One Big BS Bill

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0:36Felix Salmon: Get AT &T Business at business.att.com. Slate Money is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Listen to Washington Wise, an original podcast for investors from Charles Schwab, to hear the stories making news in Washington right now. Host Mike Townsend, Charles Schwab's Managing Director for Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market.

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1:48Hello, welcome to Slate Money, your guide to the business and finance news of the week. I'm former colleague, Emily Peck of Axios.

1:59Felix Salmon: Hello, hello. I'm here with Elizabeth Spires, who's still got her New York Times gig. Hello. And we have an unavoidably political slate money this week because the big, beautiful bill passed. It is now a big, beautiful act. We're going to talk about what was in it, what it all means. We are also going to talk about the tariff situation and what is going on with these crazy tariffs on Brazil and copper and all the rest of it. We have a whole segment on the Trump accounts, which is$1 ,000 going to your newborn, if you're fortunate enough to have a newborn this year. It's all coming up on Slate Money.

2:43So, Elizabeth, I'm going to start with you. Is there a massive piece of legislation in the U.S. right now called One Big Beautiful Act, and that's how everyone has to refer to it in perpetuity. I don't think that we're required to, but given the authoritarian state that we're marching into, maybe next year we'll have to. But when people talk about the TCJA, because they talk about the Tax Cuts and Jobs Act or whatever, they decide, that is the name of the act. If you talk about the Securities and Exchange Act, you refer to it by the name of the act. And I feel like just for the foreseeable future, everyone's going to be referring to this act as the one big, beautiful act.

3:23And you're like, what? No, what? I don't know how people can do that with a straight face. I think Donald Trump will refer to it as that. I think everybody else might just use the acronym BBB, Big Beautiful Bill. It's not a bill anymore.

3:37Felix Salmon: People call it the one big beautiful bill, even after it passed. I can tell you because I've written like 35 stories about it. And we have like official style at Axios. It's the in quotes, big comma, beautiful bill on first reference. It has a comma in there too. Second reference, you can call it a spending bill or a big bill, et cetera. They call it OBBA. I don't know. One Big Beautiful Act. One Big Beautiful Act. Yeah. And people don't typically call it BBB because that was built back better. Oh, that's built back better. Oh, okay. Better Business Bureau and also the Biden administration's failed bill.

4:16Felix Salmon: And I think it was a masterstroke of marketing to call this bill the big, beautiful bill. Because every time you write that, it's like a little win for the White House. Just have all the Democrats call it the big bullshit bill. And that was the other thing. The Democrats used that language when they talked about it more or less. And they could never get it together the way Trump usually gets it together to give someone a nickname. The Democrats could not get it together. Is it the big bullshit bill? Is it the big bad bill? Is it the big stupid bill? I think the Democrats did it on purpose because every time they used the name, they just thought it sounded so ridiculous.

4:51They wanted to use the name because the name is inherently ridiculous. But let's not concentrate too much on the name.

4:57Felix Salmon: Yeah, where are you going with this? Can we at least agree that it's big, that the big part is accurate? It's definitely big. Yes, it's big. It's definitely big. It has been signed into law and it increases budget deficits as far as the eye can see. It is fiscally wild. This is why last week we were talking about it kind of works as fiscal stimulus just because the budget deficit blows out as a result of it. But I'm just going to come out and say, even though we haven't really talked about this, Elizabeth, that you don't think it's beautiful. I do not. I think it's bad and bullshit. I mean, there are many, many parts to this bill.

5:38And as we have learned over the past week, even the people who voted for it were unaware of various bits and pieces that were shoved in there. But if you had to sort of just pick one main thing in this bill that you just think is atrocious and should never have even been considered, let alone passed, what would it be? Giving ICE more funding than federal law enforcement combined. It's now the biggest federal law enforcement agency. And that's not even including the$47 billion or something that they want to spend or that they have allocated to building his wall. The wall is now a thing that is going to happen.

6:18Yes, it will be ineffective and stupid, but we're spending money on it. So we're stuck with it. How about you, Emily? What's the thing that you object to most about this bill?

6:28Felix Salmon: I'm an objective reporter at Axios, so I don't object to anything in the bill per se. I think that the piece that is getting the most objections from people, even Republicans, would be the changes to Medicaid. There are now going to be more work requirements for Medicaid and work requirements for food stamps or SNAP that are projected to cut like a trillion dollars, I think, or more from those programs, as well as cuts to the Affordable Care Act. So my answer is the cuts to the safety net, I think, are probably what people would say are the most objectionable pieces of the bill for the pain it will inflict on the economy.

7:08Felix Salmon: And in the case of health care, I mean, that's going to be a hit to economic growth, too. Like the health care sector has grown enormously since Obamacare in 2012. Like it's been a very big and growing part of the economy. So now they're taking money away from that. So not only will millions of people, it's like 23 million projected to lose health insurance. That's also, you know, on a macro level, probably not good for the economy either. Not having insurance makes you inherently less employable. You know, it's just like the work requirement thing. Yeah, one of the reasons you're not working is because you're sick.

7:44And one of the reasons you're sick is because you don't have health insurance and you can't get health care. You know, it all kind of spirals into itself.

7:50Felix Salmon: What's really interesting, I'm obsessed with this, and Matt Iglesias made this point on Ezra Klein's show, but it's really a good point because all the administration talk about, we don't want healthy, able-bodied men, I guess, and women, they don't say women usually, men to sit around without jobs collecting Medicaid. Medicaid. But like, what? If you're an able-bodied young man who can work, your health care costs are not high, if any, costs. That's not a thing. Like, it doesn't actually make any sense. Yeah, Medicaid is not a check that people cash. It's just reimbursement for necessary health care costs.

8:29Felix Salmon: Yeah. And most people on Medicaid are already working. Those who aren't, a lot of them are caring for other sick people, right, who can't afford home care or who need extra home care, things like that. So yeah, I think it will prove to be a misguided policy, though I will say it doesn't take effect for a while. So there's now kind of a lot of people saying this is never going to happen, actually. The ICE stuff will happen. Is that part of taco as well? Is that the idea that somehow Trump will find a way of chickening out of the Medicaid cuts? Which, by the way, I totally believe he can and probably will do, if only because there's really no popular constituency for cutting Medicaid, right?

9:12Like it was just a kind of fiscal thing. It was he needed to get it into the act in order to be able to preserve the tax cuts. But now that the tax cuts have been made permanent, he doesn't need it anymore so he can bring the Medicaid back.

9:27Felix Salmon: Yeah, I think it's going to be it is politically unpopular to make those changes. and I was doing some calling and on some reporting earlier this week and a lot of times Congress will say it's going to do like bad things and make cuts and all this and then they kind of just kick that can down the road and it never happens and I could see that happening this time with the changes to Medicaid and SNAP. You know, a new Congress could come in and reverse it. They could delay it. They could extend it. They've done this before with other provisions. So I don't know. That's something to think about. Even so, some of the stuff in the bill makes it hard for the states to kind of backfill federal services and federal money that they would usually get.

10:09One of the things that I think isn't talked about that much is the fact that they're also stripping the state's ability to tax health care providers in order to backstop some of that federal money. And so if you're in a state that already has a lot of problems, and these are mostly red states, these are, you know, Trump voting states where you have a rural hospital shortage to begin with, and you don't really have the kind of money to fill that federal funds gap. Even if it gets reversed by a future Congress, it's going to be a problem because it's going to just break parts of our health care infrastructure.

10:44Yeah, I mean, I think that is definitely deliberate. There was never a belief in Congress that if the federal government vaporizes hundreds of billions of dollars of Medicaid spending, that somehow the states will step in and write those checks instead. Like, that just doesn't make any sense. And I don't think anyone believed that that was going to happen. The idea was to just get rid of that spending. And, you know, as to Emily's point, we'll see whether it actually happens. But that was clearly the sort of big picture intent. And Medicaid and most government spending, for that matter, makes sense at the federal level, if only because the federal government has the lowest borrowing costs.

11:24Felix Salmon: I would take the other side of the opposition to the big, beautiful bill for a second and say, like, the biggest thing I believe in the bill is the extension of the Tax Cuts and Jobs Act, all the tax cuts from 2017. if Congress, the administration had let those cuts expire and everyone's tax rates had gone back up, I think that would have been like a nightmare for politically for the Trump administration and for Congress. And the administration's critics would be like up in arms about that, too. Can I just plug my own podcast here? Because it was the favorite podcast that I've done in forever.

11:58but the one I did with Barry Lamb a few weeks ago about exactly this question of, you know, if the tax cuts have been allowed to expire, would we experience that as a tax hike? And would we experience that as a Republican tax hike? It's a super interesting sort of philosophical question. And I can highly recommend listening to Barry much more than me talking about like the philosophy of that. But yeah, I think in practice, put the philosophy to one side. Yeah, you're right. If you have the Republicans controlling both houses of Congress and the White House, and everyday Americans' tax bills go up from year to year on the same income, that feels like a tax hike.

12:42And they are going to say, well, it was under the Republicans, and it was the Republicans who did this.

12:46Felix Salmon: So they had to do it. So yeah, if you kind of say that they had to do that, then at that point, that blows out the budget deficit in and of itself. Even with massive cuts to Medicaid and and on the rest of it, it blows out the budget deficit. Without the cuts to Medicaid, it would blow out the deficit even more. So, yeah, there wasn't an obvious thing for them to do here. Well, let's say they had to do it. They did not have to increase military spending by, you know, a catastrophic amount. And then on top of that, overfund ICE in a way that just doesn't make any rational sense. Sure, but those, as you appreciate, Elizabeth, those are rounding errors.

13:23The only things that matter, really, are entitlements. In terms of spending, like all of the discretionary stuff is neither here nor there. Well, I would disagree with that in terms of military spending. That is a huge portion of our budget. That's not a small line item. Defense, but the defense as a line item is large, although it's smaller than the entitlements. But the delta, the change in defense was small.

13:46Felix Salmon: Well, to both of your points, then entitlements, I hate saying that word, but Medicare and Social Security make up the biggest portion of the federal budget. this bill doesn't really do anything about that. Actually, what it does do is further deplete Social Security because it cuts taxes on seniors, which is going to hit Social Security because some of those taxes go to pay for the program. But the bill doesn't touch Medicare or anything. We're rapidly coming up on the 2033 point at which the Social Security Trust Fund runs out. and it is incredibly obvious to me that the solution to the social security trust fund running out problem will not be arrived at until 2033 it'll be like a last minute thing it'll be like the debt ceiling thing the idea that we can all see this coming and therefore we have like eight years to work out how to solve it no we're going to have eight minutes to work out how to solve it because the deadline will be on us and we're like oh shit now we need to do something But we're going to leave that one until the last minute, obviously.

14:48The other really massive line item in the federal budget that we haven't talked about is interest on national debt, which has been rising significantly because interest rates have been going up. and arguably this act worsens the arithmetic on that just because the effect of the on the budget deficit is going to act to keep interest rates high because there's so much need to issue so much more you know debt to cover that deficit that investors are going to be able to charge more for it higher interest rates means higher interest cost and so like a fiscal spiral that Jared Bernstein just came out in the New York Times and said, okay, like I used to not care about fiscal.

15:31Now I care about fiscal. Like a lot of people really care about fiscal. It seems weirdly to be the one thing that Elon Musk cares about more than anything else. That seems to be the one sort of animating thing behind his America party. I don't think there's much of a popular desire to get the fiscal house in order, but certainly the sort of pearl clutching intelligence here are now genuinely worried about it in a way that I have not seen them worried about it over the past 20 years.

15:57Felix Salmon: Can you explain it again? I'm sorry. I don't know if I was zoning out when you were talking, Felix, or if I don't understand it. So the U.S. is going to need to issue more debt to pay for this bill because the bill does not pay for itself. It costs$3 trillion more than we will have over the next 10 years. So we have to issue more debt to pay for the bill. And because we have to do that, it's going to raise borrowing costs. I don't quite get that, actually. It's supply and demand. There's a lot of investors out there who want the safety and liquidity of U.S. Treasury bonds, right? And so if the U.S.

16:35Treasury issues a small trickle of them every year, and it's actually quite a large trickle because you're including the ones that are just maturing and being rolled over. It's not just the deficit ones you need to do. It's also the ones that are being rolled over. So if you're rolling over all of your existing maturing debt, then the people who are wanting to buy that debt are competing with each other to buy it. And so they're trying to outbid each other for it. And so the price that they're willing to pay goes up and yields go inversely to prices. So the yield that the Treasury borrows at goes down.

17:08Felix Salmon: Because you don't have to offer as much in interest if there's a lot of demand for something. It's like, we've got you. But if you are flooding the market with trillions and trillions of dollars of treasury bonds, and everyone who wants a treasury bond already has a treasury bond, and you're like, well, and here's more, and here's more, and here's more. Then eventually people are like, well, you need to pay me to want this piece of paper. And so the yield that they are requiring will go up. Generally, the more debt you issue, the higher the yield that you need to pay. But hasn't the U.S. been issuing more and more debt and people been making that same argument like for the past long time?

17:47Felix Salmon: Like when the pandemic happened and we issued more and more debt and borrowed more money to pay for various things, interest rates were totes fine? Demand was there? Yeah, like you can do it in a ZERP environment, but we're not in a ZERP environment anymore. That's the difference. When the Federal Reserve is keeping rates at zero for we are in a crisis reasons, then yeah, you're in a crisis and you can get away with it. But when you're not in a crisis and the economy is growing and the Federal Reserve is keeping rates somewhere in the normal range, which is where they are right now, rather than zero, then it starts becoming a real issue.

18:26Felix Salmon: So then do what Trump says and cut the rates. So yeah, that's exactly what Trump is basically saying is, well, if this was a crisis and the Fed cut rates to zero again, then we wouldn't have this problem. And that is true. But, you know, we have an independent Fed and the independent Fed does not care about, you know, trying to solve the fiscal problems that are created by Congress. as the independent Fed is trying to keep inflation under control, if there's no actual economic crisis and there is inflationary pressure and there could be much more inflationary pressure if the tariffs happen, then, yeah, they're not just going to cut rates to rescue Congress from its own fiscal profligacy.

19:09Felix Salmon: They would if it was a real crisis. Well, yeah, if it becomes a real crisis, then they would. But I don't know if it's going to become a sort of crisis crisis.

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22:51Felix Salmon: That's H-E-Y-G-E-N dot com slash P-O-D. I think this is actually quite a good segue to what we also need to talk about this week, which is the tariffs, because they're back on the agenda, and Donald Trump has been sending out dozens of letters to various countries saying this is how much you're going to pay in tariffs and this is how much you're going to pay in tariffs and all of these letters and all of these tariffs are being imposed says trump because there is an emergency because we are in a crisis and according to him the crisis is something something trade deficit something it's a little bit unclear what the crisis is but he has determined that there is a crisis and that therefore he has the power to unilaterally impose a bunch of enormous tariffs on any country he likes for basically any reason he likes the international trade court in new york came down a couple months ago with a very strongly worded opinion basically saying this is complete bullshit and no there is no crisis and under the law you are not allowed to impose these tariffs and then the federal Circuit Court of Appeals did not disagree with what the International Trade Court said, but said, listen, we will allow the tariffs to remain in place until we rule.

24:09And they are going to rule sometime in the back half of August, maybe early September, on whether any of these tariffs are legal. And the reason I mentioned all of this is because if you look at the letter that Donald Trump sent to Brazil this week, imposing a 50 % tariff on Brazil. Now, Brazil, we actually have a trade surplus with Brazil. We don't have a trade deficit with Brazil at all. We have a trade surplus with Brazil, and he's imposing a 50 % tariff on Brazil because their former president, Bolsonaro, tried to orchestrate a coup, and he is now being prosecuted for trying to orchestrate a coup.

24:48And he is a friend of Trump's, and Trump doesn't like that. And so he's punishing Lula, the current president, with this 50 % tariff because Lula is prosecuting Bolsonaro. And he says this, he says the quiet part out loud up top in his letter to Lula announcing the tariff. And this is just so wild to me. My brain is exploding. Technically, he can only impose this tariff if there is an emergency, like crisis situation in America. Obviously, Lula prosecuting his predecessor in Brazil is no one's idea of an emergency that will justify a tariff. And yet, he's going ahead and doing it. And so, I think one of the reasons why the markets are so sanguine about these tariffs is because they reckon that the federal circuit is going to take one look at this letter and one look at the, you know, gestures vaguely at everything.

25:42And it's going to say, well, obviously, this isn't an emergency. So, yeah, none of these tariffs are legal. Yeah, I think it doesn't matter for Trump's purposes. You know, it's all signaling for him. And he doesn't really view tariffs as a meaningful economic tool as much as he does a way to bully other countries. You know, I still believe that he's pretty economically illiterate on tariffs. Generally, he thinks that trade imbalances are inherently a manipulation. And I do think he genuinely believes that. But he does also sort of see them as the only meaningful piece of leverage that he has in relationships with other countries.

26:16And he doesn't really care about diplomacy as a foreign policy tactic. He thinks that it's all, you know, power politics and tariffs are the only thing in his arsenal right now.

26:25Felix Salmon: I think, Felix, what you just said, you're basically like, surely the courts will chime in and bring rationality to the situation is like, I don't know, it may be magical thinking at this point. I will agree that there is an element of magical thinking to that. I'm not saying I believe that, but that is the only reason I can come up with to understand why all of the markets in the world aren't freaking out right now. I'm kind of reverse engineering the stock market at all-time highs and saying this is the only argument I can come up with to explain why the stock market is an all-time high, even as Trump is throwing out these letters saying 25 % tariffs on Japan, 25 % on China, 50 % on Brazil, and all the rest of it.

27:12Felix Salmon: The commentary has been the stock market just thinks taco that thinks Trump will chicken out and that this stuff won't happen. And then there's this new school of thought. It seems like this week, finally, people started writing like John authors had a good piece in Bloomberg. People started writing like, why the market should be freaking out. This stuff is seeping in and affecting companies and businesses and prices. I mean, the price of coffee is already up like 10 % this year. And like the threat of 50 % tariffs on Brazil, which like sends us like a third of our coffee or something is going to send prices up more.

27:49Felix Salmon: And like aluminum prices already rose. Like there's a lot of stuff already in play in the economy. And it's weird that the stock market is still doing its thing where it's like running in midair off the cliff and doesn't realize that there's no land underneath there or whatever. It's the Wiley-Koyote moment. Absolutely. And can we just talk about copper for one minute? Because the copper thing is absolutely wild to me. Yeah. Like copper is arguably the most important industrial metal, right? Like it is by far the cheapest, most effective way to find something that conducts electricity. And everyone needs it.

28:23Like electricity is a pretty basic thing and you need to get it from A to B. And the way you get electricity from A to B is you run it along a copper wire, right? That's how you do that. Without copper, you can't do that. It is like one of the basic inputs that every American company that makes anything is going to need. So if you are trying to give a boost to American manufacturing and American companies, what you do is you try and make copper as cheap as possible so that they can be as competitive as possible. And instead, what Donald Trump does is he singles out copper for 50 % tariffs. So suddenly your copper bill goes up by 50%.

29:01For why? Why would you do that? The turistic I use is just that if he thinks that something is important and we get it from another country, he wants to onshore it, even if it's something that makes no sense to do in the US. And probably somebody put it in his head that copper is one of the most important inputs that we get from another country. And that's probably the extent of it. Is Chile suddenly now a strategic threat to us that we need to antagonize? Which also, by the way, this is going to hurt Chile. Okay, as someone who spent many years of my life writing about Latin America and economics, the idea that you could have within a single week, Washington imposing 50 % tariffs on Brazil and 50 % tariffs effectively on Chile, because most of Chile's exports are copper, in a world where for decades everyone's been like, America has always wanted to hold the leadership role in the hemisphere and make sure that it's good friends with South America.

30:02Strategically speaking, I should imagine that Marco Rubio is pulling his hair out right now. It makes everyone's jobs impossible at the State Department. There have been economists at very right-wing think tanks in the last few days just writing memos saying this is madness. and, you know, if they can't figure it out or can't come up with a post hoc rationale for it, I think there are probably people in the White House who are trying to explain to Trump why this is a bad idea. And it's just a matter of whether or not he internalizes it.

30:29Felix Salmon: And the problem is that in the past, when Trump has done his madness, like come out on Liberation Day and announced these like massive tariffs, the markets have reacted in such a way that has been a check on the president. And right now the stock market is failing in that role. It is not checking him. So I think things are going to keep going until that happens. It's crazy that all the free market types in Congress are not checking him, just out of their own self-interest, you know? I am old enough to remember everyone telling me that Medicaid is the third rail of American politics. And the only rule you can definitely live by in American politics is that no one is ever going to cut Medicaid because everyone loves Medicaid so much.

31:13And if you touch Medicaid, then you get kicked out at the next election. So no one would ever cut Medicaid. And like,

31:19Felix Salmon: suddenly, they say that about Social Security and Medicare, but not Medicaid. Yes. But like, this was, this was definitely part of the received wisdom in the process of Obamacare becoming law, right? Was that everyone basically said that if this becomes law, then it's permanent because once it becomes law, you can't repeal it. People get used to their entitlements. And obviously that was false. I push back. I will say that the way they cut Medicaid in the bill is with these work requirements. That's the biggest way they cut it. And when you ask Americans, if you do a poll and you say, do you think people who get Medicaid should have to work?

32:00Felix Salmon: Americans say yes. So when you tell people, well, we're not cutting Medicaid, we're just putting in work requirements. They're like, oh, okay. This is also because Americans are brainwashed into thinking that if you are on any kind of entitlement that you must have done something wrong and that there's something morally wrong with you and you're just lazy. And that's true even among especially centrist Democratic voters. But when you actually cut a program like Social Security or Medicare that at some point, unless you're a billionaire, you will want and need, I think it's a very different situation.

32:33Okay, that's actually, that one I buy, that Social Security and Medicare is literally something that all of us are going to wind up using at some point, whereas Medicaid is not. And so therefore Medicaid is just for the poors who are not me and so I don't need to worry about it.

32:48Felix Salmon: No, I don't think that's what it is because Medicaid is really popular now thanks to Affordable Care Act. The support for Medicaid is like at 80 % now if you look at polls. I think it's really because they have figured out a way to do cuts without calling them cuts. But you don't say we're cutting Medicaid. You say we're putting in work requirements. Everyone is like, cool, whatever. I work. It's fine. Most people on Medicaid work, right? And they're like, oh, this is fine. ProPublica even had a story about a guy in Georgia who was like on Medicaid who supported work requirements. And then they put them in place and the guy kept losing his Medicaid because they were so hard to comply with the work requirements because the paperwork is annoying and like it's harder than it looks.

33:29Felix Salmon: And like every state that has tried it, people wind up losing coverage. There's ways now that you can cut things without calling them cuts and people will support it and they won't freak out about it. That's what I think is happening. I also think that like historically speaking, Congress has been a deliberative body that negotiates and that, you know, you have to find the sort of consensus in and that if you try to get a majority of Congress to do most of the things in this bill, you'd be hard pressed to do that. But we have literally a Trump cut, you know, that basically the overriding impetus for every single member of Congress is just do whatever Trump wants, because otherwise Trump will crush you.

34:19And so they don't do that deliberation anymore. They don't do that, like, I will vote for this, but not that anymore. We have this incredibly powerful president who has the ability, at least until the midterms, to basically get Congress to do whatever he wants, which is wild given the narrowness of his majority. Well, I think another factor, and this is particularly insidious in my opinion, is that a lot of these things are not going to take effect until 2028. And at that point, Trump will presumably be out of office. There might be a Democrat in the White House, assuming we don't have another attempted coup.

34:56But at any rate, when we actually start seeing the effects of this stuff, he may not be in office. And a lot of these Congress members may not be in office either. So they're not going to get the punishment for it. Yeah, like his last day in office is going to be, you know, January 19th, 2029. And so he's like, well, you know, I'm a lame duck in 2028. If you don't like suddenly what's happening to you in 2028, well, you can't vote me out because I'm terminated out anyway. Take it out on J.D. Burns. I don't care if Donald Trump Jr. or whoever my, you know, the Republican candidate is. And he, more than any other president in history, with the possible exception of George Washington, doesn't care about his party.

35:38He is not here for the greater glory of the Republican Party. He just cares about Trump. And so once Trump has gone, he doesn't care what happens to the Republicans. It'll be really, really fascinating to see what happens to the Republicans post-Trump, because that entire unifying force will have just evaporated. So what is MAGA without Trump? But it's also that they skew sort of older, I think, the core base. And so that's the Republican Party is recompositioning itself anyway. But just to go back to, can we go back to tariffs for a second? Please. Yes, let's come back to tariffs. One of the crazier things is that Trump keeps telling people that none of these countries are negotiating with him.

36:17And particularly in some of the Asian countries, they're like, what the fuck is he talking about? Our ambassador is in Washington every single week talking to ex-Trump officials. And so they're sort of at a loss to even what they should be doing. This is such a good point, right? So Korea has a free trade agreement with the United States. The tariff that Korea has on U.S. exports to Korea is zero, right? There is no tariff on American exports to Korea. Korea cannot offer to reduce its tariffs on American exports to Korea because it is already at zero. Like, can you have a negative tariff? I don't know.

36:58Like, can Korea pay American companies to export? I don't know how you could go below zero. There was this kind of zero lower bound. And so like, this is one of the things I think that is worth pointing out is that in the case of China, there really were concessions that China could offer and that Trump could accept and that they could come to a deal on. In the case of countries like Brazil and Korea and Japan, there are no obvious concessions that these countries can offer. Trump keeps on talking about these tariff and non-tariff barriers. As an article of faith, if you listen to Peter Navarro, and Trump, for reasons no one understands, listens to Peter Navarro, if there is a trade deficit, there ipso facto must be some kind of quote-unquote non-tariff barrier to trade.

37:42And if there wasn't a barrier, then trade would be balanced or in surplus or something. This is complete bullshit. But it does mean that there's nothing these countries can offer because there are no non-tariff barriers. There are no tariff barriers. The only barrier like Japan has is like on rice. And I'm sorry, but like America is not going to export rice to Japan. He has such a simple kindergarten level understanding of what trade imbalances are. he has explicitly said, I need these countries to spend as much money with America as Americans spend on them. Writing a letter to Sri Lanka and suggesting that there's any way possible for them to do that is just bonkers.

38:21I mean, I have a 10 year old who could do that kind of math and explain why it doesn't work. I think there was a tweet or a truth or whatever it is that Trump does these days where he was like, Vietnam should definitely import lots of American SUVs, the big SUVs would be great in Vietnam. And like the per capita income in Vietnam is$4 ,000. There's no way they can afford a, you know,$50 ,000 SUV. They also have very narrow streets where you can't fit an SUV. Exactly. It's like, what? Is the non-tariff stuff like, say that you'll build

38:55Felix Salmon: a factory in the US and stuff like that? No. So my favorite example of what he considers to be a non-tariff barrier is that he believes that sales taxes are a non-tariff barrier that is affecting the trade deficit and it's just like what no no but yeah you can't like you just sometimes need to take a deep breath and spend a few weeks in the west coast of ireland and just not think about these things because otherwise you'll go crazy

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41:00Felix Salmon: All right, I need to talk to you guys about calendaring, which is a verb, sadly. And it starts with me having not one but two different Google calendars that I deal with. One is personal. One is for my work at Axios. And my work at Slate gets kind of spread over both the calendars. My doctor appointments hit one or the other. Y 'all, it's a mess. And that's just me, okay? Then there are the kids. They have their own schedules. Work, school, back to school is underway. It can get really chaotic. But what's happened recently is that I have been given a Skylight calendar. Skylight is designed to bring families together for more time.

41:46Felix Salmon: It's an all-in-one smart calendar. It can bring all of the calendars together for a great calendar summit of calendaring and other verbs that we haven't even thought about that we could use to describe what happens when all the calendars converge. You can manage events. You can manage chores. You can keep a grocery list handy. Your happiness is Skylight's happiness. And what I'm hearing is if you don't like this, you can return for a full refund. They don't ask questions. Families are better when they're working together. Right now, Skylight is offering our listeners$30 off their 15-inch calendars by going to myskylight.com slash slate money.

42:29Felix Salmon: Go to myskylight.com slash slate money for$30 off your 15-inch calendar. That is M-Y-S-K-Y-L-I-G-H-T dot com slash slate money. I really want to try and squeeze in a quick conversation about the Trump accounts because, you know, we can be servicey here, right? Emily, you're the demographer among the three of us. What proportion of our listenership do you think is having a baby this year or is likely to have a baby in the next three or four years? Not a big proportion, I'm going to guess, of our listeners. Maybe like I'm going to guess 4%. That even seems high, honestly. If you're in that 4%, this is for you.

43:12So congratulations, by the way, on your baby.

43:15Felix Salmon: Other parents can open a Trump account. They just don't get the money. Right. Anyone can open an account. Well, you can, Felix. Great. You open an account. It has no money in it. But if you are one of those great people who's doing what J.D. Vance and Elon Musk want and having babies, well done to you. And your baby was born this year or will be born next year, you will get$1 ,000 will magically appear in this Trump account. Only if you open it. You do not automatically get this account. But if you tick the box on your tax return saying, yes, please, I would like the account, then that account will appear and it will have$1 ,000 in it.

43:49And then you get to choose which index fund you get to invest in or your child gets to invest in, your newborn gets to invest in. And then your newborn has$1 ,000 worth of red-blooded American stocks and will have that until they sell them at some point. Elizabeth, now we have rich babies. Like, yay, right?

44:10Felix Salmon: Aw, little babies in tuxedos and top hats. So you know how it pains me to say anything positive about the Trump administration, but baby bonds, the idea of them has been around for a while, and they do have some bipartisan support. This is more baby equities, really. Fair. But fundamentally, if the government's giving you free money, you take it. Yeah. The more salient question for people who are actually considering these accounts is, would you put anything into the account beyond the$1 ,000 that they're just giving you? Don't. And does it make sense to do that instead of putting it into a Roth IRA?

44:43This isn't like the 401k. This isn't like the 529 college savings plan. This isn't a savings vehicle for parents and relatives to avoid taxes. This is just we create an account so the account exists. And then maybe if you want to give your kids some money, then it's a way of giving your kids some money. But it's not a particularly tax advantageous way of giving your kids some money. But as you say, it comes with$1 ,000 free dollars. So who doesn't like$1 ,003? And the weird thing about it, the thing which I wanted to sort of talk about is that by law, you have to invest it 100 % in stocks. We're talking about baby bonds, but like, can you do the standard 60-40 portfolio, which is like 60 % stocks, 40 % bonds?

45:28No, you cannot. if you want to use the money that you've accumulated in that account to say help pay for your college which is definitely one of the foreseen uses of the fund then maybe if you're going to have to pay college tuition next year you don't want 100 exposure to equities because the stock market could plunge by 50 and then you would have half the money to pay your college but nope you have to have 100 exposure to equities because you are not allowed to have a conservative risk appetite. It's kind of wild. They are just basically saying everyone who has one of these accounts, they have to have full maximum pedal on the metal acceleration, be as risky as you possibly can, be 100 % stocks, because that is the American way, goddammit.

46:14Felix Salmon: Yeah, the idea is to sort of get the next generation really into investing in stocks. I think that's like the most wholesome, most generous view on why they did it like that, and has a lot of support. I think BlackRock and Larry Fink, they're into it for obvious reasons. I feel like BlackRock would be perfectly happy if you're also allowed to invest in bonds just so long as they could run the account. I went down a little rabbit hole with this. And one thing I wanted to run by you guys and see what you think is in the US, there are at least 11 different kinds of special federal savings vehicles, savings accounts that Americans can tap.

46:51Felix Salmon: There's like a 401k, 403b, 457b. There's IRA. There's 529. There are ABLE accounts. There are health savings accounts. Roth IRAs. What is happening? I once had something called a Keo IRA, which no one can even remember. And then I, you know, read some sensible take from like the Tax Foundation Association or something that was like, we just need one, just one universal savings account. Apparently Canada has this. You have one universal savings account. Almost all the Canadians use it. New Zealand has it. You put your money in, you don't pay taxes on the growth in the account, something like that.

47:26Felix Salmon: People really like it. It's separate from a retirement account. It's a way to encourage people to save. And it sounds so much better than this alphabet soup of stuff. But I was curious what you would say to that. I couldn't agree more. And this is something that happens every time a new tax break gets passed by Congress. And I have to say, you know, a tiny little bit of kudos to Congress on this one. It's not a tax break. As we have discussed, there is effectively zero tax break associated with this account. And one of the things I have said many, many times is on a fiscal level, a tax break and a government expenditure are the same thing, right?

48:06They have the same effect on the budget deficit. If you want to do a fiscal expenditure, just do the fiscal expenditure. If you want to give$1 ,000 to every newborn baby, just give$1 ,000 to every newborn baby. Don't try and create a$1 ,000 tax credit or something that is going to screw up the tax code. Don't try and make a tax-free savings vehicle, yada, yada, yada. Just spend the money you want to spend rather than faffing around with taxes. But for whatever reason, the US Congress has historically seemed to have felt that a tax break is somehow a more justifiable way of doing a fiscal expenditure than an actual writing a check.

48:52And so when they want to do fiscal expenditures, they always just come up with a new tax breaky way of doing it rather than actually having to sign on the government spending more money. And so we wind up, as you say, with this alphabet soup of tax breaks. But yeah, it would be much better if we just took the cost of all of those programs that you mentioned, the 401ks and the IRAs and all the rest of them, and we took the fiscal cost of those, which is hundreds of billions of dollars, and said, yeah, and just said, okay, all of the tax breaks are going away. And instead, we're just going to give those hundreds of billions of dollars to various households, according to some formula, because then we could really see.

49:30Yeah.

49:31Felix Salmon: Because a lot of the breaks, like 529s I'm thinking of now, those don't do anything for low-income households who don't have the money to set aside cash for their kids' college. They need the cash right now, so they don't get any advantage from a lot of these savings vehicles. I think this is also part of, as a country, we have a pathological aversion to direct aid to people. And some of this idea that if you do that, there are going to be some undeserving portion of the population that benefits from it, which is part of the reason why I think we have all of these really baroque tax codes, because you have to have a certain level of income to even just navigate them.

50:07If you have a tax lawyer who's going to structure all of your holdings according to this smorgasbord of vehicles and tax breaks and so on, you're not the lower income person who actually needs these things. And I think that's intentional. That's built into the program. Well, I mean, one of the other intents is to quietly funnel a bunch of government largesse to the rich, which it's hard to do. For instance, if you basically said, open up a retirement account, and so long as you promise not to touch the money until you're retired, every dollar of post-tax income that you put into that retirement account, we will match with 50 cents of US government money.

50:47And so you just tell us how much money you're putting in and we'll multiply that by 50 % and we'll put in taxpayer money to multiply it. That's effectively what we're doing with the tax code by saying you can put in pre-tax money and yada, yada, yada. But because it's not framed that way, it feels more justifiable. Whereas if you were like, oh, yeah, every million dollars you put into your retirement account, we will throw you half a million dollars of taxpayer money. That would never part.

51:13Felix Salmon: Yeah. And just to make one more point about the baby accounts, because you really got me thinking about them and now I want to write about them, but I don't have time. I guess the idea ostensibly is to further the pro-natalist agenda that, you know, J.D. Vance and others have, which is like have the women have more of the babies or whatever. But like giving$1 ,000 to a baby that the baby can't use until the baby is old and they can use when they're adults, why would that encourage someone to have a baby? You have to pay for the baby for 18 years. That$1 ,000 is great for the baby and the future human adult that it will become ostensibly.

51:56Felix Salmon: Does nothing for parents. Meanwhile, in the bill, they do a little for parents. They increase the child's tax credit a little smidge, a couple hundred bucks for marrieds. But the only marrieds, parents who can access that money are the ones with money already because it's the kind of tax break that you only get if you have a certain amount of tax liability. So there are like millions of families that will not benefit at all from that increase and obviously aren't going to benefit from the thousand dollars for their baby, whether they have a baby or not. No parent will benefit from this. it will inspire no baby making.

52:31So my general rule when it comes to pronatalist policies is that none of them work.

52:36Felix Salmon: None of them. Right. I know this one won't work, but then none of the other ones work either. So it's just as effective as any of the other ones. There is limited evidence from, of course, Nordic countries, limited and small evidence that some of those policies do have a small impact, Felix, but you're mostly right. The Nordic countries have much lower birth rates in the United States. No, but there's some evidence that there have seen little increases. The last time I wrote about this, there's like a little smidgey of evidence. I swear it's real. Okay.

53:18Oh, let's have a numbers round, shall we? Emily, I'm going to skip over you. And I'm going to start because it's just a continuation of the whole conversation we've been having so much. One, there is now a 1 % tax on remittances. This is what the actual fuck.

53:36Felix Salmon: Oh my God, I wanted to talk about this and I forgot. Actual fuck. If you are working hard in America legally and earning money and you want to send your money to support your family and now your family is in a foreign country, you now have to pay a one percent tax to the u.s government because why exactly this is completely bazonquously crazy it is very easy to get around it has no fiscal effect it is basically just a way to sort of punish immigrants for being immigrants and it comes in the face of literally decades of attempts not only by the world bank and the imf but also by the state department and the u.s government to bring down the cost of remittances.

54:22And suddenly the federal government is saying, no, we don't want to bring down the cost. We want to raise the cost. It's the most insane thing.

54:28Felix Salmon: I read that the effect of doing that, cutting remittances will have a more harmful impact on countries economically than getting rid of USAID entirely, because so many countries depend on remittances. It's like a part of their GDP. Remittances, they dwarf the amount of foreign aid. The main way that money flows from rich countries to poor countries is not through foreign aid. It's through remittances. Yeah. Someone really needs to take that up and write about it. And I also read that remittances are down now because a lot of immigrants are just afraid generally. Like, I don't know if this is right or not, but they're afraid to like go to Western Union or something, but you don't have to go to Western Union to send money to your home country.

55:07Felix Salmon: Right. I just, I'd read that. Well, you kind of do. So the big thing is, do you or do you not have a bank account, right? If you have a bank account, then you can avoid the remittances tax by sending money from your bank account. But that's actually normally one of the more expensive ways to do it. Plus, as you say, especially for the undocumented immigrants, they are now very afraid to try to open up bank accounts, even though you are allowed to because they're like, yeah, no, I'm not touching that kind of official, you know, anything. So it is part of the war on immigrants that is also the increase in budget for ICE and all the rest of it.

55:44But it is, it does irk my goat.

55:46Felix Salmon: It's a war on immigrants and a war on helping others. It's the way we do foreign aid in the US. Basically, it's a backdoor, another cuts of foreign aid. United States, to be clear, is overwhelmingly, by leaps and bounds, the largest funding source for global remittances. There's no other country that comes close to the amount of money that is sent in terms countries where the money comes from. Absolutely. It just goes back to Trump's, you know, kindergarten level understanding of trade flows and money flows globally, where he just thinks that if that money is going out of the country, he wants to do whatever he can to keep it in the US, because that's his super simple understanding of global economics is if it's going to another country, then it's wrongly going to another country.

56:31Yeah, keep all of that money in America where it can be eaten by Jamie Dimon. Elizabeth, what's your number? My number is 100 million, and that's dollars. When the FTC introduces a new rule, they have to do a preliminary regulatory analysis for the proposed rule.

56:47Felix Salmon: Oh man, this is my number. Where the annual impact on the national economy exceeds 100 million dollars. So during the Lena Kahn tenure, she passed a rule that said that you should be able to cancel a subscription you have as easily as you sign up. And everybody loved it. bipartisan appeal. But because they did not do this regulatory analysis, because they argued initially that the cost, the impact to the economy would be less than$100 billion, it's now been overturned in a federal court. So our really wonderful, you know, cancel as easily as you subscribed rule is no longer. Wait, was that an effect?

57:23Was there like a brief window? It was supposed to go into effect on July 14th. Oh, so it was never in effect. And now it never will be infect. Oh, wonderful. Unless this Trump FTC decides to go back and start the process again. Oh, that famously activist Trump FTC. But yeah, at least the Trump FTC is going to allow Sherry Redstone to sell Paramount now that she's paid him a bribe of$16 million.

57:46Felix Salmon: Priorities. Emily. This is devastating. My number was also the FTC click to cancel, but I have another number. It's a bummer, but it's fine. My other number is 15.6. That is a percent, 15.6%. That is the share of US adults who in May say they sometimes or often don't have enough food to eat. So that's a happy number. It's gone up a lot. I'm sorry. I'm so sorry. Emily, I'm going to have to come up with a fourth number, which is just a happy number. All right, finish your thought. In 2021, the number was like 9%. So now it's up to 15.6. This is morning consult data. because we pulled the pandemic era benefits and the number has been creeping up ever since.

58:29Felix Salmon: And now just saying we're cutting SNAP benefits, food banks are saying the number is going to go up even more. And I'm sorry to bum everyone out. I guess click to cancel, which has been my other number, which Elizabeth just talked about is also kind of a bummer, but it's still kind of, it's more funny, I suppose. All right. I'm going to come up, this is the first time I've done this, three terribly depressing numbers. I'm going to come up with a non-depressing number, which is one, which is a Wimbledon number. And Emily, are you a tennis fan? I like tennis. It's good. I like that movie. There's an American tennis player by the name of Ben Shelton.

59:07Are you a fan of Ben Shelton?

59:09Felix Salmon: No, I don't know from Ben Shelton. In any case, Ben Shelton is playing in Wimbledon and his sister was cheering him on. And he did very well in Wimbledon and like went through to the next round. And he gave this interview on the court saying, this is all really great that I'm through to the next round and yay, but I'm also very sad because my sister being an American doesn't get very much vacation. And so she needs to go back, fly back to America and do her day job rather than cheer me on at Wimbledon. And he goes, unless my sister works at Morgan Stanley, unless someone at Morgan Stanley is willing to give her another week of vacation so that she can cheer me on at Wimbledon.

59:52And then some middle manager at Morgan Stanley was like, sure, we'll give her another week of vacation. So she magically got that extra week of vacation. And so now she's still in Wimbledon.

1:00:01Felix Salmon: I love that. And that's a great lead-in to our plus segment that people can go look for, which is about middle managers. Exactly. Middle managers are wonderful things and we should all applaud them. Also, you still only brought one number to the numbers round. One was your number for both things. All part of my one number. Yes, exactly. The one, one number. On which happy note, we will wrap this up. We will have a Slate Plus about exactly how wonderful middle managers are because they can do things like make exceptions to vacation policy at Morgan Stanley. We will read all of your emails. Thank you for sending them.

1:00:39Our email address, as ever, is slatemoneyatslate.com. We do need to thank Jeff and Molly for producing. And yeah, we'll be back next week with more Slate Money.

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