WSJ's Take On the Week Barclays Analyst on What Investors Should Know About Trump’s Tax Bill
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Jun 29, 2025 Michael McLean, a public policy senior analyst at Barclays, shares his insights on the GOP's One Big Beautiful Bill. He highlights the contrasting views between investors and policymakers on the bill's impact on the U.S. deficit and economic growth. The discussion delves into concerns about Medicare, Medicaid, and Social Security, and how tax reforms could affect these programs. Listeners are encouraged to consider the long-term fiscal implications and investor sentiments as they navigate this complex landscape.
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Deficit Concerns Differ: Wall Street vs Washington
- The bill mainly aims to extend the 2017 Trump tax cuts, with mixed concern about deficits in Washington.
- Wall Street is more focused on long-term fiscal sustainability than politicians are in D.C.
High Deficit Impact of Tax Cuts
- Extending tax cuts could add $2.4 trillion to deficits over 10 years, potentially $5 trillion including interest.
- Markets often consider the scenario if all temporary tax cuts become permanent, which increases deficit estimates.
Entitlement Spending Drives Deficits
- Current large deficits are unusual in non-recession times and stem mainly from entitlement spending and rising interest costs.
- Revenue and discretionary spending remain stable; aging populations and interest rates drive deficits higher.