The fiscal hawks are fighting back on the budget bill

Trump has a long wish list for tax cuts in Congress this year and GOP leaders are aiming to pass the bill by July 4 but it won’t be easy. The deficit is already at 7% of GDP and growth is slowing. In addition, the tax cuts will slash government revenue as interest payments continue to rise.

So where will the savings come from?

Punchbowl reports:

Significant change of tune from Senate GOP leaders who said at their closed-door retreat that House isn’t being aggressive enough on spending cuts & should still consider FMAP reductions to maximize Medicaid savings, per 3 attendees

FMAP is the share of Medicaid payments that the Federal government pays. This comes after Speaker Johnson said FMAP reductions were probably off the table after meeting with moderates.

This will be the signature bill of Trump’s second term but Republicans have a razor-thin majority in the House.

I think this ultimately end with a huge deficit and promises that it will ‘pay for itself’ but the bond market won’t like that.

This article was written by Adam Button at www.forexlive.com.