Unpacking The GOP Megabill

0:07The Senate passed Donald Trump's massive tax and spending bill yesterday by the narrowest of margins, with Vice President J.D. Vance casting the deciding vote. On this vote, the yeas are 50, the nays are 50. The Senate being evenly divided, the vice president votes in the affirmative. The bill as amended is passed. It now moves back to the House, where it could face a fight with several GOP lawmakers expressing skepticism about the Senate's version. The so-called Big Beautiful Bill is the centerpiece of Trump's agenda and filled with tax breaks and spending cuts that will touch just about every American.

0:44So what's on the table now in this GOP mega bill and how might it affect us if it passes? After the break, we're joined by Arthur Delaney, senior reporter at HuffPost, and Martha Gimbel. She's the executive director and co-founder of the Budget Lab at Yale, which researches how federal policy proposals might affect the economy and you. I'm Naila Boodoo, in for Jen White. You're listening to the 1A podcast. We've got a lot to get into. Stay with us.

1:14Let's get into the discussion. Arthur, let's start with you. So much has happened over the last two days when it comes to the so-called Big Beautiful Bill, including it being stripped of the name Big Beautiful Bill. Can you give us a summary first just of where things stand right now? It passed the Senate yesterday. The House passed a different version of it before, and the Senate changed it. And now it has to go back to the House because both chambers have to pass identical legislation before it can go to the president for his signature. and become law. So the House is going to vote, and House Speaker Mike Johnson says it'll pass.

1:48But there are a whole bunch of House Republicans who say they don't like the bill, and several who say they'll vote against it, enough, in fact, to kill it. And yet nobody thinks that will definitely happen. It's a mystery what will happen, but we know we can't count on Republican holdouts not to cave, because they've done that a bunch of times this year in similar situations, albeit the stakes now are higher than ever. So let's go back to the Senate and Senator Lisa Murkowski, Republican of Alaska, explaining her vote for the bill. Do I like this bill? No, because I tried to take care of Alaska's interests.

2:25But I know, I know that in many parts of the country, there are Americans that are not going to be advantaged by this bill. I don't like that. Arthur, it almost sounds like you can't tell how she voted by what she said there. Well, she voted yes. And this is complicated, but I believe she voted yes because she wanted to extract all these advantageous provisions from Alaska. Which she did get. Which she did get. I mean, there's so much stuff. They're carved out of the food benefit cuts. They have advantageous changes to the Medicaid cuts. There's a expanded tax deduction for subsistence whale fishermen, which you can only find in Alaska.

3:11But she did this because she believed, I think, that if she wasn't going to be the 50th yes vote, then Rand Paul, Republican of Kentucky, was. And he had a price. He wanted them to change a debt ceiling provision that adjusts the country's statutory borrowing limit. So the bill was going to pass with or without her in this thinking, and she decided to get on board in order to help her state. And this is exactly what she said. She was explicitly looking out for parochial interest. And a lot of senators were, and hers was just the most extreme case. Martha, you're executive director of the Budget Lab at Yale.

3:50Can I ask you big picture, what is your impression of the bill's impacts? So, first of all, this is a pretty regressive bill. The benefits really accrue to those at the top. So for the very, very top, you're going to see a tax benefit of over$118 ,000, and it penalizes those at the bottom. So for the poorest Americans, it's going to be a loss of about$560 in income. It's also incredibly expensive. trillions and trillions of dollars over the next 10 years, which will also cause interest rates to have some upward pressure placed on them. And so I think it's important to keep in mind, as we're talking about this, that this is a really, really expensive bill where the benefits are really tilted towards the highest income Americans.

4:43Arthur? Yeah, just to emphasize that point about the size of the bill,$3 trillion plus. This is as big as all those coronavirus relief bills put together. And Arthur, traditionally, the House has passed something and then the Senate normally becomes the more moderate version of the bill. That was not the case this time. That's right. And a lot of House Republicans voted for it, expecting the Senate to make it more moderate. And it just didn't happen, partly because there aren't Senate Republicans from individual Democratic districts that were carried by Kamala Harris in the last election. So there's just a different electoral dynamic as part of it.

5:30But this was basically a surprise for everybody, including House Speaker Mike Johnson, who now is telling people, even though he'd said it would get more moderate on the way back from the Senate, it actually didn't. And they're just saying, well, this is all, this is the best we can do. We got to go. We got a question from Claudia. The big, beautiful bill includes tax reductions that are permanent. Does that really mean forever and that they can't be changed at some time in the future? Martha, maybe we should talk about what kind of tax breaks there are and then get to Claudia's question. Yeah, so I think this is really important.

6:05There's two types of tax changes in this. Some of this is permanent. So changes to individual tax rates from the original TCGA. There's also a lot of stuff in here that is not permanent. A lot of that falls into the category of President Trump's campaign promises, like no tax on tips. This is particularly important when you're thinking about the cost. So earlier, you know, Arthur mentioned it costing over$3 trillion. That is true. But if you assume that the temporary stuff becomes permanent and then you account for interest costs, it's actually even higher. On the point around, you know, tax cuts becoming permanent, you can always get Congress to pass a new law and change taxes.

6:52They're doing it right now. The question is, are representatives going to be willing to raise taxes? It's a very, very unpopular thing to do. I personally don't like paying higher taxes. It's also something that, frankly, may very well become more important as our debt and deficit situation becomes more difficult, which contributed to, frankly, by this bill. And so in answer to your question, it's much more of a political constraint than a legal constraint. Arthur, as we think about what kind of tax breaks the bill proposes, who are they actually benefiting? A member of the 1A Tax Club writes, how is the Trump administration justifying these tax breaks for the wealthy?

7:39So the tax breaks are for everybody who pays income taxes, which is not everybody in the U.S. I think lots of people pay no income tax and only pay federal payroll taxes. But if they didn't pass this bill at the end of the year, because the last tax bill they passed was not permanent, it had an expiration date, all income tax rates would go up. And that would hurt the economy in the short term. And so they can say we are extending everybody's lower income tax rates, but just because of the way progressive taxation works, it's the higher earners who benefit the most, who have the largest improvement in their after-tax income relative to letting these expire.

8:29And there's also some really big time stuff like they make permanent and an extension of the estate tax, which is essentially an inheritance tax. And only the very, very richest heirs and heiresses in the country really benefit from that. We got some questions about the money being budgeted for immigration detention centers. Arthur, what can you tell us? There is$45 billion for detention centers under the immigration authorities in this bill. And that's just a gigantic number. It's bigger than the budget for the entire U.S. Bureau of Prisons. And it speaks to Donald Trump's plans to have record deportations and mass roundups of undocumented immigrants like they're already doing, but on steroids.

9:12And just a reminder, just before we go to the break, Arthur, what sense do we have of whether or not this is going to pass and become law? This goes now to the House to vote. When are they expected to vote on that? This vote could happen as soon as today, but a lot of flights were canceled because of the East Coast storms, so we're not sure. It could be tomorrow. And it's anyone's guess whether it'll pass, but my guess is yes. We're going to head to a quick break. We'll be back with more of the conversation in just a moment. Stay with us.

9:44We have been talking about taxes and tax breaks. Arthur, we also had a question about tax breaks and how they're being, quote, justified by GOP lawmakers. What is the reasoning they're giving? They say that if they don't pass this, then the automatic tax increase resulting from the expiration of the temporary household tax cuts that they enacted in 2017 would wreck the economy. So that's their main argument that if you don't do this, the country goes off a fiscal cliff that they created that year in a budget gimmick to make the cost of those tax cuts seem smaller. And it's true. I mean, economists agree that if taxes went up in January, that it would hurt the economy.

10:29But they say that extending them indefinitely also hurts the economy because it could put the extra debt puts extra pressure on interest rates. But that's the main argument, that they just got to let people keep their money. And if they don't do it, then the tax hikes will hurt. That doesn't explain why they have this July 4th deadline and are otherwise rushing in such an insane way that they voted only in like a couple hours after they even had the bill in the Senate and nobody— Almost 1 ,000 pages. It's about 900 pages, and people were combing through it after it passed the Senate and finding weird stuff in it.

11:07Martha, as we're talking about tax breaks, as we're talking about adding to the debt and interest rates. What do you think people listening need to understand about the long-term economic implications of this bill? So I want to talk about two things here. One, I just want to go back to the growth point for a second. My team has looked at this. The Congressional Budget Office has looked at this. Many other people have looked at this. What people are generally finding is incredibly small boosts to growth that are short-term. And if you look over 10 years, the impact on growth is functionally nil over that period.

11:40And over 30 years, it's negative. So this is like giving the economy sugar. And like a toddler, it's going to run around really fast for a short period of time and then crash. The thing that I also want to emphasize to people is that this puts upward pressure on interest rates. That sounds really esoteric. And what does that mean for me? team looked at this. We think that because of this bill, interest costs are going to be higher for consumers and businesses. So that means an additional$1 ,000 a year in mortgage interest, an additional$860 a year if you have a small business loan. Those costs just go up over time.

12:21And so I want to emphasize this isn't just some high-minded economic debate. It has real impacts for families. Yeah, high interest rates can mean you're not buying a house, that you cannot afford that given the interest cost that would go on that mortgage. Let's go to this message we got from Scott in Minnesota. So I'm curious about the timeline of this bill, when it's going to take effect. I had read something like the worst parts of this bill aren't going to take effect until 2029, which is, of course, right before the next presidential election. I'm kind of wondering how that's going to affect and what's going to happen over time with this.

12:59That's a very good question. You know, at first when they wrote it, stuff like the Medicaid work requirements did not take effect until 2029, just like Scott said. And Republicans themselves were like, hey, that's a little fishy. And if we want to do this, we should do it right away. This is the conservative Republicans. So they moved the harsh Medicaid provisions up, the work requirements, which are the single largest cut because they will deny health care benefits to people who either don't have jobs or can't document their jobs to a state government, will take effect in 2027. And states will have to start ramping up with grants from the government how to implement those next year.

13:39So we are getting emails about Medicaid. We got this email from Nick in Cincinnati who says this bill will also affect SNAP and Medicaid. Thousands will be affected in Ohio where I am. Nick is asking, why not keep it as is, help the poorest people in the U.S.? Martha, I want to have you weigh in after Arthur, but Arthur, this has been one of the biggest sticking points of the bill in terms of Medicaid and how it will affect different states. We certainly heard this a big part of the calculus of North Carolina Senator Tom Tillis talking about this. Right. So first of all, all the Republicans, including Tillis, love the work requirements because it sounds like only someone who's lazy won't comply with that.

14:24There are already work requirements that exist. Not in Medicaid. Not in Medicaid. Except in limited examples. And for example, Arkansas in 2018 in the first Trump administration. So this is pretty new for Medicaid, and it's a huge funding cut, but there's also a bunch of different other more obscure things that affect the way states finance Medicaid that will cut hundreds of billions of dollars. And Tillis and others worry that even though it's not a direct cancellation of benefits for swaths of people, that will be the result and that it will have knock-on effects for everybody else. For example, hospitals and nursing homes provide a lot of benefits, you know, healthcare coverage to Medicaid enrollees.

15:11And if those institutions lose billions of dollars as a result of, for example, the work requirements or limits on state provider taxes, then it's possible they'll just say, well, we're going out of business. And then everyone else who's not a Medicaid enrollee could be affected by that if they don't have a hospital near their home. Right, because there was a rural hospital fund that was created as part of a concession. Yeah, so rural hospitals are going to lose, by one estimate, like$350 billion. And so Josh Hawley, Republican from Missouri, said, I'm not going to go along with this if you're going to hurt rural hospitals.

15:46And they said, well, we'll give you a$25 billion rural hospital fund. And so they're essentially creating an extra layer of bureaucracy to not even come close to papering over the massive funding loss. But Holly told me, well, Missouri will come out ahead. And then you can thank Murkowski. She got this doubled to$50 billion. So it will help, but it's not on the scale of the cut to rural hospital funding that experts expect to result from the legislation. Martha, when we think about Medicaid in this bill, what else do you think is important for people to know? I think it's important to keep in mind that work requirements is a little bit of a misnomer.

16:29These are really paperwork requirements. You know, people who are on Medicaid right now largely are working or otherwise qualify for exceptions such that they would be able to keep their Medicaid. But anyone who tried to navigate UI systems in the pandemic knows that just because you qualify for a government program doesn't mean that you'll get it if the paperwork requirements are onerous enough. And so it is incredibly likely that there are people who qualify for Medicaid and who are working or in other ways are eligible under this bill will fall off because the paperwork requirements are so onerous.

17:08I mean, the work requirements specifically target people in the Medicaid expansion population from the Affordable Care Act, you know, Obamacare, who are in the 100 percent to 130 percent of poverty income range, meaning by definition they're working and they have work income. And this bill throws up a barrier to them remaining enrolled that is strictly paperwork. It also doubles the frequency of regular eligibility checks, which is literally just a paperwork requirement with no work element to it. Arthur, to your point about the ACA, we got this message from Kim in Santa Rosa, California. I'm worried about what's going to happen with the Affordable Care Act and health insurance because I've relied on the Affordable Care Act for probably four years now and can't get coverage any other way.

17:52So I want to know how the Affordable Care Act is going to be affected by this bill. Martha, can you help start to answer that? Yeah, so, you know, without knowing exactly how the listener uses the Affordable Care Act, it's not just the changes that they've made in this bill. They're also declining to extend some premium tax credits, which have helped people afford coverage. If you include what they're doing in this bill and the lack of extension of those tax credits—so I want to emphasize this is a combination of action and inaction—you're going to see that about three quarters of people in just in numbers who gained coverage under the ACA, the coverage losses will be equivalent to about that number losing coverage again.

18:40And so this is in many ways a backdoor repeal of the ACA. It's also hard to say, health insurance markets rely on the kinds of checks and balances that were set up under the ACA. And so we'll have to see whether or not these changes start destabilizing the broader marketplace. On a smaller scale, the part of the bill will prohibit automatic re-enrollment, which is how half of people, I think, in Affordable Care Act marketplaces are re-enrolled every year. So you'll have to proactively do that instead of just assuming your insurance continues. And it's possible that come December when the subsidies expire that they decide they don't want to let that happen, but it's omitted from this bill for sure.

19:29Let's go to this question we got from Nathan in Lincoln, Nebraska. AI is beginning to strain what is already a strained American electric grid, and the bill phases out the clean energy production tax credits that had previously existed and then were expanded in the Inflation Reduction Act under the Biden administration. Can the electric grid handle the reduction of wind and solar production or handle this phase out of the clean energy production tax credits? Yeah, thanks for that question, Nathan. Experts from these industries say that the grid cannot and that the phase out of these credits threatens electrical grids and increases the likelihood of brownouts or blackouts.

20:24The North America's building trades unions called this the biggest job-killing bill in the history of this country because phasing out those credits will stop the production of all kinds of green energy. But for example, solar panels and windmills, which are among, I think, the fastest growing construction industries. Let's take a quick pause here. We'll be back with more of the conversation in just a moment. Stay with us.

20:54Let's get back to the conversation and turn to immigration in the bill. Arthur, what can you tell us big picture? Big picture, I think the$45 billion for detention centers tells you a lot. And there's lots more for border personnel and not more for immigration courts and judges. And if you think of the images of federal agents, you know, whisking people off the street and raiding workplaces, Because that's really, I think, a picture, a vision of what Republicans want to expand. And for legal immigrants here, the bill also has a ton of fees on stuff that used to be free. So it's not the friendliest bill to immigrants.

21:38And that's Trump campaigned on the stuff they've got in here and people voted for him. And so that's why it's happening. And I don't think people are familiar with, you know, because Trump is so loud and repeats himself so emphatically on stuff like immigrants coming here and getting free health care and stuff. People might think that's the law, but it's not. They're excluded from most federal benefits and they do contribute tens of billions of dollars to Social Security, like the caller said. But will not. And are never eligible for, you know, on net have been beneficial, not just for Social Security, but the economy writ large.

22:18And now we're going to, we're at the beginning of potential, I mean, we're certainly at the beginning of the labor market contracting, you know, fewer people here working because the immigration was helping with the baby boomers leaving the labor force. Martha, what do you think are the broader economic impacts that you want people to be thinking about as we think about immigration enforcement? So a couple of things. One, it's really important to keep in mind that immigration has been a driver of economic growth for the United States. And so economists are expecting a slowdown in the economy in both the short run and the long run from the increased enforcement actions here.

23:06To get a little bit wonky for a second, when you looked at how the Congressional Budget Office looked at labor force participation in this bill, what they said was on the spending side, there wouldn't be any changes in labor force participation. And that's because even with the cuts to the social safety net, which will cause some more people to work because they can't get health care benefits, that's going to be offset by increased deportations. And so basically what the bill does is it holds labor force participation constant because it is forcing more poor people into the labor market while at the same time deporting more people.

23:44I do just want to conclude by saying, you know, a caller earlier asked, why aren't people talking about this? Vice President J.D. Vance was just out there saying that everything else in the bill, the conversations around the debt, the conversations around people losing their health insurance was, quote, immaterial because the only thing that mattered was the funding for immigration enforcement. And he was saying that because at that moment, the Medicaid stuff was threatening to tank the Senate bill. And that was his way of saying, look at this. Now, we do have Senator Tom Tillis, a Republican from North Carolina who very notably broke with the president.

24:21I want to play a little bit of what he said this weekend and why he wasn't voting for this. I'm telling the president that you have been misinformed. You supporting the Senate mark will hurt people who are eligible and qualified for Medicaid. We owe it to the American people and I owe it to the people of North Carolina to withhold my affirmative vote until it's demonstrated to me that we've done our homework. Martha, one of the other things Tillis said in that speech was that they had run the numbers and they felt like a lot of people had not run the numbers or were not they were not getting answers on this.

25:03Can you just address the speed in which this happened and what research and information lockmakers do have about the economic impacts of this? Yeah, I mean, full disclosure, right, my team hasn't slept in weeks because this has been moving so quickly and it's so hard to analyze. So, you know, they passed it last night without, you know, a final score. We had stuff coming out from the Joint Committee on Taxation this morning. You know, that being said, each permutation of this bill has the same outline, which is that it's incredibly expensive and it is regressive. And nothing that they are doing around the edges is going to change that fundamental outline.

25:50They are pairing cuts to Medicaid and SNAP with very regressive tax cuts, and they're still not paying for the whole thing. and nothing really changes that outline. I just, two notes. One is Tillis spoke out against the bill after it was all over for him. Trump said, you're toast, and he said he wouldn't run for election again. So this was not really the kind of resistance our earlier call of - Well, it's someone who's saying they're not going to run for office again. Yeah, so - And what does that then say to you about the House and who may oppose this in the Republican Party? I think that makes it even less likely that anyone in the House will oppose it because they're watching Trump yell at Tom Tillis and they don't want to, they want to keep their jobs.

26:30they're scared of being primaried by Republicans. And just a big picture— Not just yelling, saying, I'm going to fund primaries free. Yeah, he's been making that threat against anyone who opposes him, especially Thomas Massey, a Republican in the House, who's kind of a unique case and says he can beat a Trump primary challenger, but, you know, we'll see. A big picture, the bill is regressive, but it does follow big expansions in Medicaid and SNAP funding that were enacted under Barack Obama and Joe Biden. So it's taking us back to before potentially the Affordable Care Act and before their expansions in the value of food benefits.

27:11So callers maybe shouldn't despair too much because some aspects of it are familiar from recent decades. You know, funding levels aren't that new. Arthur, we got a lot of questions asking about the Medicaid work requirements and paperwork and how that's been complicated by doge cuts across the federal government. I mean, I'm not sure what happened in Michael's case, but missing paperwork and being dropped for like bureaucratic reasons is the essence of the Medicaid cuts. Arthur, we're also getting a lot of questions. Martha, I wonder if you can weigh in just asking about the Medicaid work requirements and paperwork and how that's complicated by doge cuts, particularly across the federal government.