Republican Budget Madness

Today on TAP: It bookends Trump’s tariff madness, both for damage and dishonesty.

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Trump’s method for calculating country-by-county tariff rates has been compared to dividing your weight by your birthday. It makes no economic sense, and the stock market has been responding accordingly.

The Republican numbers in the Senate’s pending FY2025 budget resolution are just as fantastical. If the stock market collapse had not crowded out the scandal of the Republican budget plans, the budget fantasy would be front-page news. If anything like the Republican budget is carried out, it will be a second blow to the economy.

Under the reconciliation procedure, the House and Senate have to agree on budget targets by categories, and then the respective committees fill in details. Republicans in both chambers propose massive tax cuts, mainly for the rich, to be financed by massive spending cuts and larger deficits. But the two chambers are far apart and the Senate proposes to resolve the differences by faking the numbers.

More from Robert Kuttner

In the Senate budget resolution, released Wednesday, the Senate allows for $1.5 trillion in new tax cuts plus $500 billion in new spending, primarily for immigration and defense. That’s in addition to the $3.8 trillion in sunsetting tax cuts from Trump’s 2017 tax cut. But the Senate assumes that cost away by using a “current policy baseline,” on the idea that as long as the tax cut extension reflects current policy, it doesn’t cost anything. Republicans are bypassing the Senate parliamentarian, who would likely rule the maneuver inapplicable to budget reconciliation.

To offset the new tax cuts and spending, the Senate proposes $4 billion in spending cuts. But those massive cuts would eat deeply into programs like Medicaid and food stamps (SNAP), among others.

Without politically impossible spending cuts, the tax cuts would add $5.8 trillion in new deficits over ten years; that would double the growth of the debt-to-GDP ratio, with public debt reaching 211 percent of GDP by 2055. To hide the deficit impact of the resolution, the Senate budget includes $9 trillion in unspecified cuts, which are not going to happen.

The Republican House, which has dozens of traditional fiscal conservatives, sees through it. The House resolution, at least, admits what will need to be cut to pay for the new tax cuts. And that’s far from pretty.

The House instructions call for the committee with jurisdiction over Medicaid to cut at least $880 billion over ten years, the committee responsible for SNAP to cut at least $230 billion, and the committee that governs student loans to cut at least $330 billion. These figures carry out the cuts mandated by the House budget resolution passed in February.

Neither house even bothers to take seriously the claim that massive revenues from tariffs will plug these holes.

The Republican disarray throws into relief three political realities, none of which reflect well on President Trump or his party.

First, like Trump, Republicans especially in the Senate are happy to lie with numbers and to break the rules to do it.

Second, despite earlier promises, Republicans propose to cut massively into valued social spending in order to pay for tax cuts for millionaires and billionaires.

Third, when the numbers don’t add up, Republicans use large deficit increases as the lowest common denominator, even though that course will lead the Federal Reserve to raise interest rates—deepening the Trump depression.

Between the Trump trade war and the congressional budget mayhem, both driven by lies, the Republican economy is on autopilot straight to hell.

The March job numbers came out this morning, recording economic performance before the tariff lunacy or the budget axe. They showed payroll jobs up by 228,000, unemployment at 4.2 percent, and labor force participation up a tenth, as 230,000 more people joined the March labor force. (The approximately 215,000 federal workers laid off don’t count in these statistics, because they’re still receiving severance payments. This is customary for the jobs report.)

This will be the last sunny jobs report for a very long time.

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