big beautiful bill one big beautiful bill big
and beautiful bill big beautiful bill one big beautiful bill the Trump administration is trying
to rush a multi- trillion dollar spending spree through Congress by early July trump calls it the
one big beautiful bill and at over 1,000 pages it’s certainly big but just how beautiful is it
it’s already rattled the bond market upset Elon Musk i think a I think a bill can be can be can be
big or it can be beautiful and stunned accountants everywhere so today we investigate what on earth
is in this bill how likely it is to pass and what it all means for the crypto market my name
is Guy and you’re watching the Coin Bureau in late May Trump’s flagship budget legislation
sneaked through the House of Representatives on a razor thin majority of 215 to 214 now as the name
suggests the one big beautiful bill act is a huge package of sweeping tax spending and regulatory
changes and as a budget reconciliation procedure it’s being fast-tracked currently slated for
consideration by the Senate in June once there it can’t be filibustered and can be passed by a
simple majority as opposed to the supermajority of 60% usually needed to pass bills in the Senate
but even by these standards the one big beautiful bill is moving at breakneck speed other bills of
this size and scope take weeks or months to move through committees debates and amendments but this
one took just 2 days a remarkable accomplishment considering that the bill is more than 1,000 pages
long it was introduced in the House on the 20th of May and passed on the 22nd and the administration
is now targeting an ambitious date of the 4th of July for the bill’s enactment it’s a major win
for President Trump who frequently circumvents Congress by ruling via executive order despite
being marginalized in the policy-making process like this Congress has moved extremely quickly to
execute Trump’s budget agenda in another sign of the power he wields over his party now the White
House has lorded the one big beautiful bill as quote “a once-in a generation opportunity to
cement an America first agenda of prosperity opportunity and security into law.” But with the
bill making it over the line by a single vote not everyone is so thrilled about it in particular
the bond market is back at it again with investors letting the government know exactly what they
think of the big beautiful bill by dumping US debt since bond prices and yields are inversely
related you know what that means bond yields are up making the cost of borrowing higher for the
federal government and for a government that borrows like there’s no tomorrow this is not great
news interest payments on the national debt have already tripled since 2017 reaching $881 billion
last year at 13% of federal spending it’s now bigger than the entire national defense budget the
TLDDR is that Washington looks like it’s charging headirst into a debt death spiral where it has
to borrow more money to pay its existing debts but doing this makes the cost of borrowing ever
more expensive and it all ends in tears hold up the one big beautiful bill is intended to address
this problem how is the government going to afford to keep the lights on and pay for Trump’s agenda
or anyone else’s agenda for that matter when its finances are so dire it’s rendered its own debt
ceiling meaningless by suspending or raising it every year or two for the last decade lapses in
funding have become so frequent that the federal government has come to the brink of shutting
down five times and actually did shut down on three other occasions since 2017 a phenomenon
unheard of in other wealthy countries we may be in for a new installment in the shutdown series this
year too as Treasury Secretary Scott Bessant has warned that without congressional action the US
could run out of money to pay its bills as early as August thankfully though the one big beautiful
bill also proposes to take care of this by raising the federal debt ceiling by a further $4 trillion
setting the stage for a $40 trillion plus national debt clearly the government’s need to spend money
on basic functions services and foreign wars is in tension with its everinccreasing debt repayments
and the looming threat of a death spiral so what is Trump’s plan to deal with it this time well
the big and beautiful idea behind the bill is that the government can have its fiscal cake
and eat it too it proposes to offset tax cuts and massive increases to military border security
and mass deportation programs by cutting spending elsewhere and by bringing in more federal revenue
specifically the administration expects to raise trillions of dollars of new revenue from Trump’s
import taxes and save trillions by cutting federal health care and food poverty programs and by Elon
Musk’s Doge releasing the hounds on the civil service to root out feckless spending and waste
according to the White House the one big beautiful bill will quote reduce the deficit and assuming
strong economic growth and tariff revenues the bill could even lead to a $2 trillion budget
surplus however the assumptions and accounting methods used to arrive at this conclusion are
politically contentious and rather optimistic for example the bill seeks to enact promises made
during Trump’s 2024 campaign specifically to not tax tips overtime and interest on certain
car loans these provisions are temporary and slated to expire at the end of 2028 and
that’s not because Trump only intends to have them in place for 3 years it’s simply a tactic to
reduce the estimated cost of the bill making it appear less fiscally irresponsible however this
creates an implicit political expectation for spending provisions to be extended in the future
especially if they’re popular in other words it’s a case of kicking the fiscal can down the road
this strategy for minimizing the nominal cost of new spending provisions is normally implicit
rather than explicit because if you acknowledge that your temporary spending policies are really
intended to be permanent the fiscal calculation changes entirely and your policy suddenly has a
much larger footprint on the government’s finances in the long term however in adopting this strategy
the Trump administration has started saying the quiet part out loud albeit for a different set
of tax cuts one of the main provisions of the one big beautiful bill is to make permanent Trump’s
2017 tax cuts which made it past deficit hawks in Congress during Trump’s first term on the grounds
that they would be temporary now making permanent a tax regime that has been in place for almost a
decade represents continuity rather than change for the taxpayer who may not notice any difference
as a result of this extension and this appears to be the basis for the White House’s claim that
maintaining current tax rates quote cannot add one penny to the deficit and were quote always
planned to be permanent however the legislation that introduced the 2017 tax cuts includes
a sunset clause effective September 2025 so legally speaking the tax cuts were never planned
to be permanent rather they were always planned to expire this year so the 2017 tax cuts have been
factored into the federal budget until September 2025 and not after so although the taxpayer
may not notice a change government accountants certainly will after all it’s customary for
governments to base fiscal calculations on the current letter of the law rather than assumptions
about how the law may change in the future this is how the Congressional Budget Office has always
done it and it’s how they estimated that the tax provisions within the big beautiful bill
alone would increase federal deficits by $3.8 8 trillion over a decade now this dwarfs the
CBO’s estimate of $1 trillion in spending cuts to Medicaid food aid and other services over the same
period implying a projected net deficit increase of $2.8 trillion independent taxdogs tend to
use the same baseline for their calculation the Committee for a Responsible Federal Budget for
example estimates the bill would add $3 trillion to the national debt including interests over
the next decade the Tax Foundation meanwhile projects a $2.6 trillion deficit increase based
on the tax plan alone the White House however has described these conventional methods of assessing
public finances as a quote accounting gimmick the political disagreement over the big beautiful
bill has therefore transcended the contents of the bill itself and turned into a political struggle
over how accounting works as long as this is in dispute a cloud of uncertainty is going to loom
over everyone who relies in some way on official data about the finances of the US government
different baselines lead to vastly different fiscal outlooks making it a challenge for market
participants to gauge the long-term health of the US economy with any confidence now one unlikely
critic of Trump’s big beautiful bill is none other than Elon Musk whose tenure as Doge ring
leader ended unceremoniously after 4 months of slashing and burning federal agencies ended up
reducing Musk’s own net worth more than it did government spending by a factor of more than 10
this is a point worth elaborating because Doge was supposed to be the administration’s star player
saving trillions of tax dollars being wasted on DEI hires fake email jobs and foreign aid all to
improve the state of the government’s finances doge was central to Trump’s claim to fiscal
discipline and his repeated promises to reduce the national debt without touching basic safety
nets including the federal healthcare program Medicaid joining Trump on the campaign trail
last year Musk initially promised Doge would find $2 trillion in savings a remarkable claim since
the federal budget is around $7 trillion but when the time came for him to start delivering on
this promise in January he h haveved this to just $1 trillion amounting to about 15% of the federal
budget musk maintained an ambitious timeline too telling Fox News in March that by the time he left
government Doge quote will have accomplished most of the work required to reduce the deficit by
a trillion dollars to find these savings Trump gave Musk cart blanch to stampede through the
federal government firing workers on mass and cutting entire government programs which he did
with vigor there is now a whole universe of court battles challenging the legality of these firings
many of which were made without apparent cause the government will have to spend a good chunk
of money fighting all of these lawsuits somewhat defeating the point of the firings in the first
place doge will need these cuts to stick because as they discovered around 70% of the civil
service works in the National Security State this includes for example the Department
of Homeland Security and the Department of Defense and there is rarely if ever any political
appetite in Washington for cutting spending there so then to find cuts amounting to 15% of the
federal budget in the other 30% of the civil service is quite a tall order perhaps this is why
Musk revised his target again in April reducing it to just $150 billion or 7.5% of the savings
he initially promised this must have been a lot more manageable for Doge which claims to have cut
federal spending by at least $175 billion already the department’s official website claims quote
“We are working to upload all of our receipts in a digestible and transparent manner but so far only
30% of the $175 billion claim is broken down into individual savings and this figure too appears
to have been revised down from 40% in April that leaves $52.5 billion in savings for which Doge has
offered some kind of proof beyond the trust me bro baseline however the dollar amounts Doge reports
to have saved do not stand up to the slightest bit of scrutiny there are many examples to choose
from like that time Doge claimed to have saved $8 billion by cancelling an $8 million immigration
contract other mistakes include claiming false contract cancellations triple counting a single
reform and including contracts that expired decades ago a more deliberate tactic frequently
used by Doge involves reporting as savings not the amount of money actually spent on a government
contract but a maximum credit limit provided for by the contract to ensure necessary costs on a
project can be met this is often much higher than the amount of money actually spent allowing Doge
to vastly inflate the savings made by cancelling the contract third parties trying to verify the
savings claimed by Doge have invariably arrived at just a fraction of the official tally in February
Doge claimed $55 billion had been saved but an analysis by the New York Times counted just $2
billion in verifiable savings more recently a dedicated Doge tracker website last updated in
early May found just $16 billion in verifiable savings out of the $165 billion claimed by Doge
at the time this leaves 90% of the figure claimed by Doge unverifiable and we have yet to price in
the unintended consequences of abruptly firing tens of thousands of federal workers for example
the IRS has reportedly lost a third of its tax auditors as a result of the work done by Doge a
move more likely to improve the finances of tax dodggers than the federal government after
suffering months of unfavorable press and a $180 billion draw down in his own net worth Musk
departed from government in late May doge had not completed most of the work to save the government
$1 trillion by this point as he had claimed two months prior still he told reporters in the Oval
Office that Doge would find a trillion dollars in savings eventually although he didn’t offer a new
timeline so the takeaway here is that one of the main pillars of the revenue model underpinning the
one big beautiful bill has not delivered doge’s failure to save a significant amount of money has
undermined the administration’s plan to offset massive spending increases with cuts elsewhere
even Musk himself has attacked what he calls a quote massive spending bill that would increase
the federal deficit and quote undermine the work of Doge the administration might be able to brush
aside criticism from confrontational journalists but it’ll be more difficult to dismiss the same
criticism when it’s coming from the guy they hired to clean up the government’s finances so with
just $1 trillion in spending cuts up against $3.8 trillion of tax cuts the one big beautiful
bill implies a significant and likely sustained increase in the national debt having barely made
it through the House by a single vote the bill will now face an uphill battle in the Senate in
June senate Majority Leader John Ton can afford to lose only three Republican senators to pass the
bill via reconciliation but there are already more than three who are not happy about it this could
get messy because different Republican senators have conflicting perspectives on what is wrong
with the bill both House and Senate Republicans favor making the 2017 tax cuts permanent but there
is significant division over how this will be paid for as we’ve seen the House legislated $1 trillion
in cuts specifically to offset lost tax revenue however many Senate Republicans share the White
House’s position that there is no cost associated with making the cuts permanent as such some of
them are not convinced that the House bill’s $1 trillion spending cuts are necessary for example
Senators Josh Hol Jerry Moran and Susan Collings of Missouri Kansas and Maine respectively are
concerned about the impact of Medicaid and food aid cuts on their constituents and also on their
state legislatures which will have to pick up the bill trump is nominally on this side too having
promised on the campaign trail not to cut the programs his big beautiful bill is proposing to
cut despite endorsing the bill Trump told Senator Holly quote “Don’t touch it Josh.” Regarding
Medicaid cuts he might be better advised to say this to the senators who actually want to cut
Medicaid like Senator Ron Johnson of Wisconsin johnson is opposed to the bill on the grounds that
the cuts to Medicaid and food poverty programs do not go far enough and according to him at least
three other senators agree meanwhile Senator Rand Paul of Kentucky is a fierce critic of the bill
on the grounds of fiscal discipline specifically he has said he will not vote for another debt
sealing increase so all in all there are some pretty significant divisions about the bill both
between House and Senate Republicans and between different Republican senators and the White House
senators have longer terms than members of the House and represent an entire state’s worth of
constituents and this typically leads the Senate to have a moderating influence on legislation
passed by the House this is also why the Senate has become a graveyard for many ambitious House
bills over the years so we’ll be quite surprised if the One Big Beautiful bill is indeed enacted
on the 4th of July as planned it’s highly likely that Senate Republicans will seek changes meaning
the bill goes back to the House and then back to the Senate again it’s also possible that the bill
dies in the Senate which would have its own set of fiscal and political consequences for example
the US government running out of money to pay its bills and perhaps shutting down in August now we
suspect that the bill will pass sooner or later and that it will result in a multi-trillion dollar
increase to the federal deficit necessitating yet more government borrowing the bill is shrouded
in fiscal uncertainty and as such has already introduced significant volatility to the bond
market with the administration questioning how the government should assess its own finances
the markets continue to show doubt over the future of the US national debt and the status
of the dollar as the world’s reserve currency this is pushing Treasury yields higher as
investors demand more compensation for holding US debt increasing the cost of the government’s
interest payments and therefore bringing the US one step closer to a debt death spiral all of
this is bearish for the US dollar and you know what that means dollar down equals Bitcoin up
since the price of BTC is most often measured against the US dollar the US dollar is supposed
to be the bedrock of the global financial system but with the future of this system increasingly
uncertain capital may continue to flee from the fiat ponzi and into a decentralized store of
value that is not tied to the financial health reliability or political whims of any nation state
or person sounds pretty bullish for crypto to me but we’ll have to wait and see what happens to
the one big beautiful bill because who knows it might just end in another government shutdown
instead so until this all shakes out you might want to keep tabs on other parts of the US
government that might be about to pump or perhaps dump your bags and you can check them out
with this video over here i’ll leave it there for now folks but as always thank you for watching
and I’ll see you next time this is guy over and
