issue: Economy

Passage of ‘One Big Beautiful Bill’ Renders Republican Deficit Hawks Extinct

Posted on by Alyssa Brown

Republicans have sent their “One Big Beautiful Bill” to President Trump’s desk and it’s hard to overstate the consequences. Not only will the bill be one of the most regressive transfers of wealth from society’s poorest to its richest in recent memory, but it will also add trillions of dollars to our national debt and hurt our economy. By passing this obscene budget-busting bill with near-unanimous support from their members in Congress, Republicans have proven that their party’s deficit hawks have gone extinct.

According to analysis from the Yale Budget Lab, the bill’s deep cuts to safety-net programs such as SNAP and Medicaid will reduce annual incomes for the bottom 20% of Americans by roughly $700 per person. But the savings from these cuts won’t be used to pay down the national debt or improve the programs for the people who need them most — rather, they will help offset tax cuts that will increase average after-tax incomes for individuals in the top 1% by roughly $30,000. The bill also guts pro-growth investments in the clean energy transition while propping up coal production and other conservative special interests with new giveaways, such as expansive new aid for wealthy farmers and large tax deductions for whaling boats.

Despite the bill’s large cuts, it would add roughly $4.1 trillion to the national debt over the next ten years.  Moreover, if ostensibly “temporary” policies in the bill are eventually made permanent without offset — as Republicans have made clear they had no trouble doing when writing this bill— the cost would swell to $5.5 trillion, making it more expensive than every COVID stimulus bill combined. This is not only the most expensive bill ever passed using the filibuster-proof reconciliation process, it is also the first one to permanently increase budget deficits outside the 10-year window. This unprecedented outcome was only possible because Senate Republicans effectively invoked the “nuclear option” to blow up budget enforcement mechanisms, which will open the floodgates for future Congresses to add trillions more to the national debt with barebones majorities.

The explosion of federal debt will have lasting consequences for Americans. In the short term, deficit spending by the federal government will increase by up to $632 billion in a single year, putting upward pressure on inflation rates that have remained stubbornly above the Federal Reserve’s 2% target. Increased government borrowing will also put upward pressure on already elevated interest rates, making everything from mortgages to car loans more expensive for ordinary families. Over the long term, higher rates will make it more expensive for businesses to finance new investments, slowing innovation and job creation. The federal government already spends roughly a trillion dollars each year on interest payments – more than it spends on national defense or Medicare. Now those costs will grow even faster, putting them on track to rival Social Security as the single-largest line item in the federal budget within 20 years. Instead of being used to fund investments in America’s future, taxpayer dollars will be almost exclusively used to pay for previous obligations.

Perhaps what is most remarkable is that this massive assault on our country’s fiscal integrity was only made possible by the people pretending to be its loudest defenders. For years, self-identified “deficit hawks” in the House GOP conference repeatedly called the deficit an “existential threat.” And even though they relied on completely fake growth assumptions to argue that $2.5 trillion of tax cuts would pay for themselves, these representatives insisted they would not support legislation that included any additional tax cuts without offset. They went so far as to get a commitment from House Speaker Mike Johnson that he would step down if he passed a bill that crossed this red line. Yet when the Senate sent them a bill that blatantly violated their agreement, these “fiscal hawks” quickly folded under pressure and rubber-stamped it.

Compare that to what happened just four years ago under the Biden administration. President Biden’s full “Build Back Better” agenda, while no model of fiscal responsibility, would have added less than $3 trillion to budget deficits over the first 10 years if it had been permanently enacted. Even though they used budget gimmicks to do it, Democratic deficit hawks in the House ensured the reconciliation bill advancing this agenda was scored as roughly deficit-neutral under traditional accounting. And when Democratic deficit hawks in the Senate forced party leaders to strip out those gimmicks, the bill eventually became something that actually reduced deficits. While deficit hawks may be endangered within the Congressional Democratic Party, today it is clear they are functionally extinct on the Republican side.

Deeper Dive: 

Fiscal Fact: 

As President Trump’s chaotic and destructive economic policies have shaken investor confidence in the first half of 2025, the U.S. dollar has lost over 10% of its value relative to foreign currencies — the worst such decline in more than 50 years. A weaker dollar results in more expensive imports, lower spending power when traveling internationally, and higher borrowing costs for both the American people and their government.

Other Fiscal News:

More from PPI and the Center for Funding America’s Future:

Senate Republicans Go Nuclear to Blow Up the National Debt

Posted on by Alyssa Brown

Senate Republicans on Monday took the dangerous step of “going nuclear” to pass their One Big Beautiful Bill in violation of the rules governing the filibuster-proof reconciliation process — and the fallout will add trillions of dollars to the national debt.

The reconciliation process, which was designed to fast-track policies needed to help Congress hit its budget targets, does not allow lawmakers to increase deficits outside the 10-year scoring window. These rules have always been enforced by measuring how enacting provisions in the legislation would affect the federal budget relative to a “current law baseline,” which is a scenario defined in statute and generally assumes laws are left unchanged. Senate rules require 60 votes to waive this restriction. 

Republicans couldn’t find a politically palatable way to pay for the trillions of dollars in tax cuts they wanted to make permanent, so they instead decided to make those tax cuts appear free by scoring against a “current policy” baseline, which assumes every policy in effect today is extended in perpetuity — even if the law as written would have them expire. But it gets worse: to enact new tax cuts without paying for them, Senate Republicans scheduled those provisions to expire within the 10-year window and scored them as temporary. The result is a Frankenstein scorekeeping system in which no consistent accounting is used, and legislation is assumed to cost whatever the majority wishes it did. 

While the Senate GOP’s “official” score of the bill using this Frankenstein accounting shows they would reduce deficits, traditional scoring against the current law baseline would show it adding more than $4 trillion to the deficit over 10 years (including higher interest payments) — and the cost would swell to $5.5 trillion if all the “temporary” provisions were made permanent. Notably, if the bill were measured in a way that treated the scheduled expirations of both new and existing policies consistently, it would violate the rules of reconciliation by permanently increasing deficits relative to either a current policy or a current law baseline. 

The Senate’s parliamentarian, who is responsible for interpreting the chamber’s rules, almost certainly would rule against the GOP’s attempt to use their Frankenstein score for enforcement purposes. Any effort to circumvent the parliamentarian’s official interpretation of the rules – whether by firing her, overruling her, or formally changing the 60-vote supermajority requirement with just 51 votes — would be invoking a “nuclear option” that fundamentally changes the character of the Senate. 

Senate Republicans insist they found an alternative to going nuclear by asserting the Senate Budget Committee chairman has unilateral authority to determine scores — something they argue Senate Democrats did in their 2022 budget resolution. But the two situations are not remotely the same: Senate Democrats used their authority to consistently assume discretionary spending for both the IRS and Head Start continued at baseline levels, when the original CBO score was inconsistent. Moreover, Democrats made sure the move was blessed by the parliamentarian ahead of time, whereas Republicans actively prevented the parliamentarian from making any ruling. 

The fact that Republicans prevented the parliamentarian from weighing in before voting to break their own rules with a simple majority vote, rather than overruling her directly, is a distinction without a difference. Republicans have gone nuclear with their chicanery and destroyed the Senate’s budget enforcement mechanisms.

The fallout will radiate throughout fiscal policy for years to come. Not only will the national debt be up to $5.5 trillion larger 10 years from now than it would be without the “One Big Beautiful Bill,” but there will be little to stop future Congresses from doing the same thing that Republicans did this week: adding trillions more to the debt while claiming they are doing the opposite.

GOP’s “Big Beautiful Bill” Would Undermine Economic Stability

Posted on by Alyssa Brown

Much has been written about the great harm Republicans’ “One Big Beautiful Bill” (OBBB) would do to the federal government’s finances and the financial well-being of low-income Americans. But less appreciated is how adding trillions of dollars to the deficit during a time of high price pressures, and making major cuts to safety-net programs that help cushion the economy during downturns, would undermine economic stability.  

When the country enters a recession and demand from the private sector drops, deficit-financed spending is an essential tool governments use to help fill the void and restore the economy to full strength. Conversely, policymakers should rein in deficits to prevent inflation and restore the country’s fiscal reserve when the economy has recovered. Last year, the economy grew at a healthy 2.4% annual rate. Although President Trump’s counterproductive trade policies have threatened to reverse this trend, the nation’s unemployment rate has so far remained stable around 4.2% — a historically low level. Meanwhile, the inflation rate remains stubbornly above the Federal Reserve’s 2% target after years of rising prices. Normally, this would be the perfect time for Congress to cut deficits, clamp down on inflationary pressures, and put debt on a sustainable path.

But despite campaigning against the fiscal excesses and inflationary policies of the Biden administration, Republicans’ OBBB pours fuel on the fire by pumping trillions of dollars into the economy when they’re not needed. In addition to extending the already-unaffordable tax cuts passed in President Trump’s first term, this bill tacks on expensive new provisions such as eliminating taxes on overtime and tips. Moreover, many of these provisions are temporary, supercharging the short-term impact on our deficit at precisely the time when our nation needs the opposite: nearly three-fourths of the House bill’s roughly $3 trillion deficit increase would occur in just the first four years after passage.

Yet in addition to sabotaging the government’s ability to fight inflation now, OBBB would also make it more difficult for the government to fight future economic downturns. Pointlessly piling on debt now can make it harder for the government to borrow more during a recession when it’s actually needed. And some of the few policies Republicans have included to reduce the cost of the bill would undermine programs that are most helpful in supporting the economy through those recessions, such as the Supplemental Nutrition Assistance Program (SNAP). 

SNAP is a strong “automatic stabilizer” because spending on benefits increases automatically when the U.S. economy slips into recession, as falling incomes cause more people to become eligible for support. An integral feature of SNAP is that administrators may also waive the program’s work requirements when an area “does not have a sufficient number of jobs,” which often occurs during a recession. Under federal rules, various geographic areas can demonstrate their eligibility for these waivers through several criteria, including averages of unemployment rates, eligibility for special unemployment benefits, and more, ensuring that benefits are not stalled when needed the most. 

OBBB removes this flexibility. States would only be able to request waivers for counties, while the only acceptable metric to prove a weak labor market would be an unemployment rate above 10%. For context: During the worst of the Great Recession, the national unemployment rate only hit 10% in a single month, while 40% of counties never reached that threshold at all. In addition, the House bill includes new cost-sharing requirements for states, which would require states to pay up to 25% of SNAP’s cost depending on the state’s payment error rate (the Senate has proposed limiting cost-sharing to 15% in its version of the bill). 

Although reducing improper payments is certainly an admirable goal, this legislation undermines that effort by cutting federal support for SNAP administrative costs. And taken together, OBBB’s changes would be especially detrimental during recessions. Because most states are legally not permitted to run budget deficits, they are forced to make painful budget cuts when revenues fall during downturns. At the same time, payment error rates for SNAP and other similar programs tend to rise as states scramble to process a new wave of applications. Thus, the GOP cost-sharing requirements would force states to shoulder a growing share of SNAP costs when they can least afford it, likely leading to spending cuts that prolong recessions. 

Republicans might claim that these fears are overblown because Congress is free to change SNAP’s waiver and cost-sharing requirements during a crisis (as it has done in the past). However, requiring Congress to pass legislation to unlock SNAP leaves the program vulnerable to political gridlock, and undermines its ability to automatically stabilize the economy. Moreover, if these requirements are suspended during future recessions, they will fail to generate the savings that Republicans claim will pay for their costly tax cut and make the bill’s deficit impact that much worse. By piling on debt during a time of high prices and low unemployment, while making it needlessly more difficult to fight future downturns when the situation is reversed, OBBB undercuts any argument one could make that Republicans are the party of fiscal responsibility and stable economic growth. 

Deeper Dive: 

Fiscal Fact: 

The tax portion of the Senate’s reconciliation plan would cost $4.2 trillion over 10 years — roughly $500 billion more than the House’s legislation. However, if all the tax policies in both bills were made permanent, the Senate version would cost $400 billion less than the House bill (which would cost $5.2 trillion over 10 years). Importantly, the Senate bill’s price tag is expected to grow once Senate Republicans reach a deal to increase the cap on the state and local tax deduction, and none of these cost estimates include additional interest on the debt that the legislation would rack up.

Other Fiscal News:

More from PPI and the Center for Funding America’s Future:

“Trump Accounts” Are a Promising Start, But Flaws Remain

Posted on by Alex Terr

Although Republicans’ “One Big Beautiful Bill” (OBBB) remains deeply problematic as a package, one of its few positive provisions would create individual savings accounts for American children with many similarities to a policy proposed by PPI earlier this year. Currently known as “Trump Accounts,” these investment vehicles would provide every child born between 2025 and 2028 with a tax-deferred account and an initial $1,000 seed contribution from the federal Treasury. The proposal is a surprisingly good first step towards helping America’s youth build wealth and access opportunity, but it needs improvements to fully achieve its policy goals.

Children born into low-wealth families typically start life at a significant disadvantage, lacking both financial resources and access to other tools that promote long-term economic security. Meanwhile, their high-income peers can often rely on family to get ahead — helping them to pay for college, buy a home, or make lucrative professional connections. Proposals to establish investment accounts for children aim to address this gap by giving every child a foundation on which to build a more stable financial future.

Trump Accounts would make some limited progress towards this goal due to several good design features. First, the program is nearly universal: nearly all American children born between 2025 and 2028 would be eligible to receive a one-time $1,000 contribution into a tax-deferred investment account, which reduces the administrative hurdles of more complex eligibility criteria. The accounts would be invested into broad index funds, which avoids both the risk of speculative investments and the limitations of investing only in government bonds. Limiting withdrawals before age 30 to activities such as higher education, homeownership, or starting a business encourages beneficiaries to use funds for building wealth or expanding economic opportunities. Lastly, by subjecting qualified withdrawals to capital gains taxes — which only apply to individuals who have annual incomes over $63,000 and couples who earn twice that amount — policymakers prevent these accounts from becoming a regressive tax shelter that primarily benefits wealthy families. 

But while they are a credible start, Trump Accounts fall short in several critical ways. Although the accounts provide an initial government contribution to all children, they offer no mechanism to supplement savings for low-income families, who are the least likely to have additional funds to contribute to the account. Therefore, it provides the same amount of support to low-income children, who need it the most, as it does to wealthy children, who don’t need it at all. Furthermore, the accounts lack any material support to help account holders build financial literacy and other skills needed to grow modest account balances into long-term wealth. 

Perhaps the biggest flaw is that there is very little reason under current law for families to put additional contributions into Trump Accounts, given the existence of other savings accounts with greater tax advantages. For example, 529 plans are savings accounts that offer generous contribution limits and completely tax-free growth if withdrawals are used for education. Trump accounts, on the other hand, only delay taxes on the sale of assets until money is withdrawn from the account. As long as families can contribute to 529s, there is no incentive to use or save with the relatively less tax-advantaged Trump accounts.

These flaws could all be mitigated by incorporating more elements of the Child Opportunity Accounts (COAs) previously proposed by PPI. Like Trump Accounts, COAs would start with a seed contribution at birth, but go further by providing ongoing, income-based contributions throughout a child’s life. By the time they reach adulthood, a low-income child would have tens of thousands of dollars saved in their account — compared to just a few thousand in a Trump Account. 

COAs also incorporate financial education directly into the account structure to help beneficiaries get the most bang for their buck. Account portals would include information on investing, budgeting, and other financial management topics to help owners build up their knowledge of basic concepts. Before beneficiaries can access funds at younger ages, they would be required to complete a basic financial literacy assessment. This simple requirement ensures that young adults have the tools they need to not just wisely use their account savings, but also grow them over time. 

Policymakers could both offset the cost of additional supplemental contributions (or other provisions of OBBB) and make the accounts more useful by phasing out the use of 529 plans, which PPI proposed in a comprehensive budget blueprint last year. Because the taxes from which 529 accounts are exempt only apply to higher-income households, and because the highest-income households would pay a higher rate, the tax benefit of 529s is quite regressive: more than 70% of tax benefits go to households in the top 7% of the income distribution. By removing them as an option and using the savings to improve Trump accounts, policymakers can shift federal subsidies away from high-income households and toward those who truly need them.  

If the goal is to give every child a fair shot at building a secure financial future, we need policies that not just account for the different resources they need, but also give them the skills and knowledge essential for a successful financial future. As Senate Republicans grapple with their bill’s astronomical cost and regressivity, incorporating these elements of PPI’s previous proposals would be a small, positive step to improve their bill and redirect federal resources to those who need them most.

Weinstein Jr. for Forbes: It’s The Early 1990s Bond Market Again

Posted on by Alyssa Brown

Three decades ago, a president squarely focused on middle-out growth realized, much to his frustration, that the best thing to do for the nation’s working class would hurt him politically — at least in the short term. The first Democrat to be elected president after Reaganomics had blown a hole in the deficit, Bill Clinton understood that high interest rates for borrowers — small businesses, home buyers, and ordinary consumers alike — were the primary barrier to broad-based prosperity. To bring those rates down in the service of more robust growth, he would have to do something voters of almost every stripe hate: pare back the federal government’s deficit by cutting spending and raising taxes.

He did exactly that, and the economic growth that followed meant Clinton left office boasting the only federal surpluses in recent history. The lessons of his success bear heavily on the political debate today in Washington because, for the first time in 30 years, the yawning gap between federal revenues and federal outlays is poised to emerge again as the prime barrier to domestic economic growth. And yet the Trump administration’s decision to put its head in the sand on this issue with its misnamed Big Beautiful Bill threatens to cut the nation’s working-class families off at the knees.

Keep reading in Forbes.

Senate Changes to House Reconciliation Bill Are a Mixed Bag

Posted on by Alex Terr

On Monday, the Senate Finance Committee released legislative text for the most contentious parts of the Republican reconciliation package: changes to Medicaid and to the tax code. The Senate proposal makes some welcome improvements relative to the House-passed version, particularly by improving the tax treatment of pro-growth investments. But it doubles down on the biggest flaws of the bill by deepening cuts to Medicaid and saddling young Americans with trillions of dollars of debt.

As PPI noted in last week’s Budget Breakdown, the Senate GOP’s top priority for budget reconciliation was making business tax changes permanent. One such provision, which the House approved on a temporary basis, is allowing businesses to immediately deduct the full value of their research and development expenses. This change reverses a damaging provision of the Tax Cuts and Jobs Act, which discouraged research and development by forcing businesses to delay their tax deductions over several years. By fixing this mistake, the Senate budget proposal eliminates a backward tax penalty for research and development that almost no other developed countries have in their tax codes.

Senate Republicans made another pro-growth improvement to the reconciliation bill by modifying the House’s plan to phase out subsidies for producers of clean energy. The House-passed bill terminated these tax credits almost immediately, requiring that most new power plants begin construction within 60 days to be eligible for support. This approach would have devastated ongoing clean-energy projects, which can require years of planning before construction begins. In addition to worsening climate change, which imposes significant costs on our economy every year, this move would also hamper the nation’s ability to expand affordable energy sources. Senate Republicans partially — but not completely — mitigated this issue by phasing out these credits over multiple years, allowing businesses to continue ongoing clean energy investments without short-term disruption.

In order to offset changes to the business tax code, the Senate Finance Committee scaled back two of President Trump’s misguided campaign promises — ending taxes on overtime and tips — by capping the value of above-the-line deductions for both categories of income. Senate Republicans also pushed back against the House’s regressive change to quadruple the size of the state and local tax deduction, while the two chambers continue to negotiate. All of these policy changes are substantial improvements to the House’s budget plan because they save revenue by eliminating tax exceptions for special groups.

The Senate GOP also improved upon the House bill by tightening the limit on ​​health-care provider taxes. States often increase Medicaid’s reimbursements to health-care providers to gain federal matching funds, but then raise taxes on these same providers to reclaim their lost revenue, effectively masking the true cost of providing benefits. Senate Republicans are right to crack down on this shell game in the interest of making Medicaid financing more efficient and more transparent — a move PPI has previously encouraged. 

But redirecting the savings from this policy change to fund tax cuts for the rich instead of improving Medicaid would shutter many providers that operate on meager margins and deny care to millions of vulnerable beneficiaries as a result. According to an analysis from the Congressional Budget Office published this week, the House-passed bill would reduce incomes for the poorest tenth of Americans by 3.9% while increasing incomes for the richest tenth by 2.3%. The Senate’s decision to cut even more funding for Medicaid would undoubtedly make the bill even more regressive.

On top of redistributing resources from the poor to the rich, the Senate’s changes would redistribute from the young to the old. The Senate bill increases the size of a bonus standard deduction available to seniors, which is a tax policy that PPI has previously called to eliminate because today’s seniors are generally more financially secure than younger Americans, by even more than the House would. At the same time, it cuts back on the expanded Child Tax Credit passed by the House — even as child poverty remains higher than poverty rates for seniors. 

But the biggest way the Senate proposal harms younger generations is by forcing future generations to pay for the deficits that the legislation would cause. The exact cost of the Senate legislation is still unknown, but it’s no doubt in the same ballpark as the House-passed bill that would add roughly $3 trillion to the debt over the coming decade — swelling to nearly $5 trillion if all the temporary policies included in it are made permanent. As PPI has previously warned, this increased debt burden will both reduce incomes for future taxpayers and put them on the hook for higher interest costs — all to finance a shortsighted tax cut today.

Senate Republicans have produced a tax plan that is more thoughtful and pro-growth than the one produced by their House counterparts. But their revised bill doubles down on regressive redistribution and deficit-financed giveaways that move American fiscal policy in the wrong direction, leaving low-income households and young Americans to pick up the tab.

Deeper Dive: 

Fiscal Fact: 

According to new reports from the Social Security and Medicare trustees, trust funds for both programs will be insolvent by 2033 — just eight years from now. If no action is taken before then, Social Security benefits will automatically be cut by 23%, and Medicare payments to hospitals will be cut by 11%.

Other Fiscal News:

More from PPI and the Center for Funding America’s Future:

New PPI Report Finds Tech and E-Commerce Sectors Are a Powerful Engine for Local Resilience

Posted on by Alex Terr

WASHINGTON  —  As concerns about a slowing economy mount, a new report from the Progressive Policy Institute (PPI) highlights counties where the tech, information, and e-commerce (TIE) sector is driving growth.

Titled “The 2025 PPI Tech/Info/E-Commerce Job Index: Fighting Recession on the Local Level,” by PPI Vice President and Chief Economist Michael Mandel, the report identifies the top U.S. counties by their ability to create new TIE jobs relative to overall employment. The findings suggest that regions with a strong TIE presence are not only generating high-paying jobs more rapidly, but also fueling broader economic expansion. 

“These findings show that investment in TIE industries can catalyze inclusive economic gains across a wide range of communities,” said Mandel.

The report arrives at a critical moment as sloppy budget cuts, tariff uncertainty, and tighter immigration policies could lead to a recession in the near future. The continued expansion of AI, cloud computing, and e-commerce logistics — all TIE industries — provides a potential counterweight to potential economic turmoil.

Key findings from the report include:

  • TIE sector employment has grown 18% nationally since 2019, more than four times the rate of other private-sector jobs.
  • Average weekly pay in TIE industries is 47% higher than in the broader private sector.
  • The top 25 counties on PPI’s TIE Index achieved a median 5.8% increase in non-TIE private sector jobs from 2019 to 2023, compared to just 0.3% for other large and medium counties.
  • Top performers include San Joaquin County, California; Collin County, Texas; and Somerset County, New Jersey.

PPI’s TIE Job Index, an evolution of its Tech/Info Job Index, combines employment growth with sector size to rank county-level performance. It reveals strong correlations between robust TIE ecosystems and overall job creation — even outside traditional tech hubs.

“While we don’t claim causation, the link is striking,” said Mandel. “Counties with strong TIE sectors tend to grow faster not just in high-wage tech jobs, but across the board.”

Read and download the report here.

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us @PPI. 

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

The 2025 PPI Tech/Info/Ecommerce Job Index: Fighting Recession on the Local Level

Posted on by Alex Terr

INTRODUCTION

The evidence of the past two decades is clear. The tech/info/ ecommerce (TIE) sector — which we will define below — and the closely related tech/info subsector, have consistently produced faster job gains, at higher pay, than the rest of the economy.

Focusing on the period since 2019, the tech/info/ecommerce sector has become essential as a source of good jobs. Propelled by massive investments in cloud computing, artificial intelligence and broadband, tech/info industries such as software, computer systems design, and computing infrastructure have generated hundreds of thousands of new jobs. In addition, ecommerce industries have added roughly 900,000 jobs over the same stretch.

All told, tech/info/ecommerce employment has risen by 18% since 2019, compared to a 4% gain in the rest of the private sector. Moreover, average weekly pay in the TIE sector is 47% higher than other private sector jobs.

That’s on the national level — what about the impact of tech/info/ecommerce jobs on local economies? We’ll show in this paper that counties with a strong TIE presence have stronger job growth in the rest of the private sector as well.

In particular, we will show that the top 25 counties, as ranked by the PPI Tech/Info/Ecommerce Job Index, reported a median non-TIE private sector job gain of 5.8% between 2019 and 2023. That’s compared with a median 0.3% gain for the remaining large and medium counties. The somewhat narrower PPI Tech/Info Job Index showed a similar difference in job growth between high-ranking counties and everyone else.

The implication: With recession now a possibility, counties with a strong TIE presence are better positioned to weather an economic slowdown.

Read the full report.

Weinstein Jr. for Forbes: More Colleges Freeze Hiring And Suspend Salary Increases

Posted on by Max Sherrill

Colleges and universities continue to look for ways to cut spending because of the Trump Administration’s policies towards higher education.

One June 2nd, Johns Hopkins University announced a set of policies to prepare for a possible decline in revenue. They join a list of schools including Brown University, Duke University, Harvard University, the University of Pennsylvania, the University of Washington, and the University of California system, that have temporarily paused hiring and vow to hold off on capital spending.

Hopkins has already seen $850 million in grant cuts resulting from the culling of USAID and other program terminations, plus the school has a large number of international students (many who pay full tuition) who may be dissuaded from studying in the U.S. due to the Administration’s more restrictive visa policies.

Keep reading in Forbes.

House Republicans Rub SALT into Deficit Wounds

Posted on by Alex Terr

From our Budget Breakdown series highlighting problems in fiscal policy to inform the 2025 tax and budget debate.

Among many problems with the “One Big Beautiful Bill” passed last week by House Republicans is that it would increase the cost and regressivity of the State and Local Tax (SALT) deduction. The bill would increase the SALT cap from the $10,000 it is today to $40,000 for households making under $500,000, with all thresholds continuing to grow for the next decade. Congressman Mike Lawler (R-N.Y.), one of the House GOP’s biggest advocates for expanding SALT, triumphantly declared after the bill’s passage that “for the middle class, this is a real win.” But in reality, the main beneficiaries of the change will be the affluent — not the middle class.

To even benefit from the increased SALT deduction, one has to itemize deductions on their tax return rather than take the standard deduction. But only about 10% of taxpayers do so, typically higher-income households that have enough deductions (like SALT, mortgage interest, or charitable giving) to make itemizing worthwhile. The remaining 90% — including most middle-class and nearly all lower-income Americans — take the standard deduction, which is currently $15,000 for single filers and $30,000 for married couples.

As a result, it is primarily wealthy households that would benefit from a more generous SALT deduction. According to one analysis, a $40,000 SALT cap with a $500,000 income limit would most benefit households in the 95th to 99th income percentiles (the 95th percentile starts at approximately $316,000 in household income) who would see a 0.6% boost in after-tax income when compared to the current cap. Meanwhile, the bottom 80% of earners would see no meaningful benefit. Supporters may claim that the income cap reins in the regressivity of the deal, but in practice, it simply reorders which wealthy Americans are benefitting. While the ultra-wealthy are excluded under the income cap, extremely high-income professionals and upper-tier earners would still enjoy a sizable tax break that they hardly need. 

Moreover, Republicans’ SALT deal is an expensive addition to a bill that already adds more than $3 trillion to the deficit. Relative to an extension of the $10,000 cap put in place by the Tax Cuts and Jobs Act, the Republican plan would cost an additional $320 billion over ten years. Even relative to the previous SALT change in Republicans’ original legislative text — which would have raised the cap to $30,000 with a $400,000 income limit — the plan still costs an additional $150 billion. 

Supporters of raising or repealing the SALT cap claim that regardless of these downsides, it would be fundamentally unfair for the federal government to levy income taxes on money that is being used to pay state taxes. But this argument completely ignores that such practice is commonplace in the tax code. The federal government does not exempt payroll taxes before calculating income tax burdens, nor do states allow homeowners to deduct property taxes before calculating their other state tax obligations. Multiple layers of taxation are hardly a unique or unfair burden no matter what SALT defenders claim. 

The Senate should reject this expensive and regressive SALT expansion and replace it with something more fiscally responsible. Even better, they should add restrictions for business SALT deduction to the bill, which currently faces no limitations. The justification for why businesses should be able to deduct their state and local income taxes from federal income taxes is just as weak as the argument for individuals. 

No matter what Republicans clinging to districts in places like New York, New Jersey, and California say, the reality is that raising the SALT cap isn’t middle-class tax relief — it’s a costly giveaway to affluent households in a bill that already blows up the budget deficit far more than can be afforded. Congress should kill this SALT deal and replace it with a fiscally responsible alternative. 

Deeper Dive

Fiscal Fact

A recent analysis by the nonpartisan Joint Committee on Taxation (JCT) finds that economic growth induced by the Republican tax plan would raise only $103 billion of additional revenue over 10 years — well short of the claimed $2.5 trillion. Notably, this estimate doesn’t factor in the damage the “One Big Beautiful Bill’s” massive deficits would do to economic growth, which the JCT warns will result in larger revenue losses over time.

Further Reading

Other Fiscal News

More from PPI and the Center for Funding America’s Future

California Broadband Bill Misses Mark

Posted on by Max Sherrill

The U.S. has one of the most dynamic broadband networks in the world. Providers have poured more than $500 billion into building and upgrading broadband networks since 2019. The price of internet access has dropped 10% over the past 10 years, according to the Bureau of Labor Statistics, even while the overall price level has soared. All together, the share of consumer spending going to telecom, broadband and related services fell from 3% in 2014 to 2.4% in 2024. Moreover, many providers offer robust, low-cost services for economically disadvantaged populations.

But a piece of legislation under consideration by the California State Assembly, AB 353 could derail this success story in the nation’s largest state. It would require California internet providers to offer “eligible households” internet at $15 or less per month (inclusive of any recurring taxes and fees) with at least 100 megabits per second downstream and 20 megabits per second upstream. “Eligible household” means at least one resident of the household participate in a long list of qualified public assistance programs.

This type of regulatory burden — actually writing a price ceiling into law — is likely to impede investment and expansion by both new and existing providers. If there’s anything that economics teaches us, it’s that price ceilings result in less service and fewer competitors rather than more. 

California already has one of the most competitive broadband markets in the country, with multiple providers offering a wide range of products, services and price points. This includes many that already offer low-cost services for families in need. Heavy-handed regulation will only serve to scare away investment and competitors, as recently seen in New York State.

From this perspective, AB 353 is a bad idea. However, if it is the intent of the legislature to proceed with some form of this bill, several commonsense changes should be made. These include narrower qualification standards, greater flexibility in speed requirements, and tying the price of the low-income service to the CPI. Additionally, to ensure a level playing field, the requirements of the legislation should apply to all broadband providers, regardless of whether they are public or privately owned. All of these would reduce the financial risk to providers, and thus not shut off the flow of future investment. 

House Republicans Pass ‘One Big Beautiful Bill’ Despite Several Big Red Flags

Posted on by Alex Terr

From our Budget Breakdown series highlighting problems in fiscal policy to inform the 2025 tax and budget debate.

This piece originally appeared in Forbes and was written by PPI’s Ben Ritz.

House Republicans passed their “One Big Beautiful Bill Act” early Thursday morning in defiance of several warnings that it would have big negative consequences for the United States: bigger budget deficits, bigger borrowing costs, and bigger regressive wealth transfers than any other partisan reconciliation bill in history.

The bill would add more than $3 trillion to budget deficits over the next decade — a figure that would swell to more than $5 trillion if the nominally temporary policies within it are made permanent, as leading Republicans have made clear they intend. The timing could hardly be worse: Just last week, Moody’s became the final major credit-rating agency to downgrade U.S. government debt. Their rationale was clear: Washington’s failure to “reverse the trend of large annual fiscal deficits and growing interest costs” has eroded confidence in America’s long-term fiscal trajectory. Since the announcement, yields on 20- and 30-year Treasury bonds even reached 5% —a threshold rarely seen over the past few decades.  

Rising yields have big consequences for the federal budget. Already, the federal government spends more on interest payments than on Defense or Medicare, making it the second-biggest line item in the budget after Social Security. If the “One Big Beautiful Bill” becomes law, interest costs over the next decade could be roughly $2.7 trillion bigger than the official scorekeepers at the Congressional Budget Office currently project. Within 30 years, not only would interest costs more than double as a share of economic output, but the national debt would grow to levels so big that CBO’s economic forecasting model could no longer function.

The effects on federal finances aren’t the only “big” problems with this bill. The bill’s main offsets come from big cuts to spending on anti-poverty programs, such as Medicaid and SNAP. Earlier this week, the Congressional Budget Office published an analysis showing the bill would increase after-tax incomes for people in the top 10% by roughly the same proportion as it would cut after-tax incomes for people in the bottom 10% —a big regressive transfer of wealth from the poorest Americans to the richest.

Read the full analysis in Forbes. 

Deeper Dive:

Fiscal Fact:

If the No Tax on Tips Act that passed the Senate this week becomes law, it could cost around $120 billion over 10 years — freeing up Republicans to enact more tax cuts for the rich of equal size in their “One Big Beautiful Bill” without paying for it. Furthermore, the bill would only provide a tax cut for the 2% of households that have a tipped job, while doing nothing for the millions of working-class families that don’t (besides saddling them with the costs). 

Other Fiscal News:

More from PPI and the Center for Funding America’s Future:

 

Ritz for Forbes: House Republicans Pass ‘One Big Beautiful Bill’ Despite Big Red Flags

Posted on by Alex Terr

House Republicans passed their “One Big Beautiful Bill Act” early Thursday morning in defiance of several warnings that it would have big negative consequences for the United States.

The “biggest” thing about the bill (beyond its 1,118-page length) is the more than $3 trillion that the Committee for a Responsible Federal Budget estimates it would add to budget deficits over the next decade. That figure would swell to more than $5 trillion if the nominally temporary policies within it are made permanent, as leading Republicans have made clear they intend. No matter which measurement is used, this bill would be — by far — the biggest deficit increase in a partisan bill passed through the budget reconciliation process in U.S. history.

The timing could hardly be worse. Just last week, Moody’s became the final major credit-rating agency to downgrade U.S. government debt, following similar actions by S&P in 2011 and Fitch in 2023. Their rationale was clear: Washington’s failure to “reverse the trend of large annual fiscal deficits and growing interest costs” has eroded confidence in America’s long-term fiscal trajectory and they “do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”

Read more in Forbes. 

Loss of AAA Rating for U.S. Credit Underscores Grave Consequences of Trump’s Budget-Busting Bill

Posted on by Alyssa Brown

WASHINGTON — Today, Ben Ritz, Vice President of Policy Development at the Progressive Policy Institute (PPI) and Director of PPI’s Center for Funding America’s Future, issued the following statement on Moody’s decision to downgrade the U.S. credit rating from AAA:

“Even as all the other major ratings agencies downgraded U.S. credit over the past 15 years, Moody’s held firm in maintaining our government’s AAA credit rating. That today even Moody’s has lost its once-unshakable confidence in the sustainability of U.S. fiscal policy is more than a canary in the coal mine: America cannot afford a ‘big beautiful bill’ with policies that would add more than $5 trillion to our national credit card over the next decade if permanently enacted. No lawmaker who supports this budget-busting boondoggle or anything like it moving forward can call themselves a ‘deficit hawk’ ever again.”

Read more PPI analysis of the “Big Beautiful Bill” and its grave fiscal consequences:

Launched in 2018, the Progressive Policy Institute’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. To that end, the Center develops fiscally responsible policy proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, transform our tax code to reward work over wealth, and put the national debt on a downward trajectory.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

The Data Center Boom

Posted on by Max Sherrill

In a recent blog item, we estimated that in 2025, the five big tech companies — Amazon, Alphabet, Apple, Meta, and Microsoft — are projected to invest $240 billion in the U.S. in capital expenditures, primarily in AI-related data centers and equipment. Other large tech companies and investors are pouring huge amounts of money into new data centers as well. 

This tech and AI investment surge dramatically overshadows domestic investment from major manufacturing industries. For example, in 2023, the motor vehicle industry invested just $29 billion in U.S. structures and equipment, while the primary metals industry, including steel and aluminum, invested only $15 billion.

Indeed, data center construction is providing a much-needed boost to state economies. Consider Virginia, one of the leading locations for data centers. The 2024 report on “Data Centers in Virginia,” from the state’s Joint Legislative Audit and Review Commission, found that “the data center industry provides approximately 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in Virginia GDP overall to the state economy annually.” That estimate was based on average spending by the industry between FY21 and FY23, prior to the AI boom. 

The Virginia report noted that data center revenue has allowed localities to lower real estate tax rates, construct new schools, and establish revenue stabilization or reserve funds. Moreover, “data centers are an attractive industry because they impose minimal direct costs on the provision of government services,” including local roads, and school systems. 

In recognition of the economic benefits of data centers, most states offer an exemption from sales tax for the equipment going into data centers. That’s analogous to the sales tax exemption most states offer for the purchase of manufacturing machinery to go into a factory. Texas, for example, exempts “certain items necessary to the operation of qualifying large data centers,” while also exempting “several types of items used in manufacturing products for sale, including materials that become part of the manufactured product” and equipment “necessary or essential to the manufacturing operation if it causes a physical or chemical change in the product being manufactured.”

Oddly enough, if more factories are built in a state where manufacturing machinery was exempt from sales tax, the nominal revenue loss from the sales tax exemption would rise, even as politicians would cheer. The same would be true if more data centers are built. 

This quirk in the accounting for tax expenditures can produce misleading headlines. For example, one recent report focused on the revenue loss from sales tax exemptions for data center purchases, highlighting Texas: “For example, in the space of just 23 months, Texas revised its FY 2025 cost projection from $130 million to $1 billion.” The report added: “We know of no other form of state spending that is so out of control.” 

But that’s an odd interpretation of good news. Clearly, the increase in the Texas projections was due to the AI boom, which added tens of billions of dollars in genuinely new data center construction in the state. This construction represents a true gain to the Texas economy, not a loss. For comparison, it should also be noted that the size of the sales tax exemption for machinery, equipment, and materials used in Texas manufacturing is projected to be $11.5 billion in FY25, and rising to $15 billion in FY30, reflecting the strength of manufacturing in Texas.

To summarize: A state sales tax exemption for data center equipment, like the one for manufacturing machinery, is designed to boost investment and jobs. Without the exemption, the investment in the state — and the contribution to the state economy — would be lower.

Cutting Credit: How Rate Caps Undermine Access for Working Americans

Posted on by Alex Terr

INTRODUCTION

As the inflation rate surged throughout 2021 and 2022 and put pressure on consumers’ wallets, another important trend was underway: credit card interest rates were rising. With the Federal Reserve raising the federal funds rate substantially to combat inflation, credit card interest rates climbed sharply in 2022 and 2023 as a result of the increased costs of lending, rising from an average of 14.51% in Q4 2021 to 21.19% just two years later. However, even as inflation subsided and prices stabilized, credit card interest rates remained elevated.

Why is this the case? Ultimately, credit card interest rates reflect the state of the broader consumer credit market. In recent years, that market has started showing signs of stress, particularly among less creditworthy borrowers, who have higher credit card debt and more frequent delinquencies. Higher market-wide risk — alongside a still high federal funds rate — has caused banks that issue credit cards to raise interest rates and keep them high.

Consumer discontent with these high rates has spurred a bipartisan effort to address the issue. In February 2025, Senator Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) introduced legislation that would cap credit card interest rates at 10% for five years, claiming that the bill would provide “working families with desperately needed financial relief.” A 10% cap was also floated by Donald Trump on the campaign trail, to provide relief “while working Americans catch up.”

However, limiting credit card interest rates to an arbitrary 10% effectively deprives credit card issuers of their most powerful tool to manage risk. As a result, a rate cap would dramatically reduce access to credit for the very people it aims to protect, just as the economy teeters on the precipice of a recession. By significantly limiting their ability to qualify for and use credit, it would even cause many consumers to turn to predatory alternatives such as payday lenders.

The following sections of this paper dive into the consumer credit market and evaluate the different options policymakers can use to make it function better for working Americans. First, it reviews the current state of the market, highlighting the important role that consumer credit plays in the economy, how credit card issuers decide upon interest rates, and breaking down why interest rates have risen in recent years. Second, it explains the economics of rate caps, and how workingclass Americans would bear the brunt of a cap’s consequences. Lastly, the paper explores some better policy alternatives to protect consumers, including greater transparency, better financial capability for households, and alternatives to traditional credit.

Read the full report.