The Deduction The One Big Beautiful Tax Bill: What’s In It, What’s Out
Jul 1, 2025
Congress is in a rush to finalize a major tax bill, sparking debates over key provisions like the SALT deduction. There's a clash between the House and Senate on whether to implement temporary fixes or permanent reforms. The implications for national debt and fiscal policy are front and center, as rising interest payments loom large. Listeners will also learn about the complex legislative process behind the scenes, including potential amendments and the shared responsibilities of citizens in shaping fiscal policy.
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Senate Bill's Permanence Boosts Growth
- The Senate bill makes key tax provision changes more permanent than the House bill, especially for business incentives like full expensing.
- This permanence leads to a stronger long-run GDP boost but also increases the cost and deficit impact compared to the House version.
Rising Debt Threatens Fiscal Capacity
- Large existing debt and deficits combined with rising interest rates increase the government's interest payments, surpassing defense spending.
- Growing interest costs reduce resources available for critical government programs and worsen long-term fiscal stability.
Senate's Deficit Accounting Controversy
- The Senate proposes to extend tax cuts without counting their cost against the deficit, unlike the House which emphasizes fiscal responsibility.
- This approach can increase deficits via budget gimmicks, leading to higher interest costs and worsening debt.