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Welcome to “Trump’s Beautiful Disaster,” a pop-up newsletter about the Republican tax and spending bill, one of the most consequential pieces of legislation in a generation. Sign up for the newsletter to get it in your in-box.
As of Thursday evening, the One Big Beautiful Bill (OBBB) is no longer as big, and it never was all that beautiful. But the biggest decision, worth $3.76 trillion, could come as soon as today.
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The estimate of the Senate Finance Committee’s tax provisions reflect a cost of $441 billion over ten years, according to the Joint Committee on Taxation’s estimate over the weekend. How, you might ask, could the Finance Committee have extended all the Trump tax cuts, expanded some of them, added a bunch of other new tax cuts, made some temporary business tax cuts permanent, and still only cost $441 billion? The trims to clean-energy tax credits and other rollbacks, you would presume, weren’t SO costly that they would nearly wipe out all of the costs!
The answer, friends, is a big gimmick known as the current policy baseline. Senate Republicans are claiming that, because the Trump tax cuts are in place now, as current policy, it costs $0 to extend them. An analogy would be if Congress passed a bill to institute Medicare for All for one day, at the cost of $4 to $8 billion, depending on your estimate, and then the next day they passed a bill extending M4A permanently, which would cost … nothing. The same Republicans who would scream bloody murder at that dastardly maneuver are the ones now employing this absurd maneuver.
The reality is that the Trump tax cuts, under a current law baseline that compares the policy to the change to current law, really cost $3.76 trillion over ten years. If you add that to the $441 billion estimate, you have a tax section that costs over $4.2 trillion. This is $400 billion higher than the House version that the Freedom Caucus already found intolerable, and that some self-styled Republican budget hawks in the Senate are grumbling about.
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Democrats are going to challenge the math Senate Republicans have come up with. “‘Current policy baseline’ is a budget gimmick that is nothing more than smoke and mirrors instead of honest accounting,” said Senate Budget Committee ranking Democrat Sen. Jeff Merkley (D-OR) in a statement.
The way they challenge it is in a meeting with the Senate parliamentarian, Elizabeth MacDonough. Because the OBBB is being administered under budget reconciliation, there are strict rules governing what can and cannot be passed while qualifying for a straight majority vote, so Democrats lack the numbers to block it. In most cases, the parliamentarian looks at whether provisions have a purely budgetary purpose, rather than policy dressed up as a budget item. (This is known as the Byrd Rule, after the longtime Democratic senator from West Virginia, Robert Byrd; the process by which the parties debate the provisions and by which a ruling is made is known as the “Byrd bath.”) With the current policy baseline, the parliamentarian will look at the scoring of the bill, and how that is calculated. Budget reconciliation has certain requirements regarding total costs inside and outside the ten-year budget window, so these calculations, while mostly estimates, are important for the purposes of congressional rules.
So far, the parliamentarian has reshaped the bill in important ways. She threw out most of the Senate Banking Committee title, including measures that would have defunded or dismantled the Consumer Financial Protection Bureau, the Office of Financial Research, and the Public Company Accounting Oversight Board. She stopped the repeal of emissions standards for passenger vehicles, and a “pay-to-play” measure whereby developers of infrastructure projects could avoid judicial review if they paid a fee. She stopped two bizarre home-state gifts snuck in by Sen. Ted Cruz (R-TX), one of which would have … robbed a Space Shuttle from the Smithsonian and ferreted it to Houston on the taxpayer’s dime.
There’s more. Limitations on grant funding for sanctuary cities? Out. Granting state and local officials authority to arrest undocumented immigrants for being undocumented? Out. Forcing litigants suing the federal government to post a giant bond in order to win a preliminary injunction or temporary restraining order? Out. Giving federal employees the choice of retaining hard-won worker rights or receiving more of their paycheck, and charging them a fee for filing grievances? Both out. Bonus checks for workers who rescind constitutionally appropriated spending deemed “unnecessary”? Out. Charging unions a fee for use of agency resources? Out. A slush fund that the executive branch could use to unilaterally reorganize its own agencies? Out. The REINS Act, which would basically end regulation in the U.S.? Out. A bonkers provision to require the U.S. Postal Service to sell all the electric vehicles it just bought, and dig up all parking lots with installed charging infrastructure so the chargers can be thrown out? Out.
(Surprisingly, the ten-year ban on state AI regulations as a condition of receiving federal broadband funding, a top Big Tech priority, was allowed to stay in the bill, though several Republicans have demanded that it be pulled out, so its fate is not yet known.)
The biggest move by the parliamentarian in budgetary terms thus far was her jettisoning of a provision that would have forced states to add matching funds to the Supplemental Nutrition Assistance Program (SNAP), on a sliding scale based on program error rates. Because states don’t have reserves lying around to backfill the loss, it would have meant severe cutbacks to nutrition assistance eligibility.
The House version of this provision saved about $132 billion over a decade, roughly half of the savings in the entire Agriculture Committee title. The Senate version was far less stringent, but it’s still a $41 billion hit to the bottom line. (Republicans are trying to save it now by tweaking the language.) That means that the Senate bill, which already cost more than the House’s, is even costlier now, especially when you include all the other stuff the parliamentarian caught, most of which saved money. And if the parliamentarian rules with the Democrats on the current policy baseline, Republicans won’t be able to hide those costs.
And there will be more changes to come. The parliamentarian knocked out the removal of SNAP eligibility for noncitizen immigrants like refugees and other categorizations. That same provision is also tied to Medicaid, which has yet to be scrubbed for Byrd Rule violations, but you have to think it’ll be cut there, as well. And the Finance Committee’s section, which includes the current policy baseline, also has a mountain of other provisions that could be tagged. So, you’re talking about hundreds of billions of dollars in budget savings that could go. For context, the House version costs $3.3 trillion over a decade, according to the latest estimates. We’re verging on $4 trillion for the Senate bill—unless the Republicans’ wish to have the $3.7 trillion in tax cuts entered as zero passes muster with the parliamentarian.
Remember that the Freedom Caucus demanded a 1:1 relationship between spending cuts and tax cuts, as they calculate it (they insist that the cost of the tax cuts be reduced by $2.5 trillion that they say, all precedents to the contrary, will come with the “economic growth” that the cuts will produce). The bill is not shaping up to come anywhere close to that, especially accounting for the slower phaseout of energy tax credits. The Senate saves money with a stingier state and local tax deduction, but the House SALT caucus is still fighting for their bigger tax cut. And the Senate Finance bill costs more than the House’s even without the big price tag for SALT.
There’s also the Medicaid cut problem, and the threat to rural hospitals. Senate Republicans are discussing a federal rural hospital fund, which is the equivalent of trade adjustment assistance for displaced workers, a weak substitute for simply not engaging in a decimation of Medicaid that puts rural hospitals at risk in the first place. Add to that a controversial public lands sale, which its sponsor, Sen. Mike Lee (R-UT), is frantically trying to salvage after a conservative revolt.
All of these things are a headache for Republican negotiations. It’s hard to find the sweet spot between Freedom Caucus demands for more spending cuts, moderate demands for fewer spending cuts, and the SALT faction’s demands for tax cuts for well-off people in New York, New Jersey, and California who itemize their tax returns. And note that the original plan was for the Senate to vote this thing out this week. Already the timeline has slipped. The full text had been expected Monday, but it’s now delayed.
It should be said, of course, that Senate Republicans could simply ignore the parliamentarian, and keep whatever they want in the OBBB. But Senate Majority Leader John Thune (R-SD) has vowed to heed the parliamentarian’s rulings, and so far, everyone is proceeding as if they will be adhered to. Blowing up the current policy baseline would be the real test here.
The parliamentarian’s rulings on the Senate Finance text, in which $3.7 trillion equaled zero, could come today, which would give Republicans a clearer picture of what they’re dealing with. Thune has said the Senate is staying in session until the OBBB passes. It could be a long wait.
We want to hear from you. If you’re a Hill staffer, policymaker, or subject-matter expert with something to say about the Big Beautiful Bill, or if there’s something in the legislation you want us to report about, write us at info(at)prospect.org.
