Bill baby bill: Trump’s landmark legislation

0:00When everything is moving all at once, your workforce, your tech stack, your business, you don't need more tools. You need one solution. That's why Paylocity built a single platform to connect HR, finance, and IT with AI-driven insights and automated workflows that simplify the complex and power what's next. Because when everything comes together in one place, growth comes easy. Experience one place for all your HCM needs. Start now at paylocity.com slash one. This intelligence podcast is sponsored by Perk, the intelligent platform for travel and spend. Every person on your team loses up to seven hours a week doing the work behind the work, submitting expenses, matching receipts and booking travel.

0:43Using AI and automation, Perk can do that work bringing travel and spend together in one place. Enjoy three months without platform fees when you sign up at Perk.com forward slash the intelligence. That's perk.com forward slash the intelligence. New US-based corporate customers only. Terms apply.

1:03The Economist.

1:10Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world.

1:25Ukraine is again turning to foreign fighters to help defend the country. We ask why anyone would come from elsewhere to join a fight that's not theirs. The answer isn't just money. And something rather remarkable is happening in New York. A city known for its gridlock traffic and ceaseless car horns is now flowing freely. The culprit? Congestion charging. Yup, it really works. And yup, it's also under threat again.

2:02But first...

2:10Yesterday, after more than 24 hours of debate, the US Senate passed Donald Trump's one big beautiful bill by a very narrow margin. 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. In a marathon voterama, US lawmakers had been adjudicating amendments to the tax and spending legislation to the last minute. At a thousand pages, it doesn't exactly make for a beautiful reading experience. But as Trump's landmark bill gets one step closer to being signed into law, what will it mean for America?

2:50The one big, beautiful bill is going to be Donald Trump's signature legislative accomplishment of his second term. Idris Kaloun is the Economist's Washington bureau chief. It has now passed the Senate, which was a very difficult process. It's going back to the House to pass again. It will probably do so and be signed into law. And it is going to be a sweeping, transformative piece of legislation. Before we get on to the details, you said it's probably going to pass. Trump actually set a deadline of the 4th of July. That's this Friday for the bill to be passed. Given that the bill only just scraped through originally in the House and the vice president had to break the tie in the Senate, will it be passed by then?

3:36I think the deadline could slip a bit. As you noted, the House majority for Republicans is very thin. And there are people who are unhappy with the bill who are Republicans who are willing to stick their oars in. But the president is going to put massive pressure on individual legislators to actually vote for it. He is still in control of the party, perhaps like never before. And I suspect that after all of that pressure, in the end, even if it is after July 4th, this piece of legislation will pass. OK, so what's actually in this bill? So the one big, beautiful bill, as you can tell from the name, does a lot of things.

4:11And we can't go through them all in detail. It's 1 ,000 pages of legislation, which most people who pass it haven't even read fully. But I can give you a few of the highlights. The big one, of course, is the extension of tax cuts. These are going to be deficit finance. This bill is going to add about$4 trillion or$3 trillion, depending on how you count, to the deficit over the next 10 years. And that's because it's keeping the 2017 tax cuts that Trump passed at the start of his first term in place for the next 10 years. It tries to make up some of that cost by cutting green subsidies, especially those passed by Joe Biden through the Inflation Reduction Act a few years ago.

4:48It will also make up that in part by cutting health care, particularly Medicaid, which is the health insurance program for the poor, and food stamps, which is nutrition assistance. It's a welfare program in America. It will also increase some spending on immigration and defense, two priorities for Donald Trump. There's$45 billion to build the wall, for example, in there. There is$35 billion or so to hire new Border Patrol and immigration enforcement agents. There is$25 billion to build up the Golden Dome. Everything that Donald Trump wanted was packed into this legislation. And so its passage is going to be a huge boon for his administration.

5:26And will it achieve all of that? It will achieve the tax cuts. That is something that Republicans look at as a good in itself. It will do that by blowing out the deficit. That's pretty clear. there's no way to really square the immense cost, even with some of the reductions that they've put into place. And in a lot of ways, it does accomplish what Donald Trump campaigned on. So in addition to those old tax cuts, there are some of his campaign pledges that are included. No tax on tips, no tax on overtime, no tax on the interest paid, on car loans. All of those provisions, though, are temporary.

6:00They only last for as long as Donald Trump is president, and some of the other provisions are more permanent. And so I think that while this will have a big impact, the sort of Trumpian flavor of economics is not going to be permanently embedded in American political economy. It's going to be something a little bit more like the Paul Ryan version of economics, who was the architect of the 2017 tax cut bill. And how will all that sit with Trump's MAGA base? So that's what's interesting. Paul Ryan is the former Speaker of the House. He was very much a kind of emissary of Reaganomics or supply-side economics, the idea that you try to boost investment and growth by lowering taxes.

6:42And what the Trumpian wing of the party is is a very different sort of economic policy. It is into tariffs when previously Republicans were into free trade. It is more comfortable with social safety net spending than past Republicans. Reagan, of course, was pretty hostile to, for example, welfare queens. But what you see here is actually Reaganomics boiled over. Some influential voices in the MAGA universe, like Steve Bannon, have criticized the cuts to Medicaid. He points out that a lot of Trump supporters actually use that program and will not be heartened by the cuts that come in a variety of ways.

7:20There are some things that Trump has, again, delivered, you know, some of those campaign pledges about no tax on tips, etc. There is a baby bonus that is going to be created, a new account called Trump Accounts, of course, which the federal government will put$1 ,000 into for newborns. But again, those will expire by the end of the president's term. And what will all this do for growth? So because this tax bill is extending the 2017 tax bill, in large part, there won't be a change in the macro picture. There are some changes to businesses being able to deduct their expenses. their R &D costs, which should have a positive effect on investment and growth.

8:01But on the whole, you are getting a modest amount of growth for the amount of deficit spending that you are having to do. And what we don't quite know yet is how big these cuts to solar and wind, how much they will matter, not just for decarbonization, but also for energy costs for America's place vis-a-vis China on these industries. And so the growth effects, I think, will be relatively muted. But what we know for sure is that the deficit effects will be extremely large. And Idris, this bill seems to have revived the feud between Musk and Donald Trump. What's going on there? Elon Musk is very upset with the cutting out of a lot of green subsidies, not just for wind and solar, but also batteries, which are essential to the operation of AI data centers.

8:46An electric vehicle tax credit has also been stripped out. Of course, Elon Musk has direct business reasons why he wants those to be in place, but he has been angrily tweeting or X-ing or posting whatever it is about all of this. And he has said that he is going to spend his money on a new political party called the America Party, and he is going to primary and run negative campaign ads against the Republicans who voted for this legislation. So the falling out between the two has turned into quite a messy public divorce. And Idris, where does the passing of this bill leave effective congressional scrutiny of proposed legislation in the future?

9:26I think that this bill represents a continuation of a trend, which is that individual members of Congress are not really participating in the legislative process as schoolchildren are taught in America. There is really not very much committee work that builds up these legislations. There's not long sessions where the text is debated among the members. What instead we have are deals that are negotiated by the leadership, oftentimes in secret, oftentimes only revealed in full a few hours, sometimes a day or two before the final vote, which occurs on party line. And these bills are massive. They just sweep in every possible subject area into one piece of legislation, the idea being that you just add everything onto one train and you send that train out of the station.

10:13This is not just a Republican phenomenon. on. It's what happened with Democrats, with the American Rescue Plan, with the Inflation Reduction Act, the serious pieces of legislation that Democrats have passed. And so unfortunately, I think that it is a continuation of a trend whereby individual congressional members just really have little say about the direction of policy. Idris, thank you so much for talking to me. Thank you for having me. And if you're keen to hear more scrutiny of the thousand pages that make up this one big beautiful bill. Idris and colleagues will be discussing this in Friday's edition of Checks and Balance, our U.S.

10:48politics show. You'll need to be a subscriber to listen.

11:10Waymo's been building a driver that's safer. Statistically, 10 times safer in the cities we serve. Not because humans aren't enough, but because they're everything. Based on over a 94 % reduction in serious injury or worse crash rates. Learn more at Waymo.com. This message comes from Betterment. Dan Egan, VP of Behavioral Finance and Investing, explains how Betterment takes the time-consuming work out of smart investing. I grew up learning about finance and investing myself and realizing that I needed to reinvest dividends and rebalance my portfolio. And if there was an opportunity to tax loss over time.

11:51And then I realized that I was doing all of these things that were pretty straightforward to implement. I just needed to spend my time doing them. Betterment automates the same good practices so that I know I'm doing portfolio management and goal-based planning in a way that makes sense and is responsible without me having to spend hours of my life doing it.

12:32Just after Russia's invasion of Ukraine in 2022, President Volodymyr Zelenskyy wasted no time in asking for helping hands from abroad. Every friend of Ukraine who wants to join Ukraine in defending the country, please come over, we will give you weapons. But in the fog of a new war, many haphazardly organized units were mismanaged. Volunteers felt the dysfunction put them in as much danger as the Russians did. Three years on and Ukraine is still facing a shortage of fighters. It's looking to recruit 27 ,000 people a month and again turning to foreign help.

13:18In the woods of central Ukraine, they're getting trained up. It's quite something walking into Ukraine's international military recruitment office. And our Ukraine correspondent, Oliver Carroll, paid a visit to this more organized second attempt. One moment you're in the gray ash of a Soviet housing block in a western Ukrainian city. One foot over the door and you're in the riot of Latin heat. salsa music on a tin speaker bright flags lots of hand gestures talk about a demarcation line they like rice this war keeps handing me new things to see Latin Americans on the Donbass line or in Kiev that was certainly one of them and I wanted to find out why a man or a woman leaves his own country to fight a stranger's war so I came here to these drab blocks in western Ukraine and started asking.

14:21So, Oliver, we did hear about a lot of foreigners joining the fight in Ukraine out of a sense of solidarity when the invasion was new, but why are people doing it now? Right, I mean, for some, still fighting for freedom is enough, but I think money does speak a certain language, especially among the unemployed. And a frontline salary, I mean, it's$3 ,000 a month, and that's before bonuses. That's about 10 times the average pay in certainly the poorer parts of Latin America.

14:53I was speaking to Ortiz, a 33-year-old man. He's a former Colombian Marine from near Medellin. He's definitely one of the converted. He's a Ukrainian patriot already through and through. He was saying for him money wouldn't be enough. He would never fight for Russia. In his opinion, the Russians were on the same side as the FARC militia. fighting against the Colombian army. He said a Colombian soldier is not going to fight for Russia out of conviction or out of doctrine because with the same weapons as the Russians killing Ukrainians, they're killing the Colombian army. I also spoke with another soldier called JC.

15:35It's more training. Today you have 30 days training, but if you're not comfortable or not prepared, you have more training. He's from Brazil, been here for quite a while. He's now essentially a training coordinator. He served in Sierra Leone, East Timor, the Golan Heights. And he was involved in a particularly bad fight in Bachman, for which he's proudly wearing this medal on his uniform. And he was telling me about some of the challenges, how the soldiers have to essentially go through visa bureaucracy. And then there were the problems on arrival. and many of the recruits will not have fought in the kind of army-on-army war that you see in Ukraine now.

16:19But the number one thing he warned about, slightly tongue-in-cheek, was the weather. You know when you go to the bar and see the fridge, minutes 7 for the beer? Yes. No, it's minutes 23 for you walking. That's the way you tell a Brazilian how cold it is. Yeah, they start laughing. No, no, no. Say, don't. OK, don't worry. Come for fighting. That's it. And so is all of this the result of a specific recruitment drive that Ukraine is doing? So right, this particular moment is the opening of this recruitment center in May. And alongside this is a new digital advertising campaign. TikTok, Facebook, Instagram.

16:59So we are producing materials, like TV roles, interviews with soldiers, interviews with officers, with women, Colombian, Brazilian, Ukrainian, English-speaking, Spanish-speaking. I spoke with the man who's essentially in charge of the program, Alexei Bezhevets, a lieutenant. What they're trying to do is streamline and make the process more understandable to help them deal with bureaucracy, get social security numbers, open bank accounts, and the rest of it. So what happens is they come to this space and they're trained up before being sent on to brigades where there are commanders, some of them speaking Spanish or Portuguese or whatever their language is.

17:40And he says already they're achieving a certain amount of success with this. I mean, they're getting 100 odd applications a day. Then the hope is that, you know, they can provide some manpower to the front lines at a time when the Ukrainian army is really struggling to cover its losses. So the process of getting there is easier, but surely once you're there, things are still pretty difficult, right? We heard about the weather, there's language, there's so much more. I mean, right. I mean, there are clearly mishaps.

18:12I was speaking to one 55-year-old from Chile, Doqui, from Santiago, and he was basically saying that there was one moment when all verbal commands failed and he was trying to draw pictures of the enemy to his command and he wasn't getting the message across. So he basically pushed everyone aside and had to shoot the advancing group himself. You know, at nighttime, no one is talking. So JC was saying that they've developed their own gestures to understand friend or foe, so little touch of the ear, for example. Yeah, so language is certainly one limiting factor. The other is probably the Russian influence, which is increasing quite clearly there.

18:46And on the battlefield itself, the soldiers are going to be higher value captives. Some of the recruits I spoke to said they basically made a deal with themselves to commit suicide before the Russians could even take them. When the prospects seem that grim, then, how do you get used to life in someone else's war? How do you build a life in that situation? It's a good question. I mean, the soldiers I spoke to, some of them were ready to commit to Ukraine completely. Some of them had fallen in love with the country. It certainly does get on your skin after a while. And some, their families are even moving closer to be with them.

19:24I met one soldier, actually, a woman also from Medellin, Colombia. She's arrived in Ukraine under this programme. She's taken the nom de guerre Quinn, as in Harley Quinn, because her husband, who's also serving in Ukraine, is Joker.

19:45She's training pretty much from the start, but she says she's happy to go in a defensive position in trenches. She fears for her husband, who's much further forward, and he's already had injuries from shrapnel.

20:00Despite everything that's happened, including, you know, her husband receiving these injuries on his birthday, no less, she says she sees an opportunity in the country. She wants to learn the language. She wants to establish herself here and then even bring her 12-year-old daughter. I guess the question here is how much this helps Ukraine's efforts, how much it addresses the shortfall that it has at the moment. Clearly, it's not going to solve all of Ukraine's problems. But it kind of does make sense for it to use the resources it has. The fighters like JC and Ortiz, who have shown that they want to be the faces of a campaign, that they're happy to be associated with Ukraine.

20:40And a few extra thousands every month for the mobilization effort, that comes very handy at a time of great difficulty on the front lines. The hope for Ukraine is that it isn't too little too late. Oliver, thanks very much for your time It's wonderful to be on, Jason

21:13So New York is known for many things Skyline, its culture Wall Street, fashion Incredible food its subway, which runs 24 hours a day. Rosemary Ward reports for The Economist from New York. And it was known for its gridlock. Hours were lost sitting in traffic. New Yorkers found it quicker to walk than to take a cab across town. In fact, Sam Schwartz, a traffic engineer, better known as Gridlock Sam, once told me a congestion joke. Two businessmen were debating on how to get to a meeting. One says to the other, should we walk or do we have time to take a cab? But with congestion pricing, jokes like that feel even more dated than they did.

21:59There are less cars and less traffic on the streets of New York City. Have you been driving long? Me? Eight years. Oh, why? Normally I take the subway because taking a cab into Manhattan was a nightmare. It took far too long, well over an hour from where I live in one of the outer boroughs. But recently I took a cab into Midtown to the office and it took less than a half an hour instead of the hour plus it used to take before pricing. It was unreal. Like after they start the congestion price, the traffic was less. Anywhere in Manhattan you're going, they didn't get less. So in the run-up to congestion pricing and in the immediate aftermath, people were furious.

22:42furious. They did not want to pay$9 a day to go into Manhattan. Multiple lawsuits were filed by places like New Jersey. A lawsuit was filed by people in Staten Island. But since the policy was actually implemented, it has changed a lot of minds. And that's because the effects of congestion pricing have been near miraculous. Traffic is down by 10 % and some months more than that, maybe 12 or 13%, which leads to much faster journeys, especially at those bottleneck points, at bridges and tunnels going into Manhattan, both on the East River and coming from New Jersey. And the number of cars entering Manhattan has gone down considerably.

23:23And that also has meant that car noise complaints are down by 70%. There's less honking, less beeping. Buses are traveling faster. In fact, drivers are having to pull in for a minute so they can keep to their schedules. Please exit through the rear door. That's not to say there isn't traffic. Sometimes there is. It's not like we're suddenly in a zombie world. But it's just gone down so much. Thank you. Let's go this way. Well, despite the success, there are challenges from the Trump administration. Donald Trump wants it gone. He wants it abolished. And his administration claims that congestion pricing violates federal law because it does not offer drivers a toll-free way into Manhattan's Central Business District.