Bulwark Takes: Episode Summary - "The Budget Bill from Hell"

Release Date: May 22, 2025
Host/Author: The Bulwark
Guests: John Avlon, Sam Stein

Introduction

In the "The Budget Bill from Hell" episode of Bulwark Takes, Sam Stein, Managing Editor at The Bulwark, engages in a candid discussion with political commentator John Avlon. The episode delves deep into the intricacies and controversies surrounding the recently passed Budget Bill, examining its implications, the legislative process behind it, and the broader fiscal policies of the Republican Party.

1. Unprecedented Legislative Process

Sam Stein begins by highlighting the chaotic and opaque process through which the Budget Bill was passed.

"[00:00] Sam Stein: [...] Altogether, at no point did we really actually see the legislative language until like a few minutes before the Rules Committee voted, and then like a few hours before the whole House voted to."

John Avlon concurs, describing the process as "abnormal," emphasizing the lack of transparency and the rapid, last-minute maneuvers that characterized the bill's passage.

"[01:09] John Avlon: Look, this bill's a shit show to the extent that nobody knew what was actually in it when they voted."

2. Content and Critique of the Budget Bill

The conversation shifts to dissect the contents of the Budget Bill, revealing significant cuts and fiscal ramifications.

Key Points Discussed:

• Massive Cuts to Social Programs: The bill includes automatic cuts to Medicare, Medicaid, food stamps, and other essential services.

  "[01:09] John Avlon: [...] automatic Medicare cuts that are set in here in addition to the Medicaid cuts, the food stamps, and everything else."

• Deficit Implications: Contrary to Republican claims of fiscal responsibility, the bill is projected to "blow up the deficit hugely."

  "[01:09] John Avlon: And keeping in mind that like, 34% of people on Medicaid are kids. Right. And then it simultaneously blows up the deficit, which should codify for any, Anybody with any doubt who sends to get suckered."

• Triple B Bill: Avlon references Jillian Ted's column, explaining the bill's multifaceted negative impacts.

  "[01:09] John Avlon: Because, you know, I think, Jillian, Ted had a great column about this being called the Triple B bill, which is… [cuts off]"

• Downgrade Rating: The bill's fiscal irresponsibility has led to Downgrade Ratings, further undermining its credibility.

  "[02:14] Sam Stein: One of the three B's."
  "[02:16] John Avlon: Right, Exactly. Well, that's also the downgrade rating."

3. House Republicans and Moderates' Position

Sam Stein probes into the behavior of House Republicans, especially the moderates, questioning their lack of resistance against aggressive budget cuts.

"[03:17] Sam Stein: [...] were you surprised that the moderates in the House didn't take a stand on some of the other stuff?"

John Avlon explains that moderates believe the Senate will mitigate some of the bill's harsher provisions, though he criticizes the overall lack of principled stands within the party.

"[03:27] John Avlon: No, and I'm not, for two reasons. One, I think on, on the more painful measures, they think, or they can rationalize that the Senate's going to bail them out a bit."
"[04:48] John Avlon: [...] Everybody else foals, they speak a good game because of electoral anxiety, but at the end of the day, you know, they're Trumpers."

Avlon expresses disappointment in the center-right's lack of "spine," attributing it to the overwhelming influence of Trumpism and fear of primary challenges over general elections.

4. Senate's Role and Expected Modifications

The discussion transitions to the Senate's likely interventions to amend the Budget Bill.

Key Insights:

• Trimming Cuts: Avlon expects the Senate to reduce or delay some of the Medicare and Medicaid cuts.

  "[04:54] John Avlon: [...] trim back some of the Medicaid or Medicare cuts."

• Work Requirements: There might be delays in implementing work requirements for Medicaid, originally planned for 2026.

  "[05:09] John Avlon: [...] make it less of a, of an electoral two by four to the face."

• Legislative Tactics: Avlon anticipates further negotiations with the Senate Parliamentarian to curb overly aggressive fiscal measures.

  "[09:31] John Avlon: [...] it's a new baseline and it sets up a fight with the Senate parliamentarian that a lot of senators behind the scenes are, are worried about."

5. Impact on Deficit and Bond Market

A significant portion of the conversation focuses on the broader economic implications of the Budget Bill, particularly its effect on the U.S. deficit and the bond market's perception.

Key Points:

• Deficit and Debt: The bill's provisions are expected to significantly increase the national deficit, undermining long-term fiscal stability.

  "[06:04] John Avlon: [...] The bond market's not buying the, the unreality."

• Bond Market's Response: Avlon cites a metaphor attributed to James Carville, emphasizing the bond market as a critical indicator of fiscal health.

  "[06:11] John Avlon: [...] the bond market can intimidate any, everybody."

• Credit Ratings: Moody's and other rating agencies have downgraded the U.S. credit rating, reflecting decreased confidence.

  "[07:52] John Avlon: [...] we saw one of the earlier downgrades during the Tea Party era. Now Moody's got on board."

6. SALT Deductions: Politics and Impact

A significant segment addresses the State and Local Tax (SALT) deductions, exploring their political maneuvering and socioeconomic impacts.

Discussion Highlights:

• Historical Context: SALT deductions have been part of federal income tax law since 1913, aimed at preventing double taxation.

  "[11:00] John Avlon: [...] people's ability to deduct their state and local taxes has been part of the federal income tax law since 1913."

• Trump-Era Changes: In 2017, the Trump administration capped SALT deductions at $10,000, a move seen as partisan and detrimental to high-tax states.

  "[11:00] John Avlon: [...] under Trump in 2017. State, local tax deduction was taken from, you know, Open ended to 10K."
  "[11:45] Sam Stein: [...] So Trump, it's because the blue states have higher state taxes and they wanted to give it to the blue states. Yes, correct."

• Political Consequences: The cap has led to increased taxes for middle-class families in high-tax states and has been used politically to disadvantage "blue states."

  "[12:37] Sam Stein: They just expired."
  "[12:38] John Avlon: Right? 100% back. So anything short of that is still a whack in the face right now."

• Negotiations and Compromises: The final bill increased the SALT deduction cap to $40,000 for families earning over $500,000, up from the initial $30,000, though it's still seen as insufficient by many.

  "[14:43] Sam Stein: And what do you think the Senate's going to think? Senate's going to just do nothing, keep it at 10."
  "[14:36] John Avlon: I think this is better than 10, which is what they're 20."

7. Tax Policy Reforms and Revenue Generation

John Avlon outlines his vision for a more equitable and efficient tax system, emphasizing the need for revenue generation to balance the budget.

Recommendations:

• Closing Loopholes: Focus on eliminating tax loopholes, such as the carried interest loophole, to ensure fair taxation.

  "[15:27] John Avlon: [...] The first thing I would do is I would close loopholes. I'm a big fan actually of tax."

• Simplification: Advocate for a simplified tax code with fewer rates and clear deductions to reduce complexity and prevent exploitation.

  "[16:56] Sam Stein: So not an Elizabeth Warren surtax, actually just say if you want to raise the top rate back to 39. Top margin rate at a much higher level."
  "[17:00] John Avlon: Yeah, we should have tax simplification. We should have much more."

• Corporate Tax Adjustments: Suggest lowering corporate tax rates to enhance international competitiveness while closing loopholes to prevent abuse.

  "[15:33] John Avlon: [...] If you're going to lower rates, which you should do. Close loopholes."

• New Tax Brackets: Propose introducing new tax brackets for high earners (e.g., individuals making over $1 million) to ensure progressive taxation without stifling economic growth.

  "[16:46] Sam Stein: Yeah, no, in fact, there was a move."
  "[16:48] John Avlon: [...] make the top rate higher but make it for folks pulling in a million a year."

8. Future Outlook and Senate's Role

As the episode draws to a close, Stein and Avlon speculate on the Senate's role in amending the Budget Bill and the likelihood of passing a more balanced bill.

Key Takeaways:

• Likelihood of Passage: Both agree that while the current bill is flawed, the Senate is expected to modify it to create a more viable piece of legislation.

  "[18:09] John Avlon: Ultimately they'll pass something. But that's sort of like, you know, you know, it's not quite saying the sun's going to rise in the morning."

• Legislative Realities: The pressing need to address the debt ceiling and the impending fiscal deadlines will likely compel lawmakers to negotiate and pass a revised bill, albeit with significant changes.

  "[19:03] Sam Stein: [...] It was like hours. They just put up a manager's amendment, and then within hours, they were expected to vote on it in the middle of the night."
  "[19:50] John Avlon: [...] Something. But I. When I say we don't know what'll be in it yet, I mean, no one should act like."

• Bond Market Influence: The ongoing economic indicators, particularly the bond market's response, may pressure lawmakers to adopt more fiscally responsible measures.

  "[20:00] Sam Stein: Yeah, well, and you got to watch the bond market because if it keeps going the way it goes, that does impact the way that these lawmakers think."
  "[20:07] John Avlon: [...] the bond market's kind of not going to buy the bs, Nor should it."

Conclusion

"The Budget Bill from Hell" provides a comprehensive critique of the current Republican-led Fiscal Policies, highlighting the discrepancies between claimed fiscal responsibility and actual legislative outcomes. John Avlon emphasizes the need for transparency, equitable tax reforms, and genuine bipartisan efforts to address the nation's financial challenges. As the Budget Bill heads to the Senate, the anticipation builds around the potential for significant amendments that could steer the U.S. towards a more sustainable fiscal future.

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