What will happen to the U.S. debt if the bill passes the Senate in it’s current form?

Alicia Parlapiano and Margot Sanger-Katz at The New York Times: U.S. Debt Is on Pace to Set a Record High, Going All the Way Back to 1790.

The United States hit its record debt level at the end of 1945, after a world war and the Great Depression.

That record, in which the debt was briefly larger than the size of the entire economy, is almost certain to be broken in the next several years. Estimates from the Congressional Budget Office published in January showed that the country was on track to overtake it in 2032 — and that was before the Republicans’ large tax and spending bill was taken into account.

Under the G.O.P. megabill being considered in the House, budget experts now say, the U.S. debt would blow past the record even sooner and climb significantly higher in coming decades.

America has had periods of high debt before, but they have tended to occur during wars, recessions or other major shocks. Generally, federal deficits have been lower during periods of low unemployment. Today, there is no war or recession to easily explain the rapidly increasing pace of borrowing.

Because the government has been spending more than it collects in taxes over the past two decades, the debt has been growing. Without any changes to existing law, the Congressional Budget Office predicts the debt will rise to about 117 percent of the economy’s size by 2034, higher than the 1945 record.

The Republicans’ bill would widen the gap further by extending and expanding tax cuts and increasing military spending, partly offset by spending cuts in other areas. The Committee for a Responsible Federal Budget, a nonpartisan group that favors debt reduction, estimates that the nation’s debt could be as high as 129 percent of the economy by 2034 under those plans.

More details at the NYT. I’ve run out of gift links for this month, unfortunately.

From Raw Story: Trump ‘risking fiscal disaster’ if two key Republican policies collide: analysts.

The president went to Capitol Hill to urge Republicans to unite behind a budget-busting budget bill, and Axios reported that his strong-arm tactics were putting conservatives into a precarious position.

“Trump’s ‘big, beautiful bill‘ is projected to add trillions to the deficit over the next decade — rattling conservatives who have long warned that the U.S. is barreling toward fiscal catastrophe,” Axios reported. “Some Republicans now find themselves trapped between two of the party’s most animating principles: Deficit reduction vs. absolute loyalty to Trump.”

The White House is hoping the budget bill will receive a vote on the House floor this week, and the president and his aides have brushed off warnings that the tax cuts embedded in the measure would explode the national debt without politically toxic cuts to Social Security and Medicare.

“This tax bill’s enormity is being underplayed … [It] will cost more than the 2017 tax cuts, the pandemic CARES Act, Biden’s stimulus, and the Inflation Reduction Act combined,” Jessica Riedl, a budget specialist at the conservative Manhattan Institute, told Yahoo Finance.

The Trump administration claims Biden created the deficits and Trump policies will lower the debt.

“[Those projections] assume consistent economic growth,” Jim Millstein, a former chief restructuring officer at the Treasury Department, told Bloomberg. “Just imagine the Trump tariffs … cause a recession. They are risking a fiscal disaster.”

More on the debt and deficit from The New York Times: Why Washington’s Huge Tax Bill Is Worrying Bond Investors.

For decades, budget hawks warned that America’s debt load was unsustainable and that runaway spending financed with borrowed money was eventually going to scare investors away from lending to the United States. Those fears are now taking hold more strongly in the bond market, and are at risk of spreading further.

Tax cuts pushed by the Trump administration are amplifying debt and deficit concerns among bond investors, a powerful group of market players who strongly influence how much it costs for the government to finance its budget. The buying and selling of government debt, known as Treasuries, also influences interest rates on a wide variety of debt extended to American households and businesses, including mortgages, credit cards and car loans.

Those investors were already on edge over President Trump’s whipsawing tariff policy. Then this week’s attempt to push through sweeping tax cuts without significantly slashing spending — in what the president has called a “big, beautiful bill” — set off a fresh bout of bond market turmoil. Mr. Trump put more pressure on Republican lawmakers on Tuesday, visiting Capitol Hill and warning that failing to advance the bill would lead to higher taxes.

Since dropping below 4 percent in early April, the 10-year Treasury yield has risen back above 4.5 percent, a large move reflecting deficit worries. The moves for the 30-year yield this year have also been stark: It has jumped above 5 percent, its highest level in about a year and a half.

As you probably know, that’s how much we have to pay the bondholders.

Speaking with reporters on Tuesday, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, warned that volatility in the Treasury market could add to already heightened uncertainty about the economic outlook.

That risks making people “even more cautious about how they engage,” he said. “If that happens, then I’ll have to assess the extent to which that should change my outlook on how the economy is going to perform.”

This story by Andrew Solender at Axios just dropped: Mike Johnson faces 11th-hour blowup on Trump’s big bill.

House Republicans’ internal negotiations on the “One Big, Beautiful Bill” went south Tuesday night and early Wednesday morning, with GOP hardliners publicly digging in their heels against the legislation.

Why it matters: Some of the anger centers on a deal House Speaker Mike Johnson (R-La.) is nearing with blue-state Republicans to raise the State and Local Tax Deduction cap.

• “I think, actually, we’re further away from a deal because that SALT cap increase upset a lot of conservatives,” House Freedom Caucus chair Andy Harris (R-Md.) said in a Newsmax interview.
• Rep. Ralph Norman (R-S.C.), another GOP holdout, told Axios in a text message: “THINGS ARE NOT LOOKING GOOD!!”

State of play: Johnson and a group of House Republicans from New York, California and New Jersey were close to a deal on SALT as of Tuesday night, Axios’ Hans Nichols reported.

• The deal would have raised the SALT cap to $40,000 a year for those making up to $500,000.
• The income phaseout would grow by 1% for 10 years, and then the deduction would become permanent.

Yes, but: Johnson’s right flank has long been skeptical of the SALT cap, which would increase the deficit and disproportionately benefit taxpayers in high-tax Democratic states.

• Some conservative hardliners also feel the bill doesn’t go far enough in cutting Medicaid and nutrition assistance spending.

I don’t buy it. My guess is the right-wingers will vote for it in the end. But if they don’t go with the SALT increase, blue state Republicans are going to lose their seats. In fact, if this bill passes, I think that will guarantee Democrats take the House in 2026.

I’m going to end there. All this talk about tax cuts, cuts to social programs, and the exploding U.S. debt are making me very tired and depressed. Take care, everyone!