The Republicans’ $3 Trillion Vanishing Act

Summary

The Daily: The Republicans’ $3 Trillion Vanishing Act

Release Date: July 2, 2025

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Introduction

In this episode of The Daily, Ross Douthat and Michael Barbaro delve into the intricacies of the recently passed Senate bill spearheaded by Republicans, which aims to extend President Trump's 2017 tax cuts. This legislation not only encompasses significant policy changes but also introduces a controversial $3 trillion increase to the U.S. national debt through what has been termed a "fiscal magic math" accounting maneuver.

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Senate Passage and Legislative Overview

[00:53] Ross Douthat: "The US Senate has adopted President Trump's giant domestic policy bill, which now heads back to the House of Representatives for a final vote. The legislation is defined by the staggering amount of debt that it's creating, more than $3 trillion."

The bill, after passing an evenly divided Senate thanks to Vice President Vance's tie-breaking vote, seeks to make permanent several key components:

• Extension and Broadening of 2017 Tax Cuts
• Increased Spending on Border Security
• Deep Cuts to Medicaid
• Slashed Food Benefits for the Poor

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Republicans’ Fiscal Strategy: The "Disappearing Debt" Tactic

Ross Douthat interviews Andy Duran, a New York Times colleague, to unpack the Republicans' approach to managing the anticipated debt.

[02:47] Andy Duran: "Senate Republicans are using, for the first time ever, what amounts to basically a fiscal magic math to try and make the tax cut work."

The crux of the strategy lies in leveraging the budget reconciliation process, traditionally designed to reduce deficits over time, to permanently extend tax cuts without officially increasing the national debt. This involves an accounting gimmick where the continuation of existing tax cuts is treated as maintaining the status quo rather than introducing new expenditure, thereby circumventing the reconciliation rule that prohibits increasing the debt beyond a 10-year window.

[05:27] Andy Duran: "Republicans are preserving the status quo. The United States has had these tax cuts for years, and so why should we consider it a new tax cut to continue them?"

This metaphorical "vacation" approach suggests that the tax cuts are an ongoing expense, not a temporary measure, effectively masking the true fiscal impact.

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Controversy and Internal Republican Dissent

The use of this accounting method has sparked internal disputes within the Republican Party. Fiscal hawks and some House Republicans have labeled the tactic as the "ultimate budget gimmick," expressing concerns over its long-term implications.

[11:40] Ross Douthat: "Given the reality that this gimmick doesn't actually wipe out this debt, but simply changes how we talk about it and how it's accounted for, what do the fiscal hawks inside the Republican Party have to say about this?"

[12:00] Andy Duran: There is apprehension that this approach sets a dangerous precedent, enabling future fiscal policies to similarly bypass established budgetary constraints, potentially exacerbating the national debt indefinitely.

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Financial World’s Growing Concerns

Transitioning to a broader economic perspective, Colby Smith discusses why the current debt levels are alarming for the global financial community.

[15:57] Michael Barbaro: "Our total debt is around 28 trillion, or roughly 100% of GDP. And that's before we're adding another 3 trillion or so to the deficit with this bill."

The episode highlights that the U.S. national debt has reached unprecedented heights not seen since World War II, raising fears about the sustainability of such levels. The traditional confidence investors have had in U.S. Treasury bonds is waning, exemplified by actions such as Japan’s contemplation of reducing its holdings of U.S. debt.

[19:03] Michael Barbaro: "People didn't flock to U.S. Government debt. They instead sold it. And so that just really kind of exacerbated concerns that are already starting to percolate."

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The Risk of a “Doom Loop”

A central focus of the discussion is the potential for a "doom loop," where increasing debt leads to higher interest rates, which in turn necessitates more borrowing to service existing debt, creating a self-sustaining cycle of debt accumulation.

[22:52] Michael Barbaro: "Suddenly, if we need to pay people even more back as a return for investing in our debt, then that problem just compounds and compounds."

This scenario poses significant risks, including:

• Increased Government Expenditures on Debt Servicing: Diverting funds from essential services like defense, Medicaid, and Medicare.
• Higher Consumer Borrowing Costs: Elevated interest rates on mortgages, auto loans, and other consumer credit.
• Limited Fiscal Flexibility in Crises: Reduced ability to implement stimulus measures during economic downturns due to already high debt servicing costs.

[21:16] Michael Barbaro: "The concern here is that we're setting ourselves up for a situation in which the government is just less able to come to the rescue when we need it most."

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Impact on the Average American

The episode emphasizes that the ramifications of increasing national debt extend directly to everyday citizens:

• Higher Borrowing Costs: As government borrowing rates rise, so do interest rates for consumer loans, making mortgages and auto loans more expensive.
• Reduced Government Spending on Public Services: A larger portion of the budget allocated to debt servicing means less funding available for programs that benefit the public.

[23:18] Michael Barbaro: "The more money that's being spent on servicing the debt, the more we run the risk of this problem of crowding out in which the government is spending more on servicing costs than they are on other federal spending programs that help everyday Americans."

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Conclusion

The episode concludes by underscoring the precarious balance between extending beneficial policies and managing national debt responsibly. The Republicans' "fiscal magic math" may offer a temporary solution to legislative constraints but poses significant long-term risks to the U.S. economy and fiscal health.

[25:35] Ross Douthat: "Optional debt creation, which is what we're doing right now with this bill, may constrain debt creation. That's not optional because we're in an emergency and we need to borrow and it's going to be that much harder."

As Congress navigates these turbulent fiscal waters, the implications of this bill serve as a cautionary tale about the complexities of budgetary policy and the far-reaching consequences of debt management (or mismanagement).

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Additional Highlights

• Foreign Relations Impact: The discussion briefly touches on President Trump's remarks regarding Zoran Mamdani, a Democratic socialist elected as New York City's mayor, highlighting the intersection of domestic policy and international perceptions.

• Production Credits: The episode was produced by Rob Zebko, Ricky Novetsky, and Mood Sadie, with editing by Mark George and engineering by Alyssa Moxley.

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Transcript

[Ross Douthat]

We are living in interesting times, a.

[Michael Barbaro]

Turning point in history.

[Andy Duran]

Are we entering a dark authoritarian era.

[Ross Douthat]

Or are we on the brink of a technological golden age or the apocalypse? No one really knows, but I'm trying.

[Michael Barbaro]

To find out from New York Times opinion.

[Ross Douthat]

I'm Ross Douthat and on my show Interesting Times, I'm exploring this strange new.

[Andy Duran]

World order with the thinkers and leaders giving it shape. Follow it wherever you get your podcasts.

[Ross Douthat]

From the New York Times. I'm Michael Balbaro. This is the Daily on this vote.

[Michael Barbaro]

The yeas are 50, the nays are 50.

[Andy Duran]

The Senate being evenly divided, the Vice.

[Ross Douthat]

President votes in the affirmative.

[Andy Duran]

The bill, as amended, is passed with.

[Ross Douthat]

A tie breaking vote from Vice President Vance. The US Senate has adopted President Trump's giant domestic policy bill, which now heads back to the House of Representatives for a final vote. The legislation is defined by the staggering amount of debt that it's creating, more than $3 trillion. Today I speak with my colleague Andy Duran about how Republicans have rewritten the rules to try to make all of that debt vanish. And to Colby Smith about why, despite that sleight of hand, the world is less and less convinced that the United States can handle its current debts. It's Wednesday, July 2nd. Andy, welcome to the show.

[Andy Duran]

Thanks for having me.

[Ross Douthat]

So President Trump's big, beautiful bill, which is now in the hands of the U.S. house of Representatives, does a lot of things. It extends and broadens Trump's 2017 tax cuts. It increases spending on border security, makes deep cuts to Medicaid, slashes food benefits for the poor, all of which we will cover on the show if this becomes law. But we wanted to talk to you about its impact on the US national debt. An extremely controversial feature of this bill, because you have been reporting on an effort by congressional Republicans to try to get this legislation over the finish line by making $3 trillion worth of debt basically disappear.

[Andy Duran]

Yes. So this really goes back to what Republicans in both the House and the Senate have wanted to do with the bill this year. And their main goal has been to extend a series of tax cuts that Republicans first passed in 2017. Many of them are expiring this year, and they want to make those tax cuts permanent. And so Senate Republicans, in their bill, they use, for the first time ever, what amounts to basically a fiscal magic math to try and make the tax cut work.

[Ross Douthat]

Fiscal magic math. Just explain that.

[Andy Duran]

So Republicans had a problem in their quest to make the 2017 Trump tax cuts permanent. And that problem was that the process they're using to pass Legislation this year called reconciliation has not historically allowed lawmakers to do something like that and comply with reconciliation's rules.

[Ross Douthat]

What about reconciliation, which, as we know now is the filibuster proof process of passing legislation with a simple majority, what about reconciliation would make it impossible to extend tax cuts permanently?

[Andy Duran]

So reconciliation was originally designed as a policy tool that was aimed at reducing deficits over time and making the fiscal situation in the country better. And so one of the rules that lawmakers agreed to for using this process is that when you pass a bill through reconciliation, you can't increase the debt for more than 10 years. So in the first 10 years after the bill passes, you know, maybe the budget takes a hit, but 11 years later, the fiscal picture has to start to improve or not change compared to what people were expecting before the bill. And this rule around adding to the debt in the long term has been a really important rule in Congress for a long time, where when lawmakers in both parties have used reconciliation to try and achieve their more partisan goals, like Republicans are now, they have obeyed this rule and they've scheduled things to expire before what's called the budget window or the 10 year maximum that you're allowed to go under this process.

[Ross Douthat]

And obviously, permanent tax cuts exceed a 10 year window. So like you said, Republicans clearly have a problem here.

[Andy Duran]

Yes, they clearly have a problem here. And you know, there are other ways they could have gotten around this. One would have been to try and pay for these tax cuts in perpetuity, but that would be extremely expensive and difficult. They've already had a lot of trouble cutting a much more modest amount of spending in this bill. And so what they came up with instead is an accounting gimmick that basically makes it seem like making these tax cuts permanent does not add to the debt over time.

[Ross Douthat]

Okay, so walk us through this budget gimmick.

[Andy Duran]

So essentially what Senate Republicans are arguing is that because these tax cuts exist now, they've been, you know, the law, the land since 2017, that continuing what's in the budget now is not a new cost. Essentially that they're preserving the status quo. The United States has had these tax cuts for years, and so why should we consider it a new tax cut to continue them? And why should we say that that costs what is estimated to be $3.8 trillion over 10 years to simply preserve the status quo? And so what they're saying is that because these tax cuts exist now, it's not a new hit to the budget to continue them. It's akin to saying, oh, I went on vacation for a week and I was spending, I was really kind of having a great time spending an extra thousand dollars a day on drinks and hotels and jet skis and all sorts of fun stuff. And then when I come back from vacation saying, well, I've been spending an extra thousand dollars a day for a week, and so why don't I just keep spending an extra thousand dollars a day? This isn't really a change in my fiscal situation, my financial situation, because I've been doing this. Even though when you plan the vacation, it was only supposed to be a week long and then you come and then you were supposed to go back to what had been your previous spending habits, essentially. And so they're arguing that these tax cuts that they made, temporary to begin with, that they only planned for, for a certain period of time, actually should be something that everyone assumes and that they assume and should be treated as something that was always going to be part of the country's fiscal future.

[Ross Douthat]

Got it. So basically, in this metaphor, Republicans want the United States to stay on a tax cutting vacation forever and not acknowledge that our costs have now changed.

[Andy Duran]

Yes, that's exactly right. And they do this despite the fact that when you come back from vacation and keep spending an extra thousand dollars a day, that does materially change your budget. And so this accounting description, the way that they think about it, the way that they talk about it, makes it look one way, but in fact, the United States have to borrow a lot more money to cover the cost of this tax cut forever.

[Ross Douthat]

Is this kind of creative accounting, this kind of gimmick actually allowed? My sense is that the Senate has a whole system that sits in judgment of such things. Literally a parliamentarian, right. Who looks at these things and says, you can't do that. That's a gimmick.

[Andy Duran]

Yeah. So usually that is how this works where, you know, through the special reconciliation process, the parliamentarian, she is asked to give her advice or her on whether XYZ policy, XYZ measure can be passed through the process. In this case, Republicans didn't do that because their entire bill basically depended on this accounting assumption. They never went to the parliamentarian and explicitly asked her, can we do this?

[Ross Douthat]

They didn't want to be told no.

[Andy Duran]

They didn't want to risk it. Basically. I mean, it's. We don't know what she would have said because she was never explicitly asked. Democrats certainly think that she would not have smiled upon this accounting gimmick. But they just never asked. And then instead what happened is they went directly to the floor of the Senate and through some kind of parliamentary maneuvering. John Thune, the Senate majority leader and a Republican, said that we can do this. We're allowed to use whatever accounting standard we want. A Republican senator who was presiding over the chamber at that point said, sure, yes, you can.

[Michael Barbaro]

The debate and eventual voting on the.

[Andy Duran]

Big, beautiful bill has begun. Hallelujah. And at that point, Lindsey Graham, who's the Senate budget chairman, started to defend this idea.

[Michael Barbaro]

I'm setting the numbers. The parliamentarian said, that's my job as budget chairman.

[Andy Duran]

Basically, what he was doing was relying on very obscure elements and provisions in budget law to say, I'm the budget chairman, and so I get to decide what things cost.

[Michael Barbaro]

So we're not doing anything sneaky.

[Andy Duran]

We actually voted to give me the authority to do this, that I'm in control entirely of how all of these numbers are counted. And you guys need to listen to me. Well, first of all, our bill drives the deficit down, not up. Graham is joined on the Senate floor by other Republicans who think that this accounting gimmick is completely legitimate. One of them was Mike Crapo, the chairman of the Senate Finance Committee. And the bottom line here is very simple. I think every American, at least 90% of them, intuitively understand that the refusal to let your taxes go up by $4 trillion is not a deficit increase. And he laid out in depth why he thinks that extending these tax cuts is avoiding a tax increase. It shouldn't be considered an additional cost to the budget. Us keeping your money in your pocket is not making you responsible for increasing the deficit. Democrats protested and asked for a vote. And then Republicans eventually voted to say, yeah, we can do this. And so there was never any formal decision or ruling, as they call it, by the parliamentarian to say, like, yes, this is kosher. No, this is not kosher with reconciliations, rules. And instead, Republicans just went for it.

[Ross Douthat]

So with this accounting gimmick now baked into this bill, officially, what becomes the cost of this legislation to the national debt?

[Andy Duran]

Yeah. So Republicans have asked Washington's official scorekeepers, the nerds over at the Congressional Budget Office and the Joint committee on Taxation, to analyze legislation according to their preferred accounting standard. And what they found was, or what the CBO found was that their bill, rather than adding more than $3 trillion to the debt over a decade, by the Republican standard, it would reduce the debt by half a trillion dollars over a decade. So that's obviously a huge difference.

[Ross Douthat]

Reduces the debt.

[Andy Duran]

Reduces the debt. Again, I'm making this gigantic assumption and changing the accounting principles, it goes from increasing the debt dramatically to actually shrinking it, which is obviously a huge change.

[Ross Douthat]

So given the reality that this gimmick doesn't actually wipe out this debt, but simply changes how we talk about it and how it's accounted for, what do the fiscal hawks inside the Republican Party who have this bill before them have to say about this?

[Andy Duran]

So some of them have been very opposed to this before. There have been Republicans in the House who have called this the ultimate budget gimmick, who have really been very critical of thinking about the cost of the bill this way. And that will become very important now as the legislation heads back to the House, where there are a lot of Republicans who have least made noise about the fact that they think it is too costly. We'll see how that actually pans out when they vote on the House floor. But this is a big deal. It not only is it a problem among Republicans in the short term, but it also kind of fundamentally changes how Congress can shape fiscal policy without having to overcome the filibuster. And so Democrats have already indicated that they hope to maybe take advantage of this because, you know, being able to change fiscal policy for the long term is a desirable outcome for members of both parties. So that's kind of the future that fiscal hawks are really worried about, because this rule on saying, you know, we can't add to the deficit or add to the debt in the long term has been a limiting factor on how much money Congress spends. I mean, obviously Congress is still not done a great job at managing the nation's finances, and the fiscal forecast is pretty dire as it is. But this has been some kind of break on how much lawmakers do when it's not a bipartisan bill, and that.

[Ross Douthat]

Break is now gone.

[Andy Duran]

Yes, that's exactly right. And there's concern that inevitably when either Democrats control Congress again, or even just Republicans, and they're trying to make their own fiscal math work to accomplish whatever big policy priority they have, they'll just resort to this accounting gimmick, and that could just blow out the debt forever.

[Ross Douthat]

Well, Andy, thank you very much.

[Andy Duran]

Thanks for having me.

[Ross Douthat]

After the break, my colleague Colby Smith on why this time the financial world is so worried about what more debt could mean for America's financial future. We'll be right back. I'm Helene Cooper.

[Michael Barbaro]

I cover the US Military for the New York Times.

[Ross Douthat]

So I'm sitting in my car in a parking lot outside the Pentagon. I had a cubicle with a desk inside the building for years, but the Trump administration has taken that away. So now I sometimes come out here to make phone calls and even to file my stories using my car as sort of a makeshift desk. People in power have always made it difficult for journalists.

[Michael Barbaro]

It hasn't stopped us in the past.

[Ross Douthat]

It's not going to stop us now. I will keep working to get you the facts. I want people to understand exactly what we're asking these young men and women of the US Military, military to do. All of my colleagues at the New York Times are dedicated to helping you understand the areas that they cover. None of this work happens without subscribers. If you'd like to subscribe, go to nytimes.com subscribe Colby our colleague Andy Duran just explained how Senate Republicans made it possible for this bill to create so much debt, despite rules saying that you can't do that by using this budgetary sleight of hand. And we now turn to you to understand whether this level of debt from this bill and the precedent it sets for a lot more debt in the future is something that we should be worried about. Because if we're being honest, the United States has been living with very high levels of debt for a very long time. So does this moment feel different? And if it does, why does it feel different?

[Michael Barbaro]

So there are a couple of things about this moment that are different. First of all, the reality is that the sheer amount of debt that we're talking about here is enormous. So our total debt is around 28 trillion, or roughly 100% of GDP. And that's before we're adding another 3 trillion or so to the deficit with this bill.

[Ross Douthat]

And just to be clear, because that's a really interesting sentence you just used, our debt is the equivalent of our entire gross domestic product, what we put out.

[Michael Barbaro]

Yeah. It's incredibly high and it's at a level that we haven't really seen since World War II. So it's an enormous sum. And so when we think about the scale of it, that's one point of concern. But I think the major thing that's going on here is that there's a worry that the environment in which we're accumulating this much debt is just riskier than it has been in the past.

[Ross Douthat]

Well, just explain this notion that the environment is riskier because in this country we have a habit of just borrowing more and more money. And I've learned through the many conversations we've had on this show with many of our colleagues from the business desk that we do this through a time tested system. Right. Like we have lots of debt, and we ask people to buy U.S. treasury bonds in order to finance it. And the system works for pretty well, which is why so far, despite everyone saying that debt is a problem, it doesn't ever quite seem to be a problem.

[Michael Barbaro]

Right. So the system is as tried and true as it gets. In buying a Treasury bond, the government is promising to pay you back over an allotted period of time with interest. And investors have always felt confident in the government's ability to pay back its debts. And the confidence in that system offered the government a lot of benefits. And one of those benefits is an ability to borrow quite cheaply and continue to finance spending at relatively low interest rates. But now what we are starting to see are some questions being raised about the properties underpinning the treasury market and whether investors can continue to feel confident to lend to the United States.

[Ross Douthat]

Well, just explain that. What about those underpinnings is now in doubt.

[Michael Barbaro]

The source of the strife is not necessarily that the US Is about to, let's say, default on its debt. It's that its role in the global financial system as this kind of beacon of stability is starting to be challenged. And I think that that started to come up in a number of ways in the last couple of months. The clearest sign of this was in the immediate aftermath of what President Trump dubbed Liberation Day, when he announced massive tariffs on virtually all of the country's trade trading partners. So we saw this big sell off in US Government debt. And I think what was so notable and worrisome about that phenomenon was the fact that typically in times of turmoil, investors, they move out of riskier assets and they flood into lower risk, safer havens.

[Ross Douthat]

Like treasury bonds.

[Michael Barbaro]

Exactly like treasury bonds. But that's not what happened. People didn't flock to US Government debt. They instead sold it. And so that just really kind of exacerbated concerns that are already starting to percolate, that investors were starting to kind of second guess whether or not it made sense to increase their exposure to the U.S. i think one of the most telling examples of this was when we heard from Japan's finance minister in early May. So right around some of this turmoil that the country was considering selling its holdings of U.S. treasuries. Now, Japan is the largest foreign holders of U.S. debt. So even like the Vegas hint that it would even consider doing this, I think sent shock waves across the financial system. Now, of course, this wasn't a threat that they like followed through on, but the fact that he talked about it as a card that could potentially be put on the table was really disconcerting.

[Ross Douthat]

The message was quite clearly the world's confidence in US Treasuries, in this tool, importantly for our conversation, that finances our debt has been shaken.

[Michael Barbaro]

Right? Absolutely. And I think we saw this across the board. Like, it wasn't just with Japan. I remember going down to this big international conference of global financial leaders down in Washington, D.C. in late April. And on the sidelines of this, like, big global event, investors, economists, policymakers, everyone was talking about whether or not we should be thinking about the US Anymore as a safe haven. Now, we're not at that point yet. But the concern is that once those questions start being raised, you can easily see a scenario where that doubt starts feeding on itself and creating a situation in which confidence in the US really starts to waver.

[Ross Douthat]

Well, just explain that. What happens if people around the world start to prefer European bonds to American government bonds, and suddenly it becomes harder for the US to convince people to finance our debt? Just walk us through what that starts to look like.

[Michael Barbaro]

So the fear here is that over time, it's just going to mean that it's just much more expensive for us to finance our debt load. You know, in the past, when we needed to borrow, we could do it more cheaply. We saw this in the aftermath of the pandemic, when the Trump administration and the Biden administration stepped in to shore up the economy. We saw it in the aftermath of the global financial crisis as well. There were all kinds of investors who were clamoring to hold our debt. That meant demand was really, really strong, and so the government could finance those rescue packages quite cheaply. Now, the concern here is that if the landscape gets much more competitive and investors have multiple places to put their. Their money, it could well mean that demand for U.S. assets in particular reduces, and that is going to require a larger payout to entice investors to come back onshore. And that's where the Republican bill starts to really raise anxiety levels here, because we're already spending a significant amount on debt servicing costs. We're doing so more than we are spending on defense, on Medicaid, on Medicare. And what this bill is going to do is risk pushing those costs ever higher. Some of the estimates that I hear is that one in every four dollars now is going to go towards paying down the debt, and that's an enormous amount.

[Ross Douthat]

Mm. And so suddenly, if we need to pay people even more back as a return for investing in our debt, then that problem just compounds and compounds, and suddenly we're spending even more money, creating more Debt just to pay for our debt?

[Michael Barbaro]

Yeah, absolutely. I mean, like the way this is usually described is like a doom loop that like feeds on itself and that's a situation that can get out of hand quite quickly. So we're by no means at this point. Right, But I think that if you ask people their nightmare scenario, that is what it looks like.

[Ross Douthat]

Okay, well what does a doom loop, if it were to come to pass, mean for you? For me, for the average American.

[Michael Barbaro]

So the more money that's being spent on servicing the debt, the more we run the risk of this problem of crowding out in which the government is spending more on servicing costs than they are on other federal spending programs that help everyday Americans. I think the other major impact for the average American is that it'll get more expensive for themselves to borrow if it gets more expensive for the government to borrow. And so the way this works is that the rate at which the government borrows directly impacts the interest rates that are used to set things like mortgages, auto loans, things like that. So if, let's say the 10 year treasury bond, for instance, rises, that can set off a ricochet across the entire US government debt market. And that will then mean that, you know, when you try to buy a house and you try to borrow to buy that house, that mortgage is just going to be that much more expensive. So these are the various channels in which Americans are directly affected by these debt levels.

[Ross Douthat]

So you're really talking about a kind of double whammy in which creating more debt for the US which this bill very clearly does, budgetary sleight of hand aside, means that the government needs to spend more taxpayer money to finance that debt, which is in and of itself a very big deal. And consumers as a result may end up needing to spend more money to just live their everyday lives in any way that it interacts with borrowing.

[Michael Barbaro]

That's exactly right. And I think adding to the worries here is the fact that there's no acute economic need to do this at the current moment. So investors are used to seeing surging deficits, let's say when there are wars or recessions or pandemics. Or pandemics. Right. That's a time when people want their government to kind of spend to support the economy, to step in, to stave off a crisis. But what's happening right now is that this big increase in the debt is taking place when things look relatively solid. And I think that's why a lot of economists and budget hawks are raising alarm bells here. Because if you're not gonna kind of tighten your belt in good times. What does that suggest about what happens during bad times, for instance?

[Ross Douthat]

Right. You're saying optional debt creation, which is what we're doing right now with this bill, may constrain debt creation. That's not optional because we're in an emergency and we need to borrow and it's going to be that much harder.

[Michael Barbaro]

Exactly. The concern here is that we're setting ourselves up for a situation in which the government is just less able to come to the rescue when we need it most. And that's something that I think is weighing on economists at this moment when they look at this bill and they say this is eating up any extra capacity that we already didn't have at a time when we don't need to. So when the next crisis comes, when the next slowdown happens, the government could easily be just more hamstrung than otherwise would have been the case.

[Ross Douthat]

Well, Colby, thank you very much.

[Michael Barbaro]

Thank you.

[Ross Douthat]

We'll be right back. Here's what else you need to know today. On Tuesday, the final results of the Democratic primary for New York City mayor showed that zoran Mamdani, the 33 year old democratic socialist, won with 56% of the vote, defeating former governor Andrew Cuomo by 12 points. In a likely sign of attacks to come, President Trump suggested that Mamdani was a communist who was in the US Illegally and in response to a question from a reporter suggested that he could have Mamdani imprisoned if he defies federal immigration officials.

[Michael Barbaro]

Well, then we'll have to arrest him. Look, we don't need a communist in this country, but if we have one, I'm going to be watching over him very carefully. On behalf of the nation, we send him money.

[Ross Douthat]

Mamdani called Trump's remarks an attack on democracy. Democracy and declared, quote, we will not accept this intimidation. Today's episode was produced by Rob Zebko, Ricky Novetsky and Mood Sadie. It was edited by Mark George, contains original Music by Pat McCusker, Diane Wong and Marion Lozano and was engineered by Alyssa Moxley. Our theme music is by Jim Roberg and Van Landsvark of Wunderly. That's it for the Daily. I'm Michael Balboro. See you tomorrow.

[Andy Duran]

Foreign this podcast is supported by On Investing, an original podcast from Charles Schwab. Each week, hosts Liz Ann Saunders, Schwab's chief investment strategist, and Kathy Jones, Schwab's chief fixed income strategist, along with their guests, analyze economic developments and bring context to conversations around stocks. Fixed income, the economy and more. Download the latest episode and [e-mail] oninvesting or wherever you get your podcasts.