Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: There's been a flurry of activity on Capitol Hill in
Speaker 2: Washington as lawmakers consider President Trump's tax bill, known as
Speaker 2: the One Big Beautiful Bill. It's called the One Big
Speaker 2: Beautiful Bill, and it will be the biggest bill ever
Speaker 2: passed in our country's history. It passed the House in
Speaker 2: May and is currently being considered by the Senate. In
Speaker 2: the course of that process, last week, Treasury Secretary Scott
Speaker 2: Bessant testified before the Senate Finance Committee. We appreciate you
Speaker 2: being here with us, and you may proceed with your statement.
Speaker 2: Thank you, Chairman Crapo, ranking Member Widen. Lawmakers had a
Speaker 2: lot of questions, including what impact do it have on
Speaker 2: the deficit and inflation?
Speaker 3: So you'll the Secretary of the Treasury, so I'm asking you,
Speaker 3: what is your view? Will this bill increase or decrease
Speaker 3: the guests?
Speaker 1: It is?
Speaker 2: But over several hours of testimony, one thing kept coming up.
Speaker 1: The non partisan CBO, Which is certain CBO is one
Speaker 1: of our advisors. Are the same CBO that got it wrong?
Speaker 3: Then this is not the non partisan congressional budgets meant
Speaker 3: from CBO, I believe is that all the fifteen million
Speaker 3: people lose the health insurance. Well, your colleagues have a
Speaker 3: fixation on CBO, and I.
Speaker 2: You're And it's not the first time the Congressional Budget
Speaker 2: Office has been dragged into the spotlight. This non partisan
Speaker 2: agency puts together projections and analyzes to help Congress determine
Speaker 2: the impacts of a new budget or new legislation on
Speaker 2: the economy. And this process brings out a fair share
Speaker 2: of critics who don't like the math because it chips
Speaker 2: away at support for the legislation. But this time around
Speaker 2: is a little different, and you could hear that in
Speaker 2: Besson's comments to the Senate Finance Committee.
Speaker 3: I am not attacking the people who work at the CBO, Sure,
Speaker 3: I am attacking their methodology, and the methodology is completely illogical.
Speaker 3: It assumes base.
Speaker 2: The rhetoric around CBO has been heating up. But as
Speaker 2: the bill gets closer to passage, the agency has an
Speaker 2: important job to do. And so there was one person
Speaker 2: I really wanted to talk to, the Director of the
Speaker 2: Congressional Budget Office himself, Philip Swagel.
Speaker 1: When our numbers go the way that someone wants, well,
Speaker 1: then we're heroes. When the numbers go in the wrong way.
Speaker 1: You know, we're just the opposite. And the thing about
Speaker 1: the agency is that we're nonpartisan. Whatever the numbers are, well,
Speaker 1: that's what we print, that's what we convey to policymakers.
Speaker 1: That's our job.
Speaker 2: I'm Saliah Mosen and this is the Big Take from
Speaker 2: Bloomberg News Today. On the show, I sit down with
Speaker 2: CBO director Phil Swagel to find out how his non
Speaker 2: partisan federal agency focuses on economic forecasts when it's sitting
Speaker 2: at the center of a political firestorm with Trump's tax
Speaker 2: bill moving through Congress. I wanted to start by asking
Speaker 2: Phil about the role of the Congressional Budget Office through
Speaker 2: the life cycle of a piece of legislation like the
Speaker 2: one Big Beautiful bill.
Speaker 1: So, as the Congress is considering that bill, we are
Speaker 1: working with them from the very beginning really until the
Speaker 1: very end. So at the very beginning the two chambers,
Speaker 1: starting with the House, we're working on the budget resolution
Speaker 1: and setting out the overall fiscal parameters on which the
Speaker 1: bill is built. Then as the House considered the legislation,
Speaker 1: we worked with the committees in the House as each
Speaker 1: one developed their ideas on medicaid, on snap benefit, the
Speaker 1: immigration policies, the Armed services, everything. We work back and
Speaker 1: forth with the staff of the different committees as they
Speaker 1: develop their ideas, and we're just giving them feedback. We're saying,
Speaker 1: here's how much it costs, here's what we think it does,
Speaker 1: and they fine tune it. Then we do a cost
Speaker 1: estimate of the whole thing. And that's all for the House.
Speaker 1: And now the Senate is taking up the bill, and
Speaker 1: we're doing the same thing again with the Senate.
Speaker 2: What did you find from.
Speaker 1: The bill has a huge amount in it And if
Speaker 1: you look on the CBO website, there's a cost estimate
Speaker 1: for the bill that was passed by the House, and
Speaker 1: it's actually a spreadsheet and is a spreadsheet with many tabs,
Speaker 1: one tab for each committee and then a summary and
Speaker 1: then within each tab there's a huge number of lines.
Speaker 1: But it gives anyone listening, anyone who goes to our
Speaker 1: website and gets the spreadsheet, it gives you an indication
Speaker 1: of how sprawling the bill is. And it has both
Speaker 1: tax policy, you know, both new provisions such as the
Speaker 1: no tax on tips and then extensions of existing provisions
Speaker 1: from the twenty seventeen Tax Act, and then it has
Speaker 1: lots on the spending side, some healthcare policy snap benefits,
Speaker 1: and much more so. There's lots in it. On the
Speaker 1: tax side. Relative to current law, the tax policy increases
Speaker 1: the deficit, and on the spending side, the changes that
Speaker 1: were made in the legislation generally reduce the deficit. The
Speaker 1: net of those two comes up to two point four
Speaker 1: trillion dollars over ten years, and that's a deficit increase.
Speaker 2: So right now, what are your Republican critics taking issue with?
Speaker 1: I think the most salient criticism is that we the
Speaker 1: CBO and our colleagues that Joint Committee on Taxation are
Speaker 1: not optimistic enough on the growth impacts of the legislation.
Speaker 1: Some members of Congress say, you know, if the twenty
Speaker 1: seventeen Act provisions were to expire at the end of
Speaker 1: this year, as is in current law, that would have
Speaker 1: a very big negative effect on the economy. And so
Speaker 1: then they say, okay, well, we think therefore this bill
Speaker 1: should have a big positive effect on the economy because
Speaker 1: it prevents that expiration. And you know, we've looked at
Speaker 1: it and come to a in terms of some agreement
Speaker 1: some disagreement. You know, we think that the bill does
Speaker 1: support stronger GDP growth, but it's probably not as big
Speaker 1: as some of the critics were hoping for or expecting.
Speaker 1: And so that's a substantive criticism, and it's the kind
Speaker 1: of welcome one. I mean, if someone wants to know, well,
Speaker 1: why aren't you more optimistic on this legislation, Not in
Speaker 1: the normative sense, not like it's a good idea or
Speaker 1: bad idea, but why don't you a CBO think there
Speaker 1: will be a bigger positive growth impact. Well that's a
Speaker 1: completely substantive discussion that you know, we have within CBO
Speaker 1: every day.
Speaker 2: You're pretty zen about it, though you're getting attacked by
Speaker 2: a lot of by the President of the United States,
Speaker 2: by the Treasure secretaries. He's not attacking the people who
Speaker 2: work at CBO, but attacking the math, the methodology, calling
Speaker 2: it illogical.
Speaker 1: Okay, you know, I look what the Secretary has done
Speaker 1: is he's made substantive assertions that he thinks the math
Speaker 1: should be done differently. And I know he said this
Speaker 1: in a couple of ways. One is on tariffs, and
Speaker 1: the Secretary is pointed out there is very substantial revenues
Speaker 1: coming from the tariffs that President Trump has put in place,
Speaker 1: you know, since the inauguration of his second term, and
Speaker 1: in the Secretary's mind, that should be considered as balancing
Speaker 1: out any deficit increase from the reconciliation legislation, and that
Speaker 1: arithmetic works. And so we found the reconciliation legislation increased
Speaker 1: the deficit by two point four trillion. The terriffs reduced
Speaker 1: the deficit by two point five trillion, and that is
Speaker 1: completely reasonable arithmetic. We don't have it in our cost
Speaker 1: estimate for the legislation just because the tariffs are not
Speaker 1: part of legislation, but we have a separate analysis that
Speaker 1: the Secretary has pointed to, and that's completely a reasonable
Speaker 1: thing and a substantive thing.
Speaker 2: After the break, we dig into the CBO's latest report
Speaker 2: on the One Big Beautiful Bill and what it's like
Speaker 2: to work there right now. This week, as the Senate
Speaker 2: considered the One Big Beautiful Bill, the non partisan Congressional
Speaker 2: Budget Office estimated the cost of the House version that
Speaker 2: passed in May. I wanted to dig into that process
Speaker 2: with CBO's director Bill Swagel.
Speaker 1: The first thing we did was a so called static analysis,
Speaker 1: where a conventional analysis that assumes that the economy is
Speaker 1: static is unchanged. Now the legislation as I said before
Speaker 1: is really gigantic. It's sprawling across this massive spreadsheet. One
Speaker 1: would expect that to affect the size of the economy
Speaker 1: in lots of different ways. Lower tax rates will give
Speaker 1: people incentives to work more, for businesses to invest more,
Speaker 1: their changes in immigration, that will affect the labor supply,
Speaker 1: and so on. In the first estimate we did, we
Speaker 1: essentially ignore all of that and just take the economy
Speaker 1: as given the dynamic estimate we put out, you know
Speaker 1: more recently then says, well, let's think about those effects
Speaker 1: of the legislation on the economy and then the feedback
Speaker 1: from the changes to the economy back to the budget.
Speaker 1: And that's the difference.
Speaker 2: Between the two, tell me the headline of the report
Speaker 2: from earlier this week.
Speaker 1: So we and our colleagues at the Joint Committee on
Speaker 1: Taxation look at the legislation at all the many pieces
Speaker 1: of it. Instead, there's a sense of two types of effects.
Speaker 1: One is improving incentives more people to work, for businesses
Speaker 1: to invest more, and that would lead them to hire more,
Speaker 1: and that increases the size of the economy. On the
Speaker 1: other hand, the deficit is larger. I mean, this is
Speaker 1: a tax cut, so revenues go down, and that increase
Speaker 1: in the deficit has an effect on the economy. It
Speaker 1: leads to higher interest rates. Now it's a modest effect,
Speaker 1: but the higher interest rate then plays out over the
Speaker 1: very large stock of debt that the US government has,
Speaker 1: and that goes in the other direction. That higher interest
Speaker 1: rates over a large debt means interest payments for the
Speaker 1: US are much larger, and it's nearly a trillion dollars
Speaker 1: of additional deficits because the impact through interest rates far
Speaker 1: outweighs the positive impact on the deficit from stronger growth.
Speaker 2: I want to talk to you a little bit on
Speaker 2: a more personal person level on truth social President Trump said,
Speaker 2: the CBO is Democrat contry, but you have previously served
Speaker 2: in a Republican administration. You're also an economist. How do
Speaker 2: you balance or even separate your personal economic philosophies from
Speaker 2: the job of overseeing a non partisan office.
Speaker 1: The non partisan aspect of CBO is really the foundation
Speaker 1: of the agency. In fact, that's what I tell the
Speaker 1: new staff when I meet with staff, generally on their
Speaker 1: first day, I say, take a long view. You're going
Speaker 1: to work on legislation that you might think is a
Speaker 1: good idea, something that you might think is bad idea.
Speaker 1: Most of the people, almost everyone we work with on
Speaker 1: the Hill is really a very nice and kind of
Speaker 1: smart and wonderful person. Occasionally there's some people who are
Speaker 1: you know, less so, and we're going to support them
Speaker 1: just as hard and you know, just just the same
Speaker 1: as the others and just take a long view. It's
Speaker 1: important for Congress and for the nation to have an
Speaker 1: agency like us, you know, for me, I start from
Speaker 1: there and everything else is easier, you know. Criticisms on
Speaker 1: you know, from the executive brand, from the White House. Again,
Speaker 1: I understand it. It's part of the political process. I
Speaker 1: expected it. I don't get worried about it. So I'm
Speaker 1: really able to separate the kind of political process from
Speaker 1: the substance. And I feel like none of it is personal.
Speaker 1: It's not about me. It's just about the political process.
Speaker 2: I do wonder if CBO can weather the storm, though,
Speaker 2: because that'sn't himself specifically said he's not attacking CBO employees,
Speaker 2: but the White House Press Secretary Carolyn leave It did
Speaker 2: say that CBO is a partisan and political agency, and
Speaker 2: she said that staff haven't contributed to a Republican since
Speaker 2: two thousand and have for Democrats.
Speaker 1: You know, there is some advocacy group that put out
Speaker 1: a report along those lines that I think she's leaning on.
Speaker 1: It's just a completely made up number. And the people
Speaker 1: who work with CBO, you know, our counterparts on the Hill,
Speaker 1: they know our staff, they know we're nonpartisan, they trust us,
Speaker 1: they understand our processes. I feel like we're able to
Speaker 1: focus on our mission, you know, a little bit, tune
Speaker 1: out the noise and just keep going. I mean, the
Speaker 1: thing you mentioned from the White House Press secretary, I
Speaker 1: mean it made me smile, right in a sense. It's
Speaker 1: kind of you know, a smile and just keep going.
Speaker 1: Because right as you said it was she says something
Speaker 1: like CBO employees haven't donated to Republicans. That was that
Speaker 1: was it? Since two thousand of course, Well I'm the
Speaker 1: director now. In twenty fourteen, a friend of mine was
Speaker 1: running for governor of California as a Republican, and I
Speaker 1: donated to him.
Speaker 2: Now it was any work for President George deb and
Speaker 2: I worked.
Speaker 1: For President Bush, and so you know, again I understand
Speaker 1: as part of the political process is not personal. It
Speaker 1: really did just make me smile, make me laugh, and
Speaker 1: That's just the way to kind of respond to it.
Speaker 1: That's the way I respond to it. Was just just
Speaker 1: to keep going and not to let it worry me.
Speaker 2: And your staff was their respond.
Speaker 1: It's you know, it's harder in a sense because it
Speaker 1: can feel personal to people. You know, our staff are
Speaker 1: really dedicated. But again, I think people understand. My colleagues
Speaker 1: understand this is part of the process and just to
Speaker 1: tune it out.
Speaker 2: You're an economist who's supported economic policy makers during the W.
Speaker 2: Bush era? Do you support Trump's economic policy agenda?
Speaker 1: I look at legislation and I just think about what
Speaker 1: does it do and what does it cost, and not
Speaker 1: is this a good idea or a bad idea, because
Speaker 1: we at CBO just do not think about that, and
Speaker 1: for us to support the Congress, it's really important for
Speaker 1: us not to think about that. And in sometimes if
Speaker 1: I do my job right, members won't know if I
Speaker 1: think their legislation is good or bad. And I think
Speaker 1: I've done a pretty good job of that. And yeah,
Speaker 1: I'm smiling because there have been instances when members have
Speaker 1: tried to kind of suss out what I think of
Speaker 1: their bill, and I have been frustrated just because I
Speaker 1: say look, I'm sorry, I just I can't tell you.
Speaker 1: It's just part of the job, and you Eventually they're
Speaker 1: satisfied with that.
Speaker 2: That was Phil Swagel, director of the Congressional Budget Office,
Speaker 2: talking to us about the Trump Administration's One Big Beautiful
Speaker 2: Bill and criticism of the CBO's analysis. This is the
Speaker 2: Big Take from Bloomberg News. I'm Salia Mosen. To get
Speaker 2: more from The Big Take and unlimited access to all
Speaker 2: of Bloomberg dot com, subscribe today at Bloomberg dot com
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Speaker 2: We'll be back tomorrow.