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Letter: Big? Beautiful? How about big and bloated?
Op-Ed · May 28, 2025
It seems that every time I turn on the television I have to suffer through yet another dishonest Republican ad trumpeting all of the supposed good things that will come from the Big Beautiful Bill (BBB), or as I prefer to call it, the Big, Bloated Bill.
Whoever is making these ads is counting on the gullibility of low-information voters who don’t know any better. My aim is to correct that misinformation.
There’s good news and bad news. The bad news is that in what follows there will be a little bit of math. Sorry. The good news is that the test won’t be until November 2026, so voters should have plenty of time to study.
According to the Congressional Budget Office (CBO) analysis of the BBB, it will increase the accumulated deficit by another $3.8 trillion dollars by 2034.
The CBO also found that the lion’s share of the benefits will go to the top 0.1 percent, while the bottom 40 percent of households will actually be worse off.
And now for some math. Economists like to talk about the debt-to-GDP ratio. The formula looks like this: B = [(1+r) / (1+g)] * b + d, where:
B is the debt-to-GDP ratio,
r is the Treasury interest rate,
g is the GDP growth rate,
b is the previous year’s debt-to-GDP ratio,
d is the year’s deficit minus interest payments (called the primary deficit) as a share of GDP.
This means that higher interest rates as a share of GDP will increase the debt-to-GDP ratio, while higher growth rates will lower that ratio. Furthermore, each year of additional primary deficits will also increase that ratio.
Unfortunately, Trump’s BBB will move all of those variables in the wrong direction. The primary deficits as a share of GDP will increase according to the CBO, as will the Treasury interest rates. In fact, we’ve already seen significant increases.
And finally, the combined effects of Trump’s tariffs along with his misguided immigration policies will reduce GDP growth rates. All in all, we’re looking at a perfect storm.
And smart investors are seeing the handwriting on the wall. For example, the price of credit default swaps against US Treasury bonds have increased by 50 percent since early April. Moody’s just downgraded US Treasury bonds. Long-term interest rates are now over 5 percent. And if all of that wasn’t bad enough, Bank of America and J.P. Morgan are urging a “sell America” strategy to reinvest in emerging markets rather than the US. Those GOP ads might be fooling some voters, but they’re not fooling smart investors in the bond markets.
Trump’s BBB is an economic disaster just waiting to happen. Sadly, no one from Iowa’s congressional delegation seems to understand macroeconomics, but that didn’t stop them from voting for this monstrosity.
Mike Johnson
West Branch
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