White House Issues Wildly Optimistic Projections for Trump’s Big Bill
Happy Wednesday! President Trump on Wednesday wrapped up a relatively chummy NATO summit in the Netherlands, where most U.S. allies agreed to a goal, set by the president, of spending 5% of their gross domestic product on defense. "I came here because it was something I'm supposed to be doing, but I left here a little bit differently," Trump said. "I left here saying that these people really love their countries. It's not a ripoff. And we're here to help them protect their country."
Trump now heads home just in time to wrangle some Senate votes for his "big, beautiful" bill, which is still causing some big, ugly divisions among Republicans. Here's your evening update.
As Deadline Nears, Trump's Big Bill Still Faces Big Hurdles in the Senate
Senate Republican leaders are running into a series of obstacles as they race to finalize their sweeping package of tax and spending cuts, with multiple GOP lawmakers warning that they still have concerns about the bill.
Medicaid changes remain a major issue: Sen. Thom Tillis reportedly has pushed for more clarity about proposed Medicaid changes and has sought to impress upon his colleagues how badly his state, North Carolina, would be hurt by the legislation's cuts to the program - and how badly Republican candidates in 2026 could be hurt with voters. Tillis is reportedly most concerned about a Senate proposal to lower the cap on Medicaid provider taxes from 6% to 3.5%. States use those taxes to boost the federal funding they receive. The senator reportedly passed out a flyer to his colleagues this week that estimated the cost to his state from changing the cap on the provider tax would approach $39 billion over the next decade.
"If you got a $38.9 billion cut estimated in North Carolina over 10 years, you're going to have to repeal [Medicaid] expansion and do a number of other things to get the books in order. I'm just saying, people need to just go in with their eyes open," Tillis said, according to NPR.
Senate leaders have sought to address concerns about the effects of Medicaid cuts, including fears that rural hospitals would be forced to close, by offering to create a stabilization fund for the hospitals. But Sen. Susan Collins of Maine, who had pushed for the fund, reportedly called a proposal for $15 billion over five years insufficient. She floated a $100 billion fund instead, Politico reports, but said that even that may not fully address the problem. Collins reportedly floated a proposal Wednesday to raise the top income tax rate from 37% to 39.6% on Americans making more than $100 million a year.
"I would prefer that we take more time and try to sort through these extremely complicated issues," she said this week.
Driving for deficit reduction: Fiscal hawks, meanwhile, continue to press for additional deficit reduction and spending cuts. Sen. Ron Johnson, who has been vocal about his concerns, told Politico that he's not yet ready to throw his support behind the bill, but conversations with the White House and President Donald Trump have helped. Johnson is reportedly pushing for the creation of a budget review panel that would address deficit reduction. "I think the main sticking point is ... what's the forcing mechanism to actually realize those savings, to enact them?" Johnson told Politico.
Republican factions in the House have also warned that they may reject changes made by the Senate, with conservatives complaining that the legislation is getting worse, not better, and blue-state moderates insisting that the state and local tax break they negotiated must be preserved.
Will holdouts fall in line? Senate Republicans can only afford to lose three votes from their conference and time is running short to get everybody on board ahead of a self-imposed July 4 deadline for getting the bill to Trump's desk. Thune may look to force lawmakers to fall in line by sticking to his timetable and pressing ahead with votes this week, daring holdouts to defy him and, more to the point, Trump. He'll likely have some help from the president and the White House in waging a pressure campaign to get the bill passed in the coming days.
White House Releases Wildly Optimistic Growth Projections for Trump's Megabill
The White House released an analysis Wednesday indicating that the massive Republican policy bill would generate enormous growth in investment, wages and the overall economy in the coming years, producing a bounty in tax revenues that would slash budget deficits and bring the national debt under control.
According to the Council of Economic Advisers, whose members were appointed by President Trump, the One Big Beautiful Bill Act would increase real gross domestic product by 4.6% to 4.9% over the next four years, driven by a 7.3% to 10.2% increase in real investment that creates and protects 6.9 to 7.2 million jobs. Wages would rise by $4,000 to $7,200 per worker in real terms, producing an increase in take-home pay of $7,600 to $10,900 for a typical family of four.
Over 10 years, the CEA says, economic growth produced by the tax provisions in the bill would reduce deficits and interest paid on the debt by $2.1 to $2.3 trillion, while deregulation and energy policies would further reduce the deficit by $1.3 trillion to $3.7 trillion. The bill also includes spending cuts totaling $1.8 trillion, bringing the total deficit savings to roughly $5 trillion to $7 trillion. Adding in revenues from Trump's tariff policies, the White House is claiming total deficit reduction of between $8 and $11 trillion as a result of the president's overall economic agenda. And as the economy soars, fueled by the tax cuts and policy changes, the debt-to-GDP ratio would fall, falling to between 88% and 99% after 10 years, well below the projected level of 117% to 125%.
"With the OBBB, America is poised to enter a new golden age of improved prosperity and fiscal responsibility," the CEA grandly concluded.
A rosy scenario: While the report provides much-needed ammunition for Republicans, including House Speaker Mike Johnson, who insist that the massive bill will not increase deficits, few economists beyond the walls of the White House are likely to put much stock in the projections.
Most analysts have concluded that the bill would boost growth only modestly, with one finding it would actually reduce it, and few think it would do anything but increase deficits substantially. The Congressional Budget Office recently issued projections showing it would increase deficits by $2.8 trillion over 10 years.
"Just so we all understand, the CEA numbers are ridiculous," said Marc Goldwein of the Committee for a Responsible Federal Budget, who also posted the chart below.
Jessica Riedl, a budget expert at the conservative Manhattan Institute, had a similar reaction. "I'm sorry, but these White House budget and economic estimates are absurd," she wrote. "Not even conservative economic modelers come within miles of these growth and savings estimates because they just do not make sense."
The bottom line: Leading Republicans will likely continue to argue that their massive policy bill will make the economy boom while reducing deficits, but few experts of any political stripe outside of the White House and Congress are likely to give that argument much credence, however politically effective it may be.
NIH Memo Orders Pause to Grant Cancellations: Report
Staff at the National Institutes of Health have been directed not to cancel any additional medical research grants, The New York Times reports.
"Effective immediately, please do not terminate any additional grant projects," Michelle Bulls, an NIH official overseeing external funding, reportedly instructed staff in an internal memo sent Tuesday. The memo also directed staff members to hold off on canceling grants in line to be "terminated."
The memo comes as the Trump administration's slashing of hundreds of grants - affecting more than $1.8 billion in funding, according to one recent estimate - has suffered some legal setbacks. Most notably, a federal judge in Massachusetts last week ruled that some Trump administration grant cancellations were "void" and illegal, saying they had been enacted through an "arbitrary and capricious" process and were driven by "racial discrimination and discrimination against America's LGBTQ community."
A spokesperson for the Department of Health and Human Services told news outlets that the administration wants to ensure that taxpayer money supports evidence-based science rather than "divisive DEI mandates or gender ideology" and that the department stands by its push to stop funding research "that prioritized ideological agendas over scientific rigor and meaningful outcomes for the American people."
The bottom line: Despite the NIH memo and court rulings in favor of scientists, it's not clear whether researchers can quickly get back to work because the Trump administration is reportedly still deciding on its next steps. "Researchers haven't yet been able to access funds covered by the ruling as part of the order, and the likelihood that the government will appeal or seek to halt the order leaves the outlook murky," Axios reported yesterday. And if or when the funding flows again, scientists say that their work has already been affected, in some cases making it hard to salvage their studies.
Quote of the Day
"In the face of demonstration that vaccines are the single most lifesaving technology for children, over half a century, he is asserting a position that the U.S. will not support vaccination. This is utterly disastrous for children around the world and for public health."
- Dr. Atul Gawande, a surgeon and former public health official in the Biden administration, quoted in The New York Times about a decision announced Wednesday by Health and Human Services Secretary Robert F. Kennedy Jr. for the United States to hold off on $1.2 billion in financial support pledged by the Biden administration for Gavi, a public-private partnership that helps provide vaccines for children in poor countries, until the group changes its processes.
Gavi CEO Sania Nishtar has said that losing U.S. funding could lead to an estimated 1.2 million additional deaths over the next five years. Separately, the Gates Foundation said Tuesday that it will provide $1.6 billion over the next five years to support Gavi.
Fiscal News Roundup
- Thune Faces Brewing Megabill Mutiny – Politico
- The Reconciliation Bill Republicans Love to Hate – Punchbowl News
- Senate GOP Leaders Make Opening Offer on Hospitals Fund – Politico
- Tax Hike On Mega-Millionaires Floated as GOP Debates Trump Bill – Bloomberg
- Key Republicans Signal 'Progress' on SALT Deal After Bessent Meeting – Bloomberg
- Republicans' "Big, Beautiful Bill" Would Force Postal Service to Sell Its New EV Mail Trucks – CBS News
- White House Ramps Up Sales Pitch for Trump Tax Plan – Politico
- A Running List of Policies Rejected From the Republican Megabill – New York Times
- Vought Pitches Reluctant Senators on $9.4B in Clawbacks to NPR, PBS, Foreign Aid – Politico
- IRS Staff Losses Pose 'Risks' to Next Tax Filing Season, Report Warns – Washington Post
- Mushy Wording Lets NATO Commit to Trump's Military Spending Demand – New York Times
- Europe Wins Over Trump on Defense With NATO Spending Boost – Bloomberg
- NIH Grantees May Face Long Waits for Restored Money – Axios
- Trump Says He's Already Considering '3 or 4 People' to Replace Powell at Fed – USA Today
- Trump Administration Restaffs National Security Council After Cutting Its Size – Bloomberg
Views and Analysis
- The Four Ugliest Points About the Big Beautiful Bill – Jacob S. Hacker and Patrick Sullivan, New York Times
- Johnson Warns About a Medicaid Backlash – Benjamin Guggenheim, Lisa Kashinsky, Calen Razor and Mia McCarthy, Politico
- RIP, MAHA – Catherine Rampell, Washington Post
- The GOP Is Still Trying to Repeal Obamacare – Ronald Brownstein, Bloomberg
- Senate Republicans' Climate-Wrecking Corn Ethanol Payout – Ryan Cooper, American Prospect
- Donald Trump Is Doing Socialism Now – Timothy Noah, New Republic
- This Time Is Different for the US Economy – Conor Sen, Bloomberg
- Can the World Count on 'TACO' Anymore? – Sommer Saadi and Stephanie Flanders, Bloomberg (podcast)
- A Mamdani-Fueled Exodus to Palm Beach Is an Exaggeration – Jonathan Levin, Bloomberg