This week on Facing the Future, we discussed developments on Capitol Hill as Republicans try to pass what is now officially called, the “One Big Beautiful Bill.”
Our guest was Ben Ritz, Vice President of Policy Development at the Progressive Policy Institute. Ritz is the author of a paper called “How Trump’s BBB is Shaping Up to Be an Even Bigger Mess Than Biden’s.” Concord Coalition Executive Director Carolyn Bourdeaux joined the conversation.
While there are huge policy differences between President Biden’s Build Back Better plan and President Trump’s Big Beautiful Bill, Ritz points out a number of areas where Trump is making the same mistakes with his BBB that plagued Biden’s BBB.
He warned, for example, that even if the individual policies making up a huge tax and spending bill are initially popular they can backfire politically if they ignite inflation. Biden ignored warnings about the potential inflationary effect of his BBB and it came back to haunt the Democrats in 2024. Now, Ritz says, Trump is making the same mistake.
Democrats were “very dismissive of anybody saying Biden’s BBB was potentially too big. They just said, ‘Well, it’s better to do too much than do too little.’ They didn’t even care how much of an overshoot it was. Then, when inflation happened, they said, ‘Oh, it’s transitory. Don’t worry about it.’ When that proved wrong, they still continued to push the same policies adding more fuel to the fire. When that wasn’t working politically, they shifted to the corporate greed argument. ‘It’s not our policies that are making inflation worse. It’s just greedy corporations.’ And some members, such as Elizabeth Warren, were saying the Federal Reserve should keep interest rates low, making it hard to fight inflation through the traditional means.”“It’s crazy,” Ritz continued. “but Donald Trump is doing the exact same thing. When
economists complained about what his tax and trade policies were going to do to inflation, Treasury Secretary Scott Bessent said it was going to be transitory. Trump’s FTC Commissioner said he was going to investigate companies that were unfairly raising prices. Trump said Walmart should absorb the effect of their tariffs, and it’s greedy to pass them along and price increases. And then, he said, Fed Chair Jerome Powell should cut interest rates.Trump pressured him directly at one point, even suggesting that he might think about firing him. So time and again repeating the exact same mistakes, or worse, that happened under the Biden Administration.”
Another similarity Ritz noted is the failure of either president to set priorities and stick to them. Instead of saying no to anyone, they indulged the wish lists of supporters and used budget gimmicks to hide the costs. “They said, we’re just going to do everything for a couple of years. We’re going to phase things out. We’re going to start things later in the window to make the 10-year cost seem smaller than it really is, because we’re not willing to actually pay for it,” Ritz said.
As a practical matter, Ritz is concerned that gimmicky budgets and refusing to make responsible trade-offs is eroding the trust that is needed to reach bipartisan agreements on fiscal policy. “It’s hard,” he said, “especially when Republicans are now saying we’re not going to pay for this. We’re not going to try to pay for this. We’re not even going to pretend we’re paying for it and we’re also going to get rid of budget enforcement by making all these new rules that make it effectively meaningless. And so I think it’s going to have a pretty deleterious impact on trust.”
Looking ahead, Ritz observed that the debt is no longer a future problem. “We’ve seen over the last five years that bigger deficits lead to higher inflation and higher inflation leads to higher interest costs, which leads to more expensive mortgages, more expensive groceries, and more expensive cars. We’re actually seeing the consequences.”
The recent decision by Moody’s credit ratings agency to downgrade the United States is significant, Ritz said. “When they announced the downgrade they said that none of the policies under consideration would meaningfully improve the fiscal trajectory. That’s a direct call out to the fact that this [BBB] bill is going to add at least $3 trillion to the debt, even if the most fiscally responsible Republicans have their way. The affordability of interest payments is the big issue that can start a debt spiral, and we have shown no willingness as a country to try to reduce that risk. And so I think with all these factors together. It’s not surprising that Moody’s would pick now to say we don’t have the full confidence in you that we used to.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
