Republicans are gearing up to pass a reheated tax bill that’s more about optics than growth.
As James Madison warned, “A public debt is a public curse.”
That’s why I’m glad some House Republicans, including Representative Chip Roy, are pushing back on the so-called “Big Beautiful Bill.” It’s certainly big, but it’s not beautiful.
The House plan has a net tax cut of about $6 trillion over 10 years, including interest costs and assuming temporary breaks become permanent. And it has net spending cuts of somewhat more than $1 trillion with interest savings. If that is the final package, federal debt held by the public will soar from $30 trillion this year to about $55 trillion by 2034 — $5 trillion more than under the baseline.
Yes, the bill has two redeeming features: It extends expiring provisions of the 2017 tax cuts, preventing a major tax hike on working Americans. It also holds the line against Bernie Sanders–style tax increases on high earners and small businesses. But that’s where the good news ends.
This isn’t tax reform, it’s a political spending spree wrapped in a tax-cut ribbon. There’s barely any Medicaid reform, not even immediate work requirements. And forget about other health-care subsidies. Republicans are either capitulating to left-wing talking points or protecting special interests. Worse, the bill rebrands crony giveaways as pro-growth policy, with tip and overtime carve-outs, MAGA savings accounts, student loan breaks, low-income housing subsidies, and more — all of which distort incentives, invite tax gaming, and make the code more complex and less neutral.
The structure of the tax code remains broken. Growth-enhancing reforms like full expensing are still temporary, leaving long-term investment and productivity gains on the table. And don’t forget the shameful spectacle of Republicans demanding a $124,000 SALT deduction carve-out, a blatant handout to wealthy blue-state homeowners, funded by taxpayers in middle America.
As Adam Michel at Cato has noted, the bill even includes provisions that are flat-out anti-growth:
- Makes passthrough loss limitations permanent.
- Adds new retaliatory tax tools for discriminatory foreign taxes (DSTs, OECD Pillar 2).
- Excludes 50% of sports teams’ intangibles from amortization.
- Adds entity aggregation rules to executive compensation limits under 162(m).
- Raises endowment excise tax based on endowment-to-student ratios, ranging from 1.4%, rising to 21%.
- Raises private foundation excise tax based on total assets. Rates starts at 1.39% and rises to 10%.
- Tightens definitions for the $800 de minimis exemption for low-dollar trade.
- 5% tax on remittances, with exemption or credit for US citizens.
The Senate now has a choice: Double down on this mess, or clean it up. That means making expensing permanent, scrapping carve-outs, and building a simpler, more growth-friendly system — because the stakes are enormous.
Everyone in Washington admits it now: We’re on a ruinous fiscal path. The national debt is racing past $30 trillion. Annual deficits are nearing $2 trillion. Interest payments are set to eclipse defense spending. And that’s the rosy scenario.
For too long, lawmakers believed low interest rates were permanent. But the era of cheap debt is over. Long-term Treasury yields have hovered above 4 percent for years, driven not just by inflation or Fed policy, but by the debt burden itself. My colleague Jack Salmon’s new research shows that the CBO drastically underestimates how rising debt drives up interest rates. The real impact is two to three times higher than the CBO projects. That means much higher borrowing costs ahead.
If rates settle closer to 5.5 percent instead of the CBO’s 3.8 percent forecast, debt service will explode, triggering a vicious cycle of rising deficits, rising interest payments, and rising inflation risk as markets begin to doubt Washington’s will to stabilize the debt without relying on the Fed.
And what are Republicans doing in response? Not targeting the $26 trillion in tax expenditures. Not ending wasteful programs. Not repealing open-ended regulatory statutes. Not even trying to claw back Biden’s bloated spending. Instead, they’re gearing up to pass a reheated tax bill that’s more about optics than growth, and that will make our debt crisis worse.
The GOP has a chance to act like the party of fiscal sanity again. But they need to stop selling temporary tweaks and corporate carve-outs as serious reform. They’re not. And claiming this bill will generate 3 percent to 4 percent growth? That’s magical thinking. The Tax Foundation scored the bill at 0.6 percent long-term growth if one ignores the debt drag on growth.
It’s time to get real, before the debt does it for us.