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Michael Moss
Foreign hello, this is Michael Moss. Heather Cox Richardson is traveling today and her travel arrangements did not allow her time to read today's letter, so I will be reading it in her place. May 18, 2025 Tonight, late on a Sunday night, the House Budget Committee passed what Republicans are calling their big, beautiful bill to enact Trump's agenda, although it had failed on Friday when far right Republicans voted against it, complaining it did not make deep enough cuts to social programs. The vote tonight was a strict party line vote with 16 Democrats voting against the measure, 17 Republicans voting for it, and four far right Republicans voting present. House Speaker Mike Johnson, a Republican of Louisiana, said there would be minor modifications to the measure. Representative Chip Roy, a Republican of Texas, wrote on X that those changes include new work requirements for Medicaid and cuts to green energy subsidies and so the bill moves forward. In the bulwark today, Jonathan Cohn noted that Republicans are in a tearing hurry to push that big, beautiful bill through Congress before most of us can get a handle on on what's in it. Just a week ago, Cohen notes, there was still no specific language in the measure. Republican leaders didn't release the piece of the massive bill that would cut Medicaid until last Sunday night, and then announced the Committee on Energy and Commerce would take it up not even a full two days later. On Tuesday, before the nonpartisan Congressional Budget Office Congress could produce a detailed analysis of the cost of the proposals. The committee markup happened in a 26 hour marathon in which the parts about Medicaid happened in the middle of the night and now the bill moves forward in an unusual meeting late on a Sunday night. Cohn recalls that in 2009, when the Democrats were pushing the Affordable Care act, more popularly known as Obamacare, that measure had months of public debate before it went to the Committee on Energy and Commerce. That committee held eight separate hearings about health care reform and it was just one of three committees working on the issue. The ACA markup took a full two weeks. Cohn explains that Medicaid cuts are extremely unpopular and the Republicans hope to jam those cuts through by claiming they are cutting waste from fraud and abuse without leaving enough time for scrutiny. Cohn points out that if they are truly interested in savings, they could turn instead to the privatized part of Medicare. Medicare Part D the Congressional Budget Office estimates that cutting over payments to Medicare Part D, when private insurers up code care to place patients in a higher risk bracket, could save more than $1 trillion according to over the next decade. Instead of saving money, the Big, beautiful bill actually blows the budget deficit wide open by extending the 2017 tax cuts for the wealthy and corporations. The Congressional Budget Office estimates that those extensions would cost at least $4.6 trillion over the next 10 years. And while the tax cuts would go into effect immediately, the cuts to Medicaid are currently scheduled not to hit until 2029, enabling the Republicans to avoid voter fury over them until the midterms and the 2028 election. The prospect of that debt explosion led Moody's on Friday to downgrade US credit for the first time since 1917, following Fitch, which downgraded the US rating in 2023, and Standard & Poor's, which did so back in 2011. If the 2017 tax cuts and Jobs act is extended, which is our base case, Moody's explained, it will add around $4 trillion to the federal fiscal primary, excluding interest payments deficit over the next decade. As a result, we expect federal deficits to Widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending and relatively low revenue generation. On the Sunday talk shows this morning, Treasury Secretary Scott Besant dismissed the downgrade, saying it reflected conditions already in the market. Although Moody's explicitly said it was concerned about the potential passage of the Republicans big beautiful bill, House Speaker Mike Johnson said the credit downgrade just proved the need for the measure with its historic spending cuts to pass. Although Moody's named that bill as its reason for the downgrade, the continuing Republican insistence that spending is out of control does not reflect reality. In fact, discretionary spending has fallen more than 40% in the past 50 years as a percentage of gross domestic product, from 11% to 6.3%. What has driven rising deficits are the George W. Bush and Donald Trump tax cuts, which had added $8 trillion and $1.7 trillion, respectively, to the debt by the end of the 2023 fiscal year. But rather than permit those tax cuts to expire or even to roll them back, the Republicans continue to insist Americans are overtaxed. In fact, the US is far below the average of the 37 other nations in the Organization for Economic Cooperation and Development, an intergovernmental forum of democracies with market economies in its tax levies. According to a report by the center for American progress, in 2023, if the US taxed at the average OECD level over 10 years, it would have an additional $26 trillion in revenue. If the US taxed at the average of European Union nations, it would have an additional 36 trillion. But instead of considering taxes to address the deficit in the 2024 campaign, Trump insisted that foreign countries would pay for further tax cuts through tariffs, no matter how often economists said that tariffs are passed on to consumers. In October 2024, when editor in chief of Bloomberg News John Micklethwaite corrected Trump's misunderstanding of the way tariffs work in an interview at the Economic Club of Chicago, 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. Referring to analysis that his plans would explode the national debt, including analysis by the Wall Street Journal, hardly a left wing outlet. As Micklethwait pointed out, Trump replied, what does the Wall Street Journal know? They've been wrong about everything. So have you, by the way. You've been wrong about everything. You've been wrong all your life on this stuff. Walmart's suggestion that it will have to raise prices because of tariffs is forcing the administration to try to manage reality. We're wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb, walmart's chief financial officer, John David Rainey, said during an interview with CNBC on Thursday. Rainey predicted higher prices by June. In response, Trump appeared to agree that tariffs are paid by consumers, posting that Walmart should eat the tariffs and not charge valued customers anything. I'll be watching and so will your customers. Today, Besant reassured Americans that he had spoken to the CEO of Walmart, Doug McMillan, who had agreed that Walmart would in fact eat some of the tariffs. So with the current Big Beautiful bill, we are looking at a massive transfer of wealth from ordinary Americans to those at the top of American society. The Democratic Women's Caucus has dubbed the measure the the Big Bad Billionaire Bill. Lest there be any confusion about who will benefit from this Big Beautiful bill, one of the many pieces tucked into it is a prohibition on any state laws to regulate artificial intelligence for the next 10 years. Despite its gargantuan energy demands, harm to the environment and threats to privacy, the administration is pushing AI hard and the country's leading AI entrepreneurs, including Elon Musk, Sam Altman of OpenAI, Jensen Wang of Nvidia, Ruth Porat of Google's parent company Alphabet, and Andy Jassy of Amazon, all traveled with Trump to Saudi Arabia last week. The Saudis are looking to diversify their oil dependent economy and are now the world's largest investors in in artificial intelligence Speaker Johnson hopes to pass the bill through the House of Representatives by this Friday before Memorial Day weekend. In other news today, the office of former President Joe Biden announced he is battling an aggressive form of prostate cancer. 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 1947, preventing more than 4 million deaths from cancer and improving the experience of individuals and families living with and surviving cancer. And in international news, Romanian voters today rejected a far right nationalist who deliberately styled his behavior after Trump and whose victory until recently was being treated as a foregone conclusion. Instead, voters elected the centrist mayor of Bucharest, Nicoshor Dan. Even before the election, Dan's opponent insisted the election was illegitimate, claimed that he was the new leader and called for his supporters to protest in favor of his election. But in the end, Dan's eight point victory was too much to overcome and he conceded. This is your victory, dan told his supporters. It's the victory of thousands and thousands of people who campaigned and believe that Romania can change in the correct direction. Letters from an American was written by Heather Cox Richardson. It was produced at Soundscape Productions, Dead in Massachusetts, recorded with music composed by Michael Moss.