The Big Beautiful Bill

Donald is trying to look folksy, but he still sounds like a refugee from Queens - because that is what he is.

The reconciliation bill is ignorant and mean around the edges, targeting migrants for Medicaid and SNAP cuts. This means that doctors and hospitals will be carrying bad debt until bankruptcy or default. Pantries will have to step up to help poor families - although Food Stamps are already inadequate now.

The majority of the bad tax cuts - those rewarding capital - were enacted on a permanent basis. They are not expiring and not in this bill. The only real give away to the wealthy is to keep the status quo on the inheritance tax going. The problems with this bill need reform to fix, not grandstanding. House Leadership is mostly not up to the task. I know of only one or two serious Ways and Means subcommittee chairs. The rest are not worth their keep.

Those seeking big debt savings misunderstand why Moody's joined the downgrade parade. It is because the Republicans are unwilling to make sure the debt is actually paid - or can be. I suspect that tariffs are more to blame this time around. Rating agencies cannot stand unserious people in either Congress or in the Administration.

Deficits must be adequate to pay net interest (rolling it over), create new debt for fractional reserve currency operations (there is no button that does that at the Fed - Modern Monetary Theory is a scam), and provide leverage for investment in mutual funds (high yield), pension funds and other retirement accounts. Now that my generation is retiring, people are heading for the exits and minimizing risk - moving from growth funds to income funds. Capital gains are being replaced with secure dividend and interest income. The emerging recession - tariffs again - will hurt retiree returns.

What tax reforms, may you ask? Goods and Services Tax - or tariffs - it matters little if VAT is used for industrial policy; a subtraction VAT (with employers rather than employees being the responsible party) to channel childcare, child income and health benefits to workers federally and to education at the state level - thus replacing corporate income taxes with both  of these - with subtraction VAT surtaxes taking up the slack for individual filing by the middle class ($150K), upper middle ($500K) and the wealthy to cover high salaries, interest and dividends. 

 Death taxes, wealth taxes and capital gains taxes are better replaced with an Asset VAT at point of sale - rather than through end of the year filing. Time to stop rewarding failure as a way to hide income. The AVAT would be marked to market at IPO, option exercise (CEOs especially - but also short sales), and the first sale after inheritance, donation or gift - but with zero rating for sales to a qualified ESOP or COOP.