Episode Transcript
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(00:00):
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome everybody to another episode of Something More.
I'm here with Jeff Perry and Russ Paul.
We are of the AMR team at Wealth
Enhancement Group.
Glad to have you with us.
(00:42):
House of Representatives successfully did it.
They were trying to get something passed before
Memorial Day weekend.
So last week, the One Big Beautiful Bill,
as it's known as, did successfully get passed
by the House of Representatives.
Now, that doesn't make it law.
(01:03):
As we remember, our schoolhouse rock has to
go to the Senate.
And then in this case, unless it's the
same bill, it has to go back to
the House for a final agreement, approval of
things.
They hash things out.
And then assuming everyone's in agreement, it goes
(01:23):
to the president for signature before it becomes
law.
So there's a lot of things that could
change still, but we're going to talk about
some of the highlights of what appear to
be, at least preliminarily, in this bill.
So just at a high there's so much.
I mean, what is this thing?
A thousand page bill.
(01:44):
So I was going to tease and say,
well, you have to pass it before you
can read it.
But that's a different, that was a different
That was the health care bill.
That Nancy Pelosi said, yeah.
Right.
So in any case, for fun, let's what
if that's for sense of fun, I'll grant
you, but let's go through some of what
(02:05):
we've got in this proposed legislation.
Jeff, I think, you know, maybe we should
start with a lot of this is intended
to extend or make permanent some of the
features of the Tax Cut and Jobs Act
from 2017.
Well, you referenced the so-called bill, whatever
(02:27):
your language was, that's the title of this
bill.
This is house one.
One big, beautiful bill is the title of
the bill.
And, you know, a long time ago, when
our founding fathers were debating this new system,
they talked about something called the single subject
rule, where you only put items related to
each other, like spending, or if there was
(02:50):
a tax bill that would be separate, or
if there's a border bill that would be
separate, or if there was this bill or
that bill, they'd all be separate.
This is not that.
This is, this is the one big, beautiful
bill, which is an attempt, in my view,
to pass through the promises that candidate Trump
(03:12):
made.
And I think he wants one bill, obviously,
based on the name, it's, you can see
the influence on it.
But he wants one bill because the next
election is pretty far away.
And these are his agenda items, the closer
it gets to the next election, the more
that congressmen are worried about their votes.
So this is a bill that's full of
(03:33):
things that he promised on the campaign trail.
And you're right to point out that a
signature part of this bill is the making
permanent the tax cuts, tax rates that were
under the Tax and Jobs Act.
They are sunsetting this year, if we don't
continue them.
(03:54):
Yeah.
And this House version, which did pass by
a whopping one vote, 215 to 214, right?
I think a couple of presents just to
allow it to get through, right?
Yeah.
A present vote is, you've turned my arm
so much that I don't...
I won't vote against it, but I won't
vote for it.
Yeah.
No one's going to be able to hold
(04:15):
the roll call up and me have a
Y next to it for yes.
Yeah.
It's a very political vote, non-vote.
But yes, so the signature piece, there's a
lot to talk about, as you mentioned, but
the signature piece is making these tax cuts
permanent, no more sunsetting.
And I think, I don't know, most people
(04:35):
love a tax cut.
So I don't think that's the foundational problem
with the bill.
There's a lot of missteps, but there's a
lot of other things.
Just to go through a few highlights from
his, to make it political for a minute,
of the things that he promised, right?
So he promised the tax cuts.
He promised that he would make no taxes
(04:58):
on tips and overtime, which is in the
bill.
He promised, President Trump promised more money for
the border.
There's more money for the border in there.
He promised more military spending.
There's more military spending in there, including something
that was not discussed, which is a hilarious
(05:19):
name if you think about it, $25 billion
for the Golden Dome.
Yeah.
I don't know.
Oh boy.
You gotta laugh.
I mean, this is all on purpose, obviously.
So some of his signature things are in
there.
I think the one missing thing out of
(05:40):
all that, and there's a lot more that
we can talk about, but just to not
talk the whole time.
I think the missing thing are significant cuts
to spending.
If that's one of his, with Doge and
one of the promises that was made to
the American people, it is not achieved in
this one big, beautiful bill.
(06:01):
No.
I think there's expectation that this would cause
increases.
And to recall what the number was, a
couple, $3.8 trillion, I think, over 10
years.
However, that's a little bit misleading, I think,
because we're already outspending.
(06:24):
So it's not to say that over 10
years, our Congress would only outspend their revenues
by $3.8 trillion.
It's that this would just add an additional
$3.8 trillion.
So if we're outspending, I don't know, $1
to $2 trillion a year, depending on how
(06:45):
you want to calculate it.
But this would add another $3.8 trillion
on top of that $1 to $2 trillion
a year for the next 10 years.
Then you're putting another, call it $4 trillion
on top of that.
Right.
Nothing close to a balanced budget, for sure.
(07:07):
Right.
Right.
And adding to the national debt of another
roughly $400 million on top of the shortfall
we already have.
Jeff, this is a little off topic, but
given, I know your preferred approach to policy
(07:28):
would be lower taxes to generate more economic
revenue, that that's the way you'd ideally facilitate
a way to get out of this, cut
costs, cut spending and not raise taxes type
of an approach.
(07:48):
Do you think that's possible at this point
with the amount of deficits we're running?
Do you think that we can cut our
spending sufficiently to not have to raise taxes?
I think it's possible, like mathematically possible, if
(08:09):
the federal government focused in on what the
role of the federal government should be and
what we can, most of us can agree
what it should be.
But I don't think it's politically possible at
this time.
It would take a long runway maybe for
the reduced rate of spending.
Like if you said, oh, we're going to
not just cut spending, but curb the growth
(08:31):
of spending as a way to try to
do it.
But even that, I really am as much
as, I love the idea of being able
to do that.
I just am at a point where you
look at what's in government spending and like,
it's where would you cut?
You know what I mean?
So there's a limit to how much you
can cut.
(08:52):
And when we think about entitlements having some
shortfalls on the horizon, we talk about social
security more readily.
We don't talk about Medicare all that much,
but I know that's a similar kind of
challenge that just strikes me as probably going
(09:14):
to be a painful rude awakening at some
point where we're getting the benefit of lower
taxes now, but that may not be the
case a decade from now or maybe less
than that.
And so I think when it comes to
planning, clients and listeners should, if this passes,
(09:37):
take advantage of the window you have with
lower tax rates because it's going to be
challenging to keep those rates lower in the
future.
Yeah.
Anything you said about my political philosophy is
true.
So I'm going to put that out there
as I'm not disagreeing with your description of
(09:58):
it.
I'd go even further.
I mean, that would be my preference too.
I think I'm more with Senator Rand Paul
in the Senate who has said this bill
is still too bloated.
And the president made some big promises that
aren't in the bill that would have saved
money, whether or not you agree with them,
(10:20):
but I think it has to do with
your view of your role of government.
And I think one of the compelling statements
from Republicans, including President Trump, but long before
President Trump, including President Reagan, that's how far
back we can go with this, was the
elimination of the Department of Education.
I mean, it's not going to save the
budget, don't get me wrong, but it is
(10:40):
a fundamental discussion, debate of whether or not
that is the role of government.
Of the federal government.
Right.
To collect tax dollars from all the taxpayers
and then just basically give them back to
the states in different forms, right?
And the cost.
To facilitate certain activities that are policy objectives,
(11:01):
yeah.
That's not, in my view, the role of
the federal government.
In fact, the word education isn't in the
Constitution.
And so if you're a strict conservative, and
President Trump is not, I'll argue with people
all day about this, you would be trying
to get back to those principles about what
the federal government's role is.
And arguably, part of the reason, a significant
(11:24):
reason that we have such a budget deficit
and national debt is we're doing things far
beyond.
And the reductions that President Trump talked about
during the campaign and others, Republicans, for decades,
are simply not in this bill.
Yeah, I mean, I think, I'm not going
(11:44):
to challenge you on any of that.
But I think, you know, when it comes
to, neither is the Social Security and Medicare
in the Constitution, or any of, you know,
you can point to those types of things.
But they are, at this point, I think,
social contracts that it'd be hard to change
(12:05):
your direction on that.
I'm not sure there's a political will to
do that.
You know, you get to the point where
we can probably make that same challenge on
where are we with healthcare and stuff, which,
again, not really, you know, something that the
role of federal government should have a hand
in, other than maybe a regulatory, you know,
(12:27):
basis.
But, you know, it just becomes a challenge
as to how do you navigate these issues,
right?
I'd separate out Social Security and Medicare, those
are entitlements that are earned by payment of
additional taxes.
Yeah.
So I do put them in a different
category than some of these other subjects, for
(12:49):
sure.
Yeah, it's a good discussion, probably worthy of
its own show.
It is.
My point is not to get into the
specifics of any of these things.
But I was, you know, starting with the
positives that a number of the President's initiatives
that he talked about in the campaign are
in this one big, beautiful bill.
(13:10):
But if you were to give him a
grade about the percentage of the things that
are in the bill, I'm not sure it's
a passing grade because these cuts, you know,
Doge, for better or for worse, was supposed
to like be the initial kickstart to identifying
things that many of us fiscal conservatives looked
(13:30):
at and said, okay, they're going to dig
in, they're going to identify cuts that will
be in the budget, the thing and the
courts went right along with that.
They stopped the President from making unilateral cuts,
because they're part of the budget process.
They're part of the congressional process.
The President didn't have the executive power to
make certain cuts.
So it was logical to me that the
(13:52):
things that came out of Doge, the campaign
or the new administration would be included in
this one big, beautiful bill to try to
offset some of this additional spending and, and
giveaways.
I mean, how much how much does it
cost us not to tax overtime?
Sure, it's a great thing.
It's a great campaign speech.
(14:12):
But we can't just keep giving things away
to your point about taxes.
Yeah, do it.
Well, we can do it.
But we can't do it by taxing, even
at the new even at this now permanent
lower rate, perhaps if it passes the Senate.
Yeah, if it were to become permanent, we've
taken I don't know the figure I haven't
seen yet, but hundreds of millions, billions of
(14:33):
dollars off the table that won't be taxed
because they were in the form of tips
and or overtime.
Right?
Sorry, sorry, because one piece that is important
to note is that while it's being called
permanent, you know, it's permanent for now, I
think, kind of to your to your point,
the if we were saying for planning purposes,
(14:55):
that it's always going to be this these
tax rates going forward.
And definitely, a lot of plans would be
looking pretty great, especially when it comes to
the amount we're paying taxes.
But realistically, you know, that might not be
that might not be the case permanent is
until the rules change.
So that's what I keep reading, at least.
(15:15):
You're right.
And the next administration could another Congress could
do it.
And as far as permanent, the reduction or
the elimination of taxes on tips and overtime
is not permanent.
There is a sunset, I think it's three
years or something.
I'll sit on some of the characteristics in
here.
I think we expect if this becomes law,
(15:39):
which again, stay tuned, there's a lot that
has to happen before that's the case.
It does maintain some, some small business business
deduction, was this the 20% deduction of
qualified small businesses.
It's the alternative minimum tax changes that made
that a higher threshold before people have to
(16:02):
worry about the alternative minimum tax would would
be extended.
When it comes to the estate tax.
Instead of reverting to what was it going
to be $7 million or something?
Yeah, it would keep the threshold high, perhaps
(16:23):
somewhere around $15 million.
Individual tax rates, though, we were just talking
about these the the rate of tax and
the bands of income that puts you into
which tax bracket, keep in mind, the tax
cut and jobs act, raised the income levels
before you hit the next band of higher
(16:45):
tax rate, and lowered the rates within each
of those bands.
So it's a lower tax rate for most
people, when it came to the standard deduction,
elevated the standard deduction, so that most people
don't have to itemize, they're benefited by a
lot of rather large standard deduction.
(17:05):
So that would all be made permanent.
What were some of the other things?
Corporate tax breaks?
How did that work out?
There were a variety of things that happened
in the corporate tax space of assault tax.
Let me go back to that.
The state and local tax, instead of it
(17:27):
being $10,000 cap, for your real estate
tax bill, as an example, there'd be up
to $40,000.
Was it 40 or 50,000?
40,000.
I'd be very surprised that one survives.
(17:47):
Yeah, it'll get beat up a little bit.
Child tax credit would be increased for a
period of time.
Was it like five years, I think?
Do you guys remember?
Oh, no, it was through 2028, I see
it here, to $2,500, and then go,
(18:07):
which I think it's around 2000 now, but
go to $2,000 thereafter.
The tax credits for the electric vehicles and
the energy efficient stuff basically disappear in this
new bill.
I just was getting the impression that that
seems also like something that's probably more challenged
(18:31):
to get through the Senate, that there will
be constituents who will want to keep some
of that green energy development and encouragement in
the tax code, particularly as it relates to
different jurisdictions that have more impact, benefit from
(18:52):
that.
Any thoughts on that?
In the House process, where it was razor
thin, obviously, certain things had to be given
to get certain votes.
There are a number of Republican congressmen who
live in blue states, and so they were
pushing no vote unless they get SALT, right?
(19:15):
SALT, which is the higher income tax states
are affected by that.
And many of these things, like the child
tax credit and Medicaid, we haven't talked about
it, but Medicaid is a big issue with
some senators who have been very vocal about
it.
I know of two senators who have said
(19:36):
they won't vote for the House bill because
of the reductions to Medicaid.
Yeah, just tell a little bit about that.
Right now, Medicaid is covered about half by
the state and half by the federal funding.
They were looking to change that dramatically.
They want to push more on the states,
and they also want to, a big part
(19:57):
of the bill, which I'm in favor of,
it's controversial, but I'll state I'm in favor
of it, is work requirements.
And not just work, so this is all
part of a compromise that you had, don't
get me wrong, I think it's 80 hours
a month, but that could have changed, that
you had to have employment, education, or community
involvement, volunteering.
(20:18):
What is meant by able-bodied, I guess,
remains to be clarified to some extent, right?
Right, and there's an exception for a mother
who has a child under a certain age
and all this stuff, but the work requirement,
I think, has a place.
I don't think there's any reason that people
eligible for free benefits who just are able
(20:39):
to and make no effort at all to
support themselves at all.
I think that's, we saw that in President
Clinton's tenure with welfare reform and work requirements,
and it was very successful by reducing welfare
and motivating people to get out in the
workforce.
So, my larger point is, when we get
to the Senate, there are less, there are
(21:03):
less individual things that matter to a given
congressional district, and it's more larger philosophical points
of view that take root, such as Rand
Paul, a senator from Kentucky, he's not talking
about a specific part of the bill, he's
talking about big spending.
A couple senators are just talking about the
(21:24):
Medicaid process itself.
So, I think there'll be more policy-driven
than this giveaway or that giveaway or that
negotiation on this particular element.
And so, back to your kind of question
about green energy and electric vehicles, that goes
more to a policy.
Do you want the policy, the tax policy
(21:45):
in the United States to be favorable towards
green energy and energy efficiency or not?
Yeah.
So, I could see, you know, I could
see there being a few Republican senators who
will support maintaining the status quo, and they
wouldn't have the votes to keep it in
there.
And what is there about a three-senator
majority right now?
(22:06):
They can lose three votes, there's 53 Republican
senators that can lose three, and then if
it was a tie, the vice president would
come in and be the tiebreaker.
Presumably push it over the edge.
So, I haven't seen any issue with three,
I mean with four senators, but we'll see.
(22:27):
It's the goal, the stated goal from both
congressional leaders, Senator Thune, and obviously the House
met its initial step, was to have the
bill signed by July 4th.
Let's come back to talking about that in
just another moment.
I want to just cover a couple of
(22:48):
other things that we maybe hadn't included that
were in the, you know, like overview of
this.
I think there was something about a limit
on what are tax remittances sent abroad?
Is that meaning if I pay foreign taxes,
(23:09):
I'm limited on how much benefit I get
from paying those taxes?
I think there's a cap on that.
And then there was content about university endowments,
going to try and tax them more.
And then non-profits, it grants the U
(23:30):
.S. Treasury Department the authority to revoke tax
-exempt status for non-profits deemed to support
terrorism.
That sounds pretty political, don't you think?
I think it's a restatement of the current
law and political in nature, you know, that
the U.S. Treasury and the IRS specifically
(23:52):
already have the authority to revoke non-profit
status if they're not complying with the non
-profit rule.
Yeah, yeah, exactly.
But I think this seems like it's trying
to politicize some of what's been going on
with...
I think both of that and the college
endowments are taking shots at these big universities
(24:16):
that tend to be more liberal and have
allegations of supporting activities among students or allowing
it that are arguably anti-Semitic and trying
to put some pressure on them to change
their posture with that.
Other comments about the bill?
(24:36):
We talked about the deficit.
It said that there was about $2 trillion
in spending cuts that you talked about, a
lot of that in Medicaid, the food stamps
program, SNAP.
I think you mentioned clean energy as well.
(24:58):
And then you started talking about this issue,
so just the probabilities of its success in
the Senate.
So it does seem that there's...
it's not going to be an easy walk
(25:18):
in the park to get this through, right?
I don't think so.
The president has shown great influence over the
party on getting pieces through the legislative process.
We talked about the House turning a couple
of reps into firm no's to, I'm here,
(25:40):
but I'm not voting.
It's not an easy thing to do, especially
when you I'm pretty ideological.
So I won't be surprised if the Senate
gets it done.
I'll be surprised if it's the same.
So process-wise, which may not be in
(26:01):
that it's a bill video, but if the
Senate passes something different than the House, amends
it, writes their own, it has to go
back to the House for an up or
down vote.
They accept it or they don't.
So the House is kind of at an
inferior position at that point.
(26:23):
If they reject it or don't have the
votes to pass, it would be more accurate.
The process actually would have to basically start
over.
On a good note, process-wise, it's possible
that we, the United States, for the first
time in a very long time, could have
(26:44):
a budget, a bill, passed before the fiscal
year starts and goes for the whole year.
That would be amazing, right?
Wouldn't it?
Yeah.
I mean, it sounds so foolish, but it
would be amazing.
We haven't had that in a long time.
Supplemental budgets, debt ceilings, all these different terms
(27:06):
that were needed.
Well, to that point, let's just talk about,
I think there's the risk of volatility over
the summer that investors should keep in mind.
So we've got this issue, the passage of
this legislation.
The debt ceiling is its own conversation.
(27:30):
Is it tied to the bill?
I believe so.
I don't know if it made it into
the House version, but there was a provision
in the discussion about the debt ceiling.
I don't know if it made it.
The debt ceiling is one of these issues
that is kind of looming out there kind
of soon, right?
We're already into those emergency measures and all
(27:51):
that kind of stuff.
And the timeline on that's coming up.
I think it's before this bill.
This bill, if passed, would take an effect
October 1st.
Because of that issue, you're saying?
No, because this is the budget.
Oh, the budget's fiscal year, right?
(28:11):
Right.
So issues with the debt ceiling are certainly
relevant and independent of this bill.
So I think we've got that issue outstanding.
Then you've got the the negotiations, the 90
-day delay for most countries comes back to
for tariff topic on July 9th.
(28:33):
And for China is sometime in August.
Do you remember August?
Anyway, around about a month later, roughly.
So, you know, this summer, we've got a
variety of topics coming up that we want
to pay attention to.
This being one of the, you know, if
(28:54):
we get this legislation passed, I do think
that would give markets a little bit of
enthusiasm around expectations for the economy and so
forth, that this would be a favorable step.
We got the tariffs, which I think remain
(29:16):
somewhat elusive as to what to expect, you
know, and then, and the economic consequence of
that.
Though, you know, they're clearly there's an effort
to suggest that there are deals in the
works, you know, that kind of thing.
But what will actually come to fruition in
(29:36):
a relatively short time?
Or will we kick the can another 90
days or, you know, that kind of thing?
Will, you know, we saw the president in
the last week do a little bit more
social media posting about some of the challenges
that are to come, perhaps positioning.
But again, you know, one of these challenges
(29:58):
scares the markets a bit.
We saw the back end of last week.
We'll see.
And then this debt ceiling thing hopefully gets
packaged into this a little bit to get
us past that.
Because that's another, we've seen this before where,
you know, political chicken, you know, can be
(30:18):
problematic.
So certainly to market confidence.
So lots to watch for.
If you are not inclined to do this
yourself, you may want to talk to a
financial advisor, because I'll tell you, we're paying
attention.
There's a lot to pay attention to.
And but anyway, if you need any help
(30:39):
in dealing with your investments or financial planning,
please don't hesitate to reach out to us.
Until next time, everybody keeps driving for something
more.
Thank you for listening to something more with
Chris Boyd.
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planning or portfolio management, insurance concerns, or those
(31:01):
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