Pulling Apart the GOP Budget.

One Fish, Two Fish, Red State: Fucked!

The GOP’s spending bill H.R.1 takes a sledgehammer to the very communities that voted Republican in red state ‘Murica. Full stop.

To start, we’re talking about $625 billion in Medicaid cuts over ten years (at a minimum), hitting hardest in places like Mississippi, West Virginia, Kentucky, and Alabama—states that receive up to 77% in federal funding for their Medicaid programs because they’re the poorest in the nation.

Think about that math for a second. Mississippi gets three-quarters of its Medicaid funding from Washington. When you slash that, where exactly is Mississippi supposed to find the money? States can’t print money like the federal government; they’re constitutionally required to balance their budgets.

So they have two choices: raise taxes on people who are already struggling, or kick families off healthcare and food assistance. Neither is pretty.

That’s why you’ve seen Republican governors and senators pushing back hard against their own party’s bill. They know what this means for their constituents. Trump has had to personally arm-twist GOP members, threatening political consequences for anyone who doesn’t fall in line.

But here’s the human reality behind those budget numbers: We’re talking about working parents who can’t afford their kid’s asthma inhaler. Elderly folks choosing between heart medication and groceries. Single mothers working two gig economy jobs who still can’t make ends meet.

The bill also cuts $230 billion from SNAP over a decade—that’s food assistance for families where someone is working full-time at let’s say, a Walmart, or caring for an aging parent with dementia. These aren’t people gaming the system. Fraud rates in SNAP are under 1%. These are neighbors trying to feed their kids.

In the full budget essay we’ll talk more about how they’re pulling this off, because they shouldn’t be able to touch these programs. These cuts are to the mandatory side of the budget and are supposed to be set in stone. Long story short, they’re doing it procedurally rather than budgetarily, meaning they’re changing the nature of the programs themselves to make people ineligible.

For example, these administrative changes create stringent work requirements that don’t account for the lack of employment opportunities in rural job markets. They also establish asset limits that penalize families for having a working car or small savings account. It’s like they’ve never met an actual poor person. Either that or they just don’t care.

Here’s the bitter irony. This isn’t even about reducing government spending. The GOP is still increasing overall spending—they’re just shifting money away from healthcare and food for struggling families toward other priorities.

As a result, the social fabric of these communities will fray. Rural hospitals will close. Kids will go hungry. Families will break apart under financial stress. And here’s the kicker: all of that creates more need for social services, not less. When families lose healthcare, they show up at emergency rooms for basic care, driving up costs for everyone. When kids go hungry, schools have to step in with more meal programs. When people lose housing assistance, homelessness spikes, requiring more crisis intervention and shelters. In the end, states spend more money on the back end dealing with the chaos these cuts create.

And it’s about to get worse.

Trump’s tariff war is already pushing the economy toward recession. When unemployment rises and wages stagnate, tax revenues plummet just as more families need help. States then get hit with a double whammy: less federal support and less of their own revenue to fill the gap.

This is how poverty becomes a vicious cycle. Cut the programs that keep families stable, and you create the conditions that push more families into crisis. It’s like removing the foundation of a house and then wondering why the walls are cracking.

Come election time, voters will remember who did this to them.

But beyond the politics of it, this is just cruel. In the wealthiest nation on earth, we’re choosing to make life harder for people who are already hanging on by a thread. That’s not fiscal responsibility—that’s abandoning our neighbors when they need us most.

The question isn’t whether we can afford these programs. The question is whether we can afford to be the kind of country that doesn’t have them.

The reason the GOP and even many Democrats say we can’t afford to fund these programs to the levels we require is because of the big, bad boogeyman. And that brings us to part two.

I Solved the Debt Crisis

I have good news for the deficit hawks out there and to anyone concerned about the ballooning national debt. I found out where it all went. And here’s the really good news…We could get back 70% of it overnight.

But wait there’s more! We can also retire the rest of it whenever we want.

I literally solved the debt crisis. So, like…you’re welcome?

MMT Refresh

Sovereign currency issuing nations like the United States (dollar), Japan (yen), United Kingdom (pound) and Switzerland (Franc)—as opposed to Eurozone nations that use the Euro for example and cannot issue their own—these nations have the ability to print their own money. The trick is whether they can do so without completely devaluing the currency or negatively impacting inflation, which is the most dangerous monetary phenomenon that can derail an economy. Moreover, among currency issuing nations, the United States stands atop the heap because we’re also the world’s reserve currency, which means that whether the world is purchasing our debt instruments for investment purposes or not, they’re also settling obligations in dollar denominations. So there is a global macroeconomic reason to purchase U.S. securities beyond investing.

But back to solving the debt crisis.

‘Slash and Burn’ GOP to add $2.4 Trillion to the National Debt

The big budget headline this week was about the CBO’s revised estimates that H.R.1 in its current form would add $2.4 Trillion dollars to the federal debt over the next ten years as a result of tax cuts. (I know this sounds impossible considering Elon Musk cut 72 cents from the federal budget at a cost of $32 million, but yeah.)

The proposed budget is astounding on so many levels, not the least of which is that it adds to almost every line item. The reason the cuts to the budget are getting so much attention is because they’re cutting fairly sacrosanct poverty measures as we discussed above, and many of the good provisions of the Inflation Reduction Act that helped promote green energy transitions.

Other than that, I think people are going to be surprised at how much spending is actually left in this thing. It’s a beast.

Revenue estimates—and remember they’re only estimates at this point—for 2026 are around $5 trillion roughly. But the discretionary spending request from the Oval Office is around $1.7 trillion, the mandatory spending is around $4 trillion and the projected interest expense on our debt is about $900 billion. So we’re looking at a total outlay just north of $6.5 trillion on revenue of around $5 trillion.

Just a quick point to be clear on the new CBO projections. The additional $2.4 trillion added to the national debt is over and above what was already projected in prior out-year budgets. When the Congress puts forward a budget, it’s required to carry it out for ten years to understand the total impact if everything in the current budget remains the same. It’s called a “baseline budget.” The current baseline projections already showed that we would have about a $1 trillion deficit which would add to the $35 trillion in debt. All things being equal, this number would have grown under current policy—assuming no good or bad economic changes —to around $47 trillion in ten years. What the CBO is saying is that the extension of the Trump tax cuts and short-term tax cuts on things like eliminating tax on tips, would add an additional $2.4 trillion to the already expected debt, bringing us to around $50 trillion in debt by 2034.

So what’s the good news again?

Well, let’s look at debt another way. In a way that literally only the United States as a sovereign currency issuer and reserve currency of the world can look at it.

Money doesn’t self-immolate. When it’s printed it doesn’t just burst into flames when it’s not being used in the real economy or taxed back into federal coffers. Think of all the money we print and send into the world economy. If the U.S. treasury is a giant bucket of water that we fill from the magic printing machine in the basement of the country, when the bucket overflows—meaning it’s more than the entirety of what we spend on—it goes into other buckets. For ease of understanding, the biggest buckets on the receiving end belong to U.S. consumers and corporations. If the U.S. government sends $100 into the economy and only takes back $80 through taxes and other revenue, it means that they gave us 20 extra bucks.

The problem, which relates to the good news fix here, is that we’re not all getting an even slice of that $20.

So, if the government sends the $100 into the economy and only takes back $80, the Democrats look at it and say, “cool, increase taxes and make the $80, $100. Problem solved.”

The Republicans are like, “fuck that, make the $100, $80, by cutting spending.”

Before we talk about the fallacy of both approaches, let me first solve the debt crisis now that you know that the government’s deficit is just the public’s surplus.

There’s about $35 trillion in debt right now. That’s the eye-popping number everyone is freaking out about.

Looking back at our MMT refresher above, we know from prior essays (and basic math) that U.S. corporations are sitting on $4.1 trillion dollars in cash. This is the result of cheap, easy money flowing since 2000 that really accelerated during the financial crisis. This led to historic corporate profits over the past 15 years in particular. And we know they love spending this money on their own shares to boost the value of their stocks because 2025 has been a record year for stock buybacks.

Corporate America is flush.

We also know from prior essays that wealthy U.S. individuals and corporations have parked around $4 trillion in offshore accounts. So that’s $8.1 trillion just sitting around doing nothing.

It gets better. The top 10% of Americans are also sitting on—get this—$14 trillion in liquid assets. So that’s just over $22 trillion just sitting around!

But hang on. Did you know that the Department of Defense has failed over a dozen audits and still can’t account for $2.6 trillion in assets as of 2024? I think we should send them a fucking bill.

So that brings us to almost $25 trillion dollars that we should just take back if we were serious about solving the so-called debt crisis. If the conservatives are so concerned about the debt, then just go get it back. That would bring the national debt back to the 2008 level of $10 trillion, right before corporate America fucked the global economy and sent us all into a tailspin.

Now to really get all MMT on you, we could even eliminate the $10 trillion remaining debt over a period of just a few years by printing excess money—a little every year—and retiring the outstanding debt by paying off the treasuries.

You see, our debt is in U.S. Treasury obligations sold on the global market with about $9 trillion set to expire over the next year. The rest will expire over the next several years. Every year, we could just decide to print an additional, let’s say, $2 trillion dollars (we’ve done it before ) and retire a portion of the outstanding debt. It would reduce the global money supply of dollars, sure, but we would still maintain a healthy amount of outstanding debt.

Here’s another incredible fact. Do you know who one of the largest single holders of U.S. Treasury Bonds in the world is? To the tune of about $5 trillion? Wait for it…The Federal Reserve. Do you know what would happen if the Federal Reserve forgave this debt to the U.S. Treasury? Nothing. Jay Powell could log into the system like he’s checking his bank balance and just delete the entry. Poof! So now we’d only have to retire $5 trillion over the next five years and it’s all gone.

Here’s the point. Most of this is an exercise in ignorance and futility.

The Fed owns these treasuries because it needs a reserve to provide liquidity into the system in the event the shit hits the fan. So, no, it shouldn’t forgive these notes. We’re lending money to ourselves. We’re the loan shark and the mark.

Selling U.S. dollars into the global market also means that there are U.S. dollars circulating and making the global economy turn. So we don’t need to do that either.

There are decent policy rationales to maintain a healthy debt when the funds are used to stabilize the global economy and provide liquidity in a crisis. But that other $25 trillion dollars? Let’s talk about it. Sending a bill to the Pentagon is tempting. But let’s be realistic. That’s one pocket to the other. So it’s the $22 trillion dollars that exist in the pockets of millionaires, billionaires and big corporations that we can address.

There’s a point at which excess dollars circulating through the economy have diminishing returns. When the Clinton administration engineered a budget surplus (the last time it happened in the U.S.) the deficit hawks celebrated right before we plunged the economy into recession. That’s because, back to our bucket analogy, the government’s surplus was the public’s deficit. Remember, money doesn’t self immolate. It circulates. It circulates until it doesn’t. In this case when it stops circulating, it finds its way into the savings accounts of the absurdly wealthy.

This all goes back to the end of the Bretton Woods system and having an understanding of what money is. The Bretton Woods system allowed for monetary growth by pinning currency value to gold but allowing it to float at a multiple of it rather than be tied to it one-to-one. So we were able to increase circulation of absolute dollars in order to rebuild the global economy. The reason the convertible product of monetary value became the dollar is because it was understood that the dollar was the most stable currency in the world.

We didn’t just win the war, we won the world by having the reserve currency.

When Nixon took us off the gold valuation principle and allowed the dollar to float, it meant that the underlying valuation peg was no longer gold. Gold was replaced by faith. Faith that the word of the United States was its bond. Nothing more. Literally nothing more. And here’s the thing. Despite the debt and deficits it still is.

The only thing that’s giving the world a reason to rethink this relationship is because we put an idiot in charge of everything. The flight from U.S. treasuries and the dollar isn’t a lack of confidence that we won’t honor our debt, it’s a punishment for the tariff war and for generally being assholes. If it was a lack of confidence in the strength and value of the U.S. as the hegemonic power and reserve currency of the world, the U.S. Treasury and dollar would have imploded in the Global Financial Crisis. Instead, they remained stable because there was faith in our leadership at the time.

So why am I going through all of this again? Because the entire conversation is still around the debt and deficits, and the two party system sees the issue in a binary. Cut expenses or increase revenue. So long as we continue with this framing we’re never going to break this cycle.

The only thing that matters to the United States specifically is that we maintain price stability. The value of the dollar has to correlate with the expectation of value in the market. Meaning that a dollar buys what’s fair and rational commensurate with market expectations for goods and services. The goal is to further align the value of the dollar with what the general public can afford to spend and receive in order to exist and hopefully thrive. That’s where the imbalance is right now.

This is what we’re going to explore in greater detail in the big beautiful budget essay and in future MMT essays. The point is to reframe the way we think about debt and deficit spending. Deficits aren’t necessarily a problem. It’s how much of the deficit goes into the hands of the few and doesn’t circulate through the real economy. A surplus (or government deficit) of this size hits a diminishing return once individuals and corporations start hiding money offshore, buying back stocks or investing in highly speculative assets. That’s when we need to have a fiscal intervention conversation.

The GOP wants to cut between $675 and $880 billion from Medicaid over the next ten years? How about reshoring the $4 fucking trillion dollars being hidden in offshore accounts instead? They want to cut $230 billion in SNAP benefits over the next decade? How about cutting the Pentagon budget dollar-for-dollar for the amount they can’t account for on their balance sheet? We’ll cut $260 billion every year from their fucking budget. The GOP says that SNAP has to cut because of the 1% of fraud in the system, so considering the Pentagon lost track of $2.6 trillion dollars certainly warrants putting them on a tight leash, no?

There are a ton of ways we can get to a balanced budget, but we must recognize that this means we’re making the government whole by taking away from the public. Also, because of the unique role we play in global finance you have to tread carefully. As I’ve said before, I’m not a burn it all down guy. But I am a proponent of shifting our thinking and policy mindset to rewarding and uplifting the masses rather than continuing to provide benefits to the elites.

They’ve had a good run. And now it needs to come to an end. But we need to stop looking at debt and deficits in that binary framing. Deficits are a net positive in the post Bretton era so long as there’s price stability, faith in our leadership and they’re not so extraordinary as to pass the point of diminishing returns because our reflexive response is always to punish the wrong people.

Here endeth the lesson.