday, June 10, at 2 p.m. ET, join AV Program Integrity Fellow Doug Criscitello and an all-star panel — composed of Francis Fukuyama, Charles Kieffer, Phil Joyce, and Eloise Pasachoff — to discuss what’s happening with impoundment, the legal challenges making their way through the courts, and some smart reform ideas. Register here.
Thursday, June 12 at 3:30 p.m. ET: Brace yourselves: it’s ERC time again. Economist Adam Isen of Johns Hopkins University will present early findings from his research on how firms actually used their ERC funds. Spoiler alert: you may want to have a stress reliever on hand when you hear how much was wasted on windfalls. Register here.
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In the News
- AV’s George Callas laid it out plainly in The Washington Post, cautioning lawmakers who shrug off market reactions to the House bill: this isn’t just Beltway chatter. “I don’t just hear it from D.C. policy people, I’m hearing it from market participants. When you’re hearing it from the people who are actually trading on the information, that gives it a much higher level of credibility than people trying to use it for political purposes.” (free link)
- Of course, no newsletter would be complete without mentioning SALT. AV’s Scott Hodge hits the nail on the head in his recent letter to the editor of The Wall Street Journal. Here’s a taste: “SALT isn’t merely a red vs. blue issue; it also pits the poor against the rich.” (free link)
- Scott also reminds Washington Post readers that "the largest university endowments have become tax-free hedge funds that generate tens of billions of dollars in investment income each year," in a new letter to the editor out this morning. (free link)
- Committee for a Responsible Federal Budget’s Maya MacGuineas cut through the noise on CNBC’s Squawk Box, delivering the straight-up fiscal reality about the reconciliation bill.
- Ray Dalio, renowned market whisperer and economic prophet, just released his new book, How Countries Go Broke: The Big Cycle. Dalio spent the past year urging lawmakers to defuse the debt bomb. Will they listen now?
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Trivia Corner
Which American president was quoted as saying, “Bring me a one-handed economist. All my economists say ‘On one hand,’ then ‘But on the other...’”?
That would be Harry S. Truman, who apparently found it easier to be decisive about war and peace than economic policy.
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Before You Go
A quick reminder: CBO’s revenue projections from the TCJA era were eerily spot-on once you account for pandemic-era inflation and emergency spending in 2022. Turns out, Congress’ scorekeepers pretty much nailed it, as this CRFB chart shows.
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