The US House has passed the One Big Beautiful Bill Act (OBBBA). The bill is now in the US Senate undergoing additional tweaks and adjustments. The bill is a comprehensive reconciliation measure that combines tax reforms, spending adjustments, and policy changes into one package. The OBBBA includes an extension of the 2017 tax cuts; tax exemptions for tips, overtime pay and auto loan interest; an increase in the child tax credit to $2,500 through 2028; an increase of the state and local tax (SALT) deduction caps from $10,000 to $40,000; and an increase of the estate tax exemption to $15 million. The spending and program changes include stricter work requirements and eligibility verification for Medicaid and the Supplemental Nutrition Assistance Program (SNAP), prohibiting Medicaid and the Children’s Health Insurance Program (CHIP) from covering gender-affirming care for individuals of all ages, ending federal direct subsidized loans for undergraduate students, allocating $150 billion for defense spending, and $70 billion for border security measures. Environmental and technological policies include rolling back many clean-energy tax credits established under the Inflation Reduction Act and imposing a 10-year moratorium on state-level regulations of artificial intelligence which will override existing state laws. The OBBBA, while not a complete disaster, does not reduce the debt or the deficit. Tax cuts and spending in OBBBA will rise over the first 5 years with savings materializing in the last 5 years of the budget cycle. Projections of how much the deficit will increase over 10 years range from $1.7 trillion to $6 trillion. Reducing government spending to address the debt and deficit requires tough decisions. Reducing the debt and deficit is challenging but necessary. Government borrowing and money printing to cover spending greater than government receipts results in an increase in inflation, weakens the dollar, and threatens the dollar’s reserve currency status. The lower and middle classes suffer the most as the value of the dollar decreases and prices increase because of the borrowing and money printing. If the debt and deficits continue to grow unchecked, the financial system is likely to experience a significant downturn or collapse. Elon Musk, despite all the success of DOGE finding outlandish spending and waste, became frustrated when he realized no one in Washington is interested in cutting spending and reducing the deficit. MAGA patriots did not come out in droves and vote in 2024 to continue the DC spending grift. It is time to stop playing “kick the can down the road.” Unfortunately for President Trump, he has to play ball with the Congress Critters who owe everybody and his brother.
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