Letters from an American: May 18, 2025 – Detailed Summary
Heather Cox Richardson’s "Letters from an American" podcast episode released on May 19, 2025, delves into the latest political developments in the United States, analyzing the implications of the Republican-led legislative maneuvers, economic policies, and international events. Narrated by Heather’s colleague, Michael Moss, the episode provides an in-depth examination of the newly passed House Budget Committee bill, its ramifications on the national deficit, credit ratings, and broader socio-economic impacts.
1. Republican Passage of the "Big Beautiful Bill"
Overview of the Bill's Passage
In a significant political maneuver, the House Budget Committee passed the Republican's "Big Beautiful Bill" on Sunday night, May 18, 2025. This legislation is touted by Republicans as a comprehensive enactment of former President Donald Trump’s agenda. The bill narrowly succeeded after a previous failure on Friday, where far-right Republicans opposed it, arguing it did not sufficiently cut social programs.
Voting Breakdown and Key Modifications
The vote was a strict party-line affair:
- 17 Republicans voted in favor.
- 16 Democrats opposed.
- 4 far-right Republicans chose to present.
Representative Chip Roy (R-Texas) elaborated on the modifications, stating on social media platform X:
"The changes include new work requirements for Medicaid and cuts to green energy subsidies, pushing the bill forward." [12:45]
House Speaker Mike Johnson (R-Louisiana) assured that only minor tweaks would be necessary to finalize the bill:
"There will be minor modifications to the measure." [05:30]
2. Jonathan Cohn’s Analysis on the Bill’s Expedited Process
Comparative Legislative Timelines
Journalist Jonathan Cohn highlighted the Republicans' rush to pass the bill, contrasting it with the Affordable Care Act (ACA)'s passage in 2009. While the ACA underwent extensive public debate and committee reviews over months, the current bill advanced swiftly:
- One week ago: No specific language on Medicaid cuts.
- Last Sunday night: Medicaid-related language introduced.
- Two days later: Committee on Energy and Commerce took up the bill.
- Tuesday: Despite awaiting the Congressional Budget Office's (CBO) cost analysis, the committee proceeded with an intense 26-hour markup session.
Cohn remarked:
“Republicans are pushing this bill through Congress at a frightening pace, leaving little room for public scrutiny.” [18:20]
Implications of Medicaid Cuts and Fiscal Responsibility
The bill includes significant Medicaid cuts, which are notoriously unpopular. Cohn suggests that Republicans aim to portray these cuts as efficiency measures targeting waste and fraud:
“If they are truly interested in savings, they could prioritize privatizing Medicare Part D, which could save over $1 trillion in the next decade.” [22:10]
However, rather than reducing the deficit, the bill is projected to widen it substantially:
- Extending 2017 tax cuts for the wealthy and corporations is estimated by the CBO to cost $4.6 trillion over the next decade.
- Deficits could soar to 9% of GDP by 2035, up from 6.4% in 2024.
3. Credit Downgrades and Economic Repercussions
Moody’s Downgrades and Reactions
The impending fiscal strain led Moody's to downgrade the U.S. credit rating for the first time since 1917, following previous downgrades by Fitch in 2023 and Standard & Poor's in 2011.
Treasury Secretary Scott Besant dismissed the downgrade:
“It reflects conditions already present in the market.” [35:50]
Conversely, House Speaker Mike Johnson defended the bill:
“The credit downgrade just proves the need for the measure with its historic spending cuts to pass.” [37:15]
Historical Context and Actual Drivers of Deficit Growth
Richardson clarifies that discretionary spending has decreased by over 40% relative to GDP in the past fifty years. Instead, the deficit increase is primarily due to:
- George W. Bush and Donald Trump tax cuts, adding $8 trillion and $1.7 trillion to the debt respectively by end of FY2023.
Jonathan Cohn emphasizes:
“Republican claims of uncontrolled spending ignore the real culprits—the significant tax cuts that have ballooned the deficit.” [40:05]
4. Tax Policies, Tariffs, and Consumer Impact
Republican Stance on Taxes and OECD Comparisons
Republicans continue to argue that Americans are overtaxed, despite the U.S. having lower tax rates compared to the OECD average. According to the Center for American Progress:
- Average OECD tax levies could have generated an additional $26 trillion over ten years.
- European Union average taxes could add $36 trillion.
Trump’s Tariff Policies and Public Misconceptions
Former President Donald Trump maintains that foreign countries would offset tariff-induced costs, despite economists’ assertions that tariffs ultimately burden consumers.
During an interview at the Economic Club of Chicago, John Micklethwait, editor-in-chief of Bloomberg News, corrected Trump’s misunderstanding:
“Trump, it must be hard for you to, you know, spend 25 years talking about tariffs as being negative and then have somebody explain to you that you're totally wrong.” [45:00]
Trump retorted:
“What does the Wall Street Journal know? They've been wrong about everything. So have you, by the way. You've been wrong all your life on this stuff.” [46:10]
Impact on Retail Prices
Walmart CFO John David Rainey warned that tariffs would necessitate price hikes:
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb.” [48:25]
In response, Trump insisted Walmart absorb the tariffs without passing costs to consumers:
“Walmart should eat the tariffs and not charge valued customers anything. I'll be watching and so will your customers.” [49:30]
Treasury Secretary Scott Besant later confirmed negotiations with Walmart’s CEO, Doug McMillan, leading to Walmart partially absorbing the tariff costs.
5. Wealth Redistribution and AI Regulation
Wealth Transfer Concerns
The "Big Beautiful Bill" is criticized for facilitating a massive transfer of wealth from ordinary Americans to the affluent. The Democratic Women's Caucus has dubbed it the "Big Bad Billionaire Bill", highlighting the disproportionate benefits to the wealthy elite.
Artificial Intelligence Regulation Ban
A contentious inclusion in the bill is the prohibition of state-level AI regulations for the next decade. Despite AI's significant energy demands, environmental impact, and privacy concerns, the administration is heavily promoting AI development. Key industry leaders, including Elon Musk, Sam Altman (OpenAI), Jensen Wang (Nvidia), Ruth Porat (Alphabet), and Andy Jassy (Amazon), recently accompanied Trump to Saudi Arabia to bolster AI investments.
House Speaker Mike Johnson aims to pass the bill rapidly:
“We hope to pass the bill through the House by this Friday before Memorial Day weekend.” [52:40]
6. Additional News Highlights
Joe Biden's Health Announcement
In a personal development, the office of former President Joe Biden announced his battle with an aggressive form of prostate cancer. Reflecting on his political legacy:
“As vice president and president, Biden was a fierce advocate for cancer research with the goal of reducing the death rate from cancer by at least 50% by 2014...” [55:15]
Romanian Election Outcome
Internationally, Romanian voters rejected a far-right nationalist candidate, who emulated Trump’s style, favoring instead the centrist Mayor of Bucharest, Nicoshor Dan. Despite his opponent's attempts to delegitimize the election, Dan secured an eight-point victory, symbolizing a push towards political moderation:
“This is the victory of thousands and thousands of people who campaigned and believe that Romania can change in the correct direction.” [58:50]
Production Credits
Letters from an American is authored by Heather Cox Richardson and produced by Soundscape Productions in Dedham, Massachusetts. The episode was recorded with music composed by Michael Moss.
This summary encapsulates the critical discussions and analyses presented in the May 18, 2025, episode of "Letters from an American," providing listeners with a comprehensive overview of the political and economic narratives shaping current American society.