The Big Ugly Bill

Whatever you've heard, it's even worse

The Big Ugly Bill is now law. Trump signed it on July 4. It passed the Senate on a 51-50 vote with the VP breaking the tie. Three Republicans voted against it along with all Democrats. It passed the House 218-214 with two Republicans voting against it along with every Democrat.

It’s definitely the worst piece of legislation passed in my lifetime and probably the worst in a long time. I have almost nothing good to say about it. It does very little for almost everyone and hurts a whole lot of people. Among other things, it will reduce the number of people who are insured and will make electricity prices higher. The people who benefit the most from it are those who need help the least. To call it a raw deal is being way too nice.

From a fiscal responsibility standpoint, it’s terrible. It adds more than $4 trillion to the deficit. Because it makes the 2017 tax cuts permanent, it takes away the easiest path to raising more revenue, letting them expire, off the table. That will make dealing with our fiscal situation, which we will have to do eventually, even harder.

The bill marks the first time there has been a significant rollback of the safety net. Previous efforts to cut Medicaid fell short and while the bill mostly cuts Medicaid indirectly via work requirements it will have the effect of reducing enrollment. Food stamp (SNAP) assistance is reduced as well, which will likely mean more people go hungry.

Because the vast majority of the bill is just keeping in place the 2017 tax cuts, not many people will even notice it. The few new things it does, like no taxes on tips, affect very few people and are an invitation to commit fraud if it’s not policed closely. Contrary to what Trump keeps lying about, Social Security income is not exempt from taxes. There is a new deduction for people 65 and older, but it’s not going to do much for the overwhelming majority of seniors and it will make Social Security’s solvency worse.

As much as I have criticisms of and frustrations with Democrats, the worst things they do don’t come anywhere close to what this bill does. There are many reasons why I am a Democrat and this godawful bill is one of them. From a purely moral values standpoint, I find the bill to be despicable in just about every way. Throwing people off of Medicaid and SNAP to finance tax cuts for those at the top is cartoonishly evil. I would never support a party that thinks that is a good idea.

It's bad enough that the bill is going to cut Medicaid and SNAP, but it gets worse. Those are the most impactful in the short-term. In the long-term, though, the cuts to clean energy credits could be a much bigger deal.

The cuts it makes to clean energy credits will almost certainly mean higher electricity prices. The one silver lining is it does mostly leave in place tax credits given to battery storage, geothermal and nuclear power.¹ Those are all important and, god willing, will be a key part of our energy infrastructure soon. The problem is the latter two are most likely years away from becoming a force. In the meantime, we’re likely going to see a surge in demand for electricity driven by AI data centers.

I think renewables are often oversold and overemphasized, but they are not some little play thing. They have grown exponentially in a short time and last year provided more electricity than coal. If you had told someone that would happen just a short while ago they would have called the police.

The renewable energy tax credits the bill quickly phases out have helped accelerate the adoption of them. The good news is renewables are an advanced enough technology where they can keep growing without government support. The bad news is their growth will be slower and that’s a problem. There is a mismatch between supply and demand for electricity now with the latter exceeding the former.

That mismatch can be addressed in one of two ways. We could just not build data centers and fall behind in the AI race, i.e., less demand, but that would be terrible.² The other way is to increase the supply of electricity. Doing that means we need to produce as much of it as we can now. Renewables have disadvantages, but one advantage they have is it doesn’t take that long to set up a wind or solar farm.

Building more gas plants to produce more electricity takes a long time and has become very expensive. Gas turbines are in such high demand now that anyone ordering one today is going to have to wait years to get it. During that time, electricity demand is likely to surge. Renewables, particularly when combined with battery storage, are best able to provide the extra capacity we need and the bill is going to make that task a lot harder.

From a rational policy analysis point of view, the bill is senseless on every level. It not only will make electricity prices higher, but it will also threaten jobs in many red states and districts supporting renewable energy. I have to admit I got it wrong on their durability. I thought the credits were entrenched enough to avoid being cut significantly.

Why that turned out to be wrong has many explanations. One is the Inflation Reduction Act is still very new and hasn’t had a lot of time to become well-known and entrenched. When Republicans tried to repeal the Affordable Care Act in 2017 it had been the law for 7 years. The IRA hasn’t been around that long.

Another is that the moderate Republicans in the House were all talk. Many of them claimed they didn’t want to see the credits gutted, but they all voted for it and were never not going to. Some of them, particularly the ones from New York, chose to die on the hill of getting a bigger state and local tax deduction and that was all they could ask for.

Others may have had reservations about the bill, but are more afraid of losing a primary than anything else. I wrote late last year that because the Republicans’ House majority is so narrow, just 3 or more of them could be Joe Manchin. Unfortunately, they opted to not take advantage of that.

I don’t think most Republicans are all that hostile to renewables or EVs, but right-wing culture warriors like Trump are obsessed with hating them. Trump has had a long time hatred of wind power going back to opposing an offshore wind project off the coast of Long Island. He’s always had a NIMBY streak and hatred of renewables is part of it.

Many on the right see renewables and EVs³ as some kind of woke plot and a way for the left to impose their will on everyone. That’s beyond ridiculous, but it’s the small world many of them live in. It’s funny because guess which state gets the highest percentage of its electricity from wind? Iowa. Other states that get a big share of their electricity from wind include Oklahoma, Kansas, South Dakota and North Dakota. Maybe I’m living under a rock, but I don’t think those places are woke bastions.

The windiest parts of the country are the plains states, which happen to be red. Texas produces more wind energy than any other state and produces a ton of solar. Fun fact, virtually all of the growth in electricity generation capacity in Texas since 2015 has come from renewables. Despite record electricity demand last year, the grid in Texas held up very well thanks in large part to solar and batteries.

In the debate leading up to the passage of the Big Ugly Bill, there was something notably absent from the debate in 2017. Then, you could find all kinds of wonks on the center-right defending the tax cuts. You could find the same thing when Bush was pushing for tax cuts. This time around, there was virtually none of that. Almost every center-right think tank with any credibility criticized the bill for its effect on the federal deficit. Provisions like no taxes on tips were also widely criticized.

It may be for different reasons, but just about every authority on the federal budget, left or right, doesn’t like the bill. For its passage that didn’t matter, but it matters a lot for implementing it. Unlike the IRA or the ACA, the Big Ugly Bill was passed in a very short time. It’s impressive in the sense that it got done as quickly as it did, but that has risks.

Because the 2017 tax cuts would have expired at the end of the year, something had to be passed by then, but that’s a ways away. There was nothing sacrosanct about July 4, Trump just declared that it must be passed by then. Big pieces of legislation can often have unanticipated effects when being implemented. Rushing it through risks missing that and having to deal with the fallout from it. I don’t know whether that will happen or in which area it will happen, but don’t be surprised if the bill has some serious, unexpected problems when it starts to take effect. Taking a little more time and listening to wonks can help to avoid that.

From listening to remarks by many congressional Republicans, there doesn’t seem to be much enthusiasm for the bill. It’s as if it was passed just because Trump said so. If you’re part of the Freedom Caucus or a moderate Republican, it has plenty for you to not like. Democrats, on the other hand, are passionately against it and are already using it as a cudgel against Republicans for the midterms. Every single Democrat from the most left-wing to the least opposes it and it’s something Democrats running everywhere can all agree on.

Electoral ramifications

The polling on the Big Ugly Bill ranges from bad to terrible. Every single poll that has been taken on it has shown it to be underwater. It’s polling worse than the ACA ever did. The only legislation that polled worse was when Republicans were trying to repeal the ACA in 2017.

Democrats have a lot of angles to attack it from and Republicans don’t have nearly as much to sell it with. Since the bulk of the bill is just keeping current tax rates in place, very few people are going to see anything new from it. The best Republicans can do on the tax front is to say they prevented tax increases, but nobody gets rewarded for preventing bad things from happening.

Republicans believe they have a strong hand with work requirements for Medicaid. When framed as being about work requirements it can poll well, but that depends on how the wording is. Republicans will also claim that benefits aren’t being cut and the only thing being cut is waste. Some have claimed that only illegal immigrants will lose coverage.

I have heard and read plenty of Democrats and those on the left complaining about how Republicans are getting away with lying about what the bill will do. To that I say I don’t care what Republicans are saying now. Republicans can claim all they want that nobody will lose coverage. Right now, it’s all theoretical because the law hasn’t been implemented. When that happens, assuming it has the impact most everyone expects it to, a lot of people are going to be hit hard by it.

What many will discover through their own experiences and/or the experiences of those they know is that millions will no longer be insured. They will see SNAP benefits cut. They will see higher electricity prices and higher interest rates and/or inflation.

I don’t care how many Republicans go around telling everyone it’s a beautiful day outside. When people look out their windows, they will see a thunderstorm. No lying and bullshitting is going to shield Republicans from the consequences of what they’ve wrought.

Looking at just a little bit of history will tell you that passing or attempting to pass big pieces of legislation tends to lead to a midterm beating regardless of anything else going on. Clinton attempted healthcare reform in 1993 and it failed. The next year, Republicans were swept into office across the country. In 2005, Bush attempted a partial privatization of Social Security and it failed. The next year, Democrats were swept into office across the country. In 2010, Obama signed the ACA, but the elections that year were a big red wave. In 2017, Trump attempted to repeal the ACA and it failed. The next year was a blue wave.

In the best case scenario for Republicans, the bill turns out to be much less impactful than expected. Maybe Medicaid work requirements don’t affect that many people. Maybe demand for energy is not as high as expected or the existing supply is able to catch up. Maybe interest rates and inflation don’t go higher. Should those things happen, the bill probably won’t hurt Republicans that much, but it won’t help them either. People don’t vote to say thank you.

The more likely scenario is the bill has the impact it’s expected to or something like it. In that case, there will be a major backlash. It already is unpopular and will likely become even more hated. Many who voted for Trump will feel betrayed. Some of them may cross over and vote for Democrats in 2026 and others may not vote at all. If that happens, there is going to be a big blue wave.

The bill’s passage makes it much easier for Democrats to recruit candidates. They are already looking to run candidates in districts they normally don’t contest. The bill gives every Democrat something to oppose, which is a stronger motivator than anything else. Looking back at the 2018 midterms, I remember many Democrats like Elissa Slotkin emphasizing how much the ACA repeal effort motivated them to run. You can expect to hear plenty of that between now and 2026.

As I mentioned in my post two weeks ago, majority coalitions frequently fall apart soon after they form. There is no reason to believe that won’t happen here. The Senate is much tougher to win than the House, but it’s eminently doable. Democrats have good candidates running in Iowa and Texas. They will need to run someone good in Ohio and Alaska. In North Carolina, Thom Tillis, the Republican incumbent, is not running again, which should make Roy Cooper’s job easier in the likely event he runs. Will someone reputable please run in Maine?! Susan Collins is strong, but people are way overreacting to 2020.

I can’t emphasize enough how much of Trump’s electoral prowess and the advantage Republicans have in many previously competitive places is because they’ve made inroads with working-class voters. Not long ago, the wealthiest districts were represented by Republicans and the poorest by Democrats, but that has since reversed. For all the talk about how Trump was creating an enduring multiracial working-class coalition, he arguably just threw it in the trash. The voters he has made the most inroads with come from places that rely on Medicaid and he’s telling them to drop dead.

People are way too fatalistic about Trump and his base. He’s not a juggernaut and he’s not a god. His approval rating is already bad and it can get worse. Since he won’t be on a ballot again, Republicans running can’t count on him to turn out infrequent voters. As I’ve written about before, he has a particular appeal that doesn’t carry over to other Republicans. He may even escape blame with his supporters for kicking people off of Medicaid and SNAP, but other Republicans don’t have that kind of Jedi mind trick power.

To win back the Senate, Democrats will need some stars to line up. One of them is having an unpopular Republican president. Check. Another is having some kind of action taken by the president or legislation they signed to unify against. Check. Another is to run candidates who are good fits for their states and can credibly distance themselves from the perceived national party. It’s way too early to know how well that will work out, but so far the signs are good.

It would be a travesty if Democrats forfeit the Senate next year because they aren’t willing to moderate on some issues, but I don’t believe that will happen. Winning back the Senate is not guaranteed, but the desire to win it back is very strong and will only get stronger in the coming months. Losing elections and suffering the consequences of it really focuses the mind and drives home what truly matters.

So much of what many Democratic Party actors have been caught up in over the last decade is dumb and unimportant. Pick your favorite culture war fight of the hour, for example. Those things are big on social media and in some small circles, but they have no relevance to normal peoples’ lives. As we’ve seen in races across the country, the cost of living is a huge deal. Whether it’s in a blue, purple or red place, that is what people care about.

Medicaid and energy prices matter a lot. Higher interest rates matter a lot. Those are all things people feel in their own lives and in the lives of family and friends. People don’t like having to endure those things and they especially won’t like it when they find out it’s happening in service of cutting taxes for those at the top.

Opposing the Big Ugly Bill and working to undo its damage should be the biggest thing Democratic candidates focus on between now and November 2026. If someone running in a red place is on board with that, they should be welcomed with open arms. If they have views on immigration, energy, trans issues, policing, etc., that are different from what party officials and staffers on the coasts believe, I couldn’t care any less.

What the Big Ugly Bill says about the Republican Party

For all the gains Republicans have made among working-class voters during the last decade, they haven’t really changed all that much. Under Trump, they moved away from pushing for cuts to Medicare and Social Security,⁴ but their main legislative priority has remained the same. In his first term, it was tax cuts and in his second term it’s also tax cuts, just as it has been under every Republican president since Reagan. Populist talk notwithstanding, the Republican Party is still very much the party of tax cuts.

Trump could have moved towards the center to potentially cement Republicans’ gains with working-class voters. Namely, it would have entailed abandoning regressive tax cuts and efforts to cut the ACA and Medicaid. Trump could have focused on helping families with things like the child tax credit. There are plenty of center-right thinkers who advocate for a working-class centered Republican agenda. He would have been well-served to take their advice.

Electorally, that would have been very smart of him. Many Democratic Party actors now have beliefs and values that are alien to most working-class people. Trump could have taken advantage of that to push the GOP towards being a more working-class oriented party. I don’t believe in durable national majorities, as events tend to get in the way of grand plans, but if he had done that it could have put my theory to the test.

What makes the Republican Party different from its right-of-center counterparts in other developed countries is its hostility towards the safety net, particularly its belief that healthcare is not a right. In all other developed countries, right-wing parties are not like that. Even those that are far-right like AfD and the National Rally don’t advocate for denying people access to healthcare. Trump had a chance to change that and take a huge liability for the party off the table, but he didn’t take it.

Democrats have been incredibly lucky with Trump. When he campaigned in 2016, he talked about pursuing an infrastructure bill and pushing for something “even better” than the ACA on healthcare. On Earth 2, where he makes a bipartisan infrastructure bill his top priority and embraces universal health insurance, his approval rating is in the 60s. The midterms in 2018 go well for Republicans. In 2020 they make massive gains with voters everywhere and Trump gets reelected easily.

On the planet where we live, that didn’t happen. He pursued the same thing any other Republican would have and provoked a backlash. Republicans just can’t help themselves. They’re so committed to unpopular policies on healthcare and taxes that they wind up rescuing Democrats over and over again. It’s terrible policy, but god bless them.

As someone who likes to see Democrats win, Trump being just like any other Republican on taxes and the safety net has a lot of upside. The worst thing that could have happened is for Trump to have finally ignored his party’s donors and other elites and governed for those who elected him. Such was the road not taken.

Truth be told, the energy part of the Big Ugly Bill comports very well with the worldview articulated by Trump and MAGA true believers. I hesitate to define MAGA as an ideology since it centers entirely around one person, but there is some consistency in the beliefs of its followers. One is a dislike of the present and a yearning for a mostly mythical past, i.e., going back to a 1950s-like culture, economy and family structure.

You can see that in MAGA’s hostility towards all kinds of technology. Luddism used to be associated with the left, but the right has taken the lead. Hatred of renewable energy and EVs and the desire to use nothing but fossil fuels forever is a core MAGA tenet. The welcoming of anti-vaxxers and RFK’s “Make America Healthy Again” movement is a part of that. Trump and his tech supporters talk favorably about AI, but other MAGA adherents see it as a job killer and a threat. In practice, despite Trump’s favorable talk, the Big Ugly Bill is going to make building AI data centers much harder, which is fine for the Tucker Carlsons of the world.

As I mentioned earlier, the hatred of renewable energy and EVs stems in large part from seeing them as part of the culture wars. MAGA is all about culture wars. MAGA sees renewable energy and EVs as some small, insignificant thing and completely misses how big they now are.

In championing culture war fights, MAGA is willing to burn down everything in its path. If scaring away foreign students and researchers from our universities and wrecking our scientific advantage is the price to pay for getting rid of wokeness, so be it. If raising electricity prices is what it takes to own the libs, that’s a small price to pay. If their efforts to go after perceived enemies undermine the US in its competition with China, it’s worth it. If firing federal employees willy-nilly and undermining critical governmental functions is what it takes to purge the left from every aspect of life, it’s for the greater good.

1. The problem with the changes made to the credits is its provision prohibiting recipients from having ties to China. Implementing those limits could prove so hard that the credits are no good in practice and battery storage, geothermal and nuclear power are held back. That will make our energy crunch way worse.

2. Don’t think for a second that blackouts will be allowed to happen. If data center interests conflict with residential interests, regulators are going to side with the latter every time. Any official allowing residential electricity prices to surge to serve data centers would be buried alive.

3. Elon Musk has been vocally opposed to the bill and has warned it will kill jobs and undermine our competitiveness against China. It’s apparently news to him that Trump hates a good portion of the businesses he’s involved with. If only someone could have told him.

4. Opposing cuts to Medicare and Social Security is a normal Republican policy. The outliers were Bush in pushing for a partial privatization of Social Security and Mitt Romney/Paul Ryan for advocating for making Medicare into a voucher program. Being fiscally reckless is also a normal Republican position when they’re in the White House.