#federal-deficit

#federal-deficit

S&P Global reaffirmed its AA+ credit rating and stable outlook last week due in part to "robust tariff income," which should help offset the impact of tax cuts and spending in the federal budget. While S&P doesn't see meaningful improvement in the fiscal deficit, it doesn't expect steep deterioration either. However, reciprocal tariffs face legal challenges and could be struck down.

The Congressional Budget Office predicts that the megabill Trump signed on July 4 would increase the federal deficit by $3.4 trillion and cause ten million people to lose health insurance.

The bill, which makes the 2017 Trump tax cuts permanent and provides a big funding boost for border security and national defense, was bitterly opposed by Thomas Massie (R-KY) in the House and Rand Paul (R-KY) in the Senate because of its dismal fiscal implications: an estimated $3.3 trillion increase in the national debt over the next decade.

The One Big Beautiful Bill Act passed by a narrow 51-50 vote, including a tie-breaking vote from Vice President J.D. Vance, amidst significant internal dissent.

After guest Daniel Newman added that higher taxes would add still more uncertainty amidst President Donald Trump's trade wars, McDowell weighed in. "It's also the creep's way out and I use the word creep because they want to let the top rate creep up the creepy way out of not cutting spending," she argued. "And it's just the fact that we're running more than a $2 trillion deficit this year, it will come in higher than Joe Biden's last year in office."