What a fiscal joke the Republican party has become.
Please note Trump Says No Cuts to Medicaid.
Senate Republicans are plowing ahead with their plans for trillions of dollars in tax-cut extensions and new breaks, nearing a crucial budget vote to advance President Trump’s legislative agenda just as his trade plans have triggered a sharp downturn on Wall Street.
There is, however, no guarantee the House and Senate can agree on a budget. Hard-right House conservatives are balking at endorsing the Senate’s minimal spending-cut floors and higher debt limit.
The Senate budget would lock in just $4 billion in spending cuts and aim higher in the actual bill. Senate Republicans who back significant spending reductions, including Rick Scott of Florida and Ron Johnson of Wisconsin, said they were comfortable advancing the budget now after getting White House assurances that Trump supports spending cuts.
The House, meanwhile, backs smaller tax cuts of $4 trillion to $4.5 trillion and calls for at least $1.5 trillion in spending reductions.
One of the biggest flashpoints ahead is Medicaid, the health-insurance program covering more than 70 million low-income and middle-income people. The House budget assigns most of its spending cuts—$880 billion—to the committee that handles Medicaid. Lawmakers have been talking about creating work requirements and reducing the federal government’s share of costs, pushing more responsibility to states.
But some GOP senators are wary of Medicaid cuts. Sen. Josh Hawley (R., Mo.), said he spoke with Trump on Thursday and that the president committed not to sign any bill that cuts Medicaid benefits.
Sen. Susan Collins (R., Maine) said the $880 billion target was a problem.
“I don’t see how you can get to that amount without cutting Medicaid benefits,” she said. “The last thing I want to do is to cut Medicaid for vulnerable people who are disabled or are seniors or cannot work.”
The Spending Cut Proposals
- House Version: The House wants $1.5 trillion in cuts with $880 billion from Medicaid
- Senate Version: The Senate budget would lock in just $4 billion in spending cuts and aim higher in the actual bill. But an $880 billion Medicaid target is a problem.
- Trump Version: $0 cuts to Medicaid
Do You Believe in Magic?
Somehow, Senate cuts of a mere $4 billion will mesh with the House version of $1.5 trillion dependent on an $880 billion cut to Medicaid that Trump says won’t happen at all.
Cutting $880 billion from Medicaid and cutting nothing from Medicaid may sound contradictory.
However, contradictions and Trump cannot and do not exist as I have explained before.
The resolution is the same as before. Believe in magic.
Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
On March 12, I commented Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget
Lutnick: “We’re going to make the External Revenue Service replace the Internal Revenue Service.”
By “External Revenue Service” Commerce Secretary Howard Lutnick means tariffs.
Reciprocal Tariffs
We have an annual trade deficit of $918 billion.
Team Trump proposes $918 billion in “reciprocal tariffs” to make the trade deficit go away.
But to balance the budget and eliminate personal income taxes, Trump would need to collect $7 trillion in tariffs on a net trade deficit of $918 billion.
I would love to hear a detailed explanation of exactly how that works.
Are you ready for that miracle? Me too. But wait, there are still more benefits to this amazing deal.
Trumps Claims
- Tariffs will increase revenue enough to balance the budget
- Tariffs will bring manufacturing back to the US
- Tariffs will reduce inflation
- Tariffs will increase exports
Conflicting Economic Madness
Points 1 and 2 conflict. Tariffs cannot simultaneously bring back manufacturing and raise enough revenue to balance the budget.
Points 2 and 3 conflict. Since the US is the world’s highest cost producer of goods thanks to unions, tariffs will not reduce inflation.
Points 2 and 4 conflict. Since the US is one of the world’s highest cost producer of goods, and other countries will retaliate, tariffs will not increase exports.
You may be struggling with this math, but not me.
We resolve the dilemma by stating contradictions and Trump are illogical in nature and cannot exist.
Thus, we can have our cake, eat it too, and gather 20 baskets of leftovers to feed the poor.
It’s magic.
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