Elon Musk is right, the bill is big, not beautiful. It is an abomination. I don’t think it really will cut the deficit or the national debt. I think it will make it worse. Forgive me for not believing the politicians trying to sell us something.
The Senate should work to fix the bill. It has some deep flaws that include things like barring states from regulating AI, which we should want the laboratories of democracy to do to see what works and what does not.
There’s another reality too.
There are a handful of congressmen from blue states who are Republicans. They have demanded certain things be in the legislation, including a massive deduction for state and local taxes.
On January 1, 2026, if nothing passes, blue states get to deduct 100% of their state taxes from their federal income taxes. Concurrently, every other American in more fiscally responsible states will face a massive tax increase.
The blue state congressmen get to hold the whole nation hostage. They get what they want or the rest of us see our taxes go up and their wealthy donors get huge tax breaks.
Republicans set themselves up for this when they passed the tax package in 2017, timing the expiration of the tax cuts for what they presumed would be the first presidency after Donald Trump ended his second term on January 20, 2025. Instead, he is back for the extension, and now, with a three-seat margin in the House, the blue-state Republicans can hold everyone else hostage.
Likewise, a few moderates want to extend Joe Biden’s Green New Deal subsidies. They too get to hold the GOP hostage.
This is the sausage-making process. It is ugly and flawed, but this is how it works with a narrow majority. Every member becomes more powerful and has more ability to block stuff.
Musk, for his part, is right that the legislation is bad. He’ll probably now withhold his $100 million promised spend for the GOP. Marc Caputo, who is one of the White House’s favorite reporters, got the White House spin on Musk’s complaints. The White House staff think Musk is mad because the legislation cuts the tax credit for buying electric vehicles; Musk tried to get an extension as a special government employee and could not; the FAA is not going to use Starlink; and the President has pulled his nomination of Jared Isaacman, a Musk friend, to lead NASA just days before Isaacman’s Senate confirmation vote.
In other words, the White House team thinks Musk is only complaining so vocally now because he did not get what he wanted.
That may be so, but Musk is not wrong.
Likewise, it is also the reality that the legislative process is messy, the blue state Republicans were willing to sabotage the whole thing, and if no deal is passed we all get a tax increase while blue state millionaires and billionaires get a tax decrease.
That’s just reality.
The other reality is this — we will hit the fiscal crisis before we solve the fiscal crisis. Neither side wants to get blamed. They’ll have to bipartisan commission the coming disaster.
