The GOP's Reconciliation 3.0 and Trump's Speech on the SAVE America Act

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couple of months ago, and that's money to replenish munitions that have been worn down from the war in Iran, as well as money for trooping or increases in pay for troops. $73 billion, just to keep in mind, that is well below what the White House proposed and its budget, which was $350 billion for a supplemental... budget reconciliation bill and a lot of that money was to help rebuild america is kind of degraded military industrial base. So, and to provide more money for long-term procurement contracts because one time infusion of money doesn't really provide the defense contractors the certainty into really rebuild these supply chains. Now, in addition to that $73 billion, there's $10 billion in grants that would go supposedly to help implement the President Save Act. And this is kind of a budget trick that they're trying to do. use funding in federal dollars to cajole or career states to adopt provisions in the President Save Act. They cannot do that and they cannot pass the Save Act through budget reconciliation because budget reconciliation can only be used to enact policies that have kind of a direct nexus to spending and taxes. The President Save Act. is mainly a policy bill legislation. And it doesn't really directly affect the budget. So this is a way to try to get around that. And then in addition to that, there's about $12 billion in aid for farmers. And this comes on top of, by the way, $12 billion in aid that the administration doled out at the end of the last year in Farm Assistance and other income supports. Just as an interesting side note that the farm income was about more than double at the start of this year than it was pre-pandemic, largely because of all this assistance that the Trump administration is shoveling out to farmers to try to compensate. for the effects of its tariffs, which are deeply unpopular in the heartland. Kim, the journal's editorial overviewing this House framework is under the headline, the GOP's budget reconciliation bust. And let me read one line here near the end. The GOP's lack of ambition and governing agenda doesn't give Americans much reason to vote for Republicans in November, unquote. And is it really as bad as all that? It really is. And here's... the problem. If you're going to go out and invest a lot of time in political capital in a reconciliation bill, it needs to have some sort of big overriding theme, something that voters, especially when you're this close to a midterm, the voters can understand and say, here's how you help me today. And the first two bills Republicans did. They had that framework. The first one obviously was about making sure that tax rates did not go up. They also included some other tax benefits in there that have helped some people, although not.

the economy so much. The second one was about providing money to make sure immigration enforcement could go on in the face of democratic shutdown of DHS and those. functions within DHS. What you want with this third bill as you head into a midterms is something that you can really hold out there and say, look at this magnificent thing we've done. So an example, like here's the president's $350 billion to rebuild the military. We're facing all these threats in the world. Here it is. Here's a bill that shows the GOP. really taking on the fraud problem. Like it's rife in Medicare and Medicaid and the GOP is going to claw back that money. Or here's a bill that's really going to help you with affordability on your health care costs or your housing costs or whatever it is. This is a bill. If you step back and you look at it, it's essentially a bill that says, here's some money. for a war that half of our base isn't convinced is a great idea, just so that we can keep muddling along on that. And then there's some money to deal with the president's tariffs that are really unpopular in Iowa and other places. So we're going to like do a little bail out there. And here's some money for the voting bill that we told you, we have been telling you, for three months. If it doesn't pass, the world will collapse. And we're only going to pass a little bit of it. And really. None of the states that we really want this to go into effect into, i.e. any blue states are going to do any of this anyway because they would rather, they'll just say we don't want the money because they want to keep voting exactly the way it is. Yay, like what a message for the midterms, right? So this reflects a lot of the disappointment that's out there. It's a reflection of some real, very real political realities, we should note. In particular, the Senate is being very wary of dealing with any kind of. large issues that have to do with health care or tax policy because they know that they would have to go through this voter ramma as part of their Senate reconciliation process and they're worried that they might lose some of the Democrats will propose, for instance, bringing back Obamacare subsidies and that they can't hold all their troops. I get it, but it is overall. very much a reflection of a GOP that is going small because of the political problems they believe they face in doing anything bolder. Hang tight. We'll be right back in a moment. What happens when work becomes too much work? The disconnected systems, the updates, the scramble to make every customer feel like your only customer. But right now, Virgin Voyages is using Gemini Enterprise to turn millions of data points into a virtual concierge that fields endless guest questions. So crew members can focus on world-class hospitality at sea. No more digging, scrolling, or scrambling.

Work is less work with Gemini Enterprise from Google Cloud. I'm Matthew Hennessy, the editor of Free Expression, the new daily newsletter from the opinion pages of the Wall Street Journal. Free expression is a little different than what you get in the print paper's opinion section. We've expanded things out a little bit. We have a great mix of columnists, including Matt Continetti, Louise Perry, and Kyle Smith. You also get frequent sharp contributions from my editorial colleagues. And we publish outside contributors, too, from rock star economists like Tom Sol to real rock stars like John Androsic and David Drayman. You can sign up for free expression by going to the journal's homepage and looking for the free expression tab. We're also on substack, Twitter, Instagram, threads, and TikTok, if that's your sort of thing. Sign up for free expression today, and we'll see you in your inbox tomorrow. What Alicia do you think would be a better plan for them? What could be an injection of ambition? I mean, it's true that the first reconciliation effort had a lot packed into it. There was a reason that they named it, the one big, beautiful bill act. But one idea from this editorial that jumps out to me is adjusting capital gains for inflation, particularly on homes to the extent that those capital gains taxes are preventing seniors from selling. a disincentive for them to downsize if they don't need all that space anymore and can maybe free up that housing stock for somebody who's coming up, a young family. I mean, that's one idea. And I'm sure you have more Alicia. There are many other ideas that they could have grasped, and I would say some of this is low-hanging fruit. For instance, they could have just tried to repeal some of the taxes, tax increases that were in the Inflation Reduction Act. And that would include the corporate. alternative minimum tax as well as the stock buyback tax, which really was that they inserted, Democrats asserted in the IRA really has a down payment and they have now proposed. It would be better if they just won away because it does distort investment. Now there are some other ideas. For instance, repealing the Obamacare 3.8% surtax that again goes back to 2010 and raises the rate on capital gains, long-term capital gains to 23.8% for people who are singles who earn more than 200,000 or couples who earn more than 250,000. Now, mind you that the income thresholds for this net investment tax, as it's called, were never indexed per inflation. So over time, there's been kind of what's known as kind of bracket creep or more and more people have been ensnared or caught by this tax. So it's been effectively, and inflation tax increase. More than two or three times, two to three times as many people are now paying this tax, as well as a Medicare surcharge, separate Medicare surcharge that ObamaCare imposed just because their incomes have increased. And now they're getting hit by it. So that's another thing they could do is either repeal the tax. If they're not willing to go that far, they could at least adjust the income thresholds for inflation.

They could also undertake some spending reforms. If they want to pay for those tax cuts, now I don't think these tax cuts necessarily need to be paid for because we have found that generally, in many cases, the growth effects of pro-growth supply-side tax reform can and does pay for itself in the long term. But there are many spending reforms that they could undertake to cut down on the tax reform. cut down on waste, abuse, and fraud. For instance, a big issue is the Medicare payment rates. And Republicans and actually Democrats have long kind of grouse that hospitals get paid much higher rates than physicians offices for the same procedures and treatments. They could go to what's called site neutral payments, thereby equalizing making sure that the physicians and physician offices and hospitals are on the same footing. They are paid equally. That could save money, but it would also reduce the incentive for hospitals to acquire a lot of these physician practices. which is really what's fueling consolidation within the industry and pushing up hospital prices, which is a big driver of health care spending and costs. So that's something that, as I said, that I think would even have bipartisan support, unfortunately, maybe not this Congress, but has in the past. They could also equalize the Medicaid. federal matching rate or what's called the FMAP. Right now under the for Obamacare enrollees, the federal government picks up 90% of the cost. And these Obamacare enrollees are the able-bodied working age people with incomes, low 138% of the poverty line. And they can equalize that payment rate or the FMAP. to the rate that states receive for the disabled population, the traditional Medicare medicated rollies, which for most states is around, around 60%, well, 50% in some of the bigger states, bigger and wealthier states. In equalizing those rates would really reduce the incentive to spend more these able-bodied adults than on the disabled, but also would reduce the federal spending in the long term. provide an incentive in addition for states to do a better job of auditing and reviewing their Medicaid roles and cutting back on waste and fraud themselves. So there are a lot of things that they could do if they had the political will or really even interest, but it doesn't seem that they have any appetite for real forms, which is reforms, which is really unfortunate. On the Save America Act, the budget reconciliation rules certainly are a break on what Republicans could do to change election security through the budget reconciliation process. But President Trump certainly hasn't given up, I think, on increasing political pressure on Republicans and on the Senate to act on this as a regular piece of legislation either, including in this prime time address, Kim, that he gave on Thursday.

part of this address was declassifying and releasing some information, some files, some government records, intelligence analysis, and so forth. And Kim, to my mind, the claims really ranged the gamut. I mean, talking about how China illicitly acquired voter files, information on tens of millions of registered voters in 18 states, names, addresses, and party affiliations and so forth. That's a vulnerability. though it doesn't really speak directly to voting machines, ballots, anything that could affect election outcomes. His most direct effort on that involved CIA analysis, actually, of what happened in Venezuela under the Nicholas Majuro regime. Listen to this. Today we are releasing documents that show the CIA obtained reporting of a specific plot to... do a big number in favor of the corrupt Maduro regime in Venezuela, and that's exactly what happened conspiring to digitally rig their own country's elections in 2020, and that's what they did. This reporting included precise details about methods to regime develop, to digitally alter vote totals in ways that could not be detected even with an audit no matter how deep they went. Kim, to my mind, anybody who tuned into this address hoping and thinking that maybe the president was finally going to crack open some conspiracy and explain what he thinks happened to steal the 2020 election must have been disappointed. But I wonder what you made of the president's address. First of all, let's just note that some of the claims he makes are very, very serious. I mean, especially this claim that. during the 2020 election cycle, communist China did obtain or acquire 220 million voter files. And he said something very notable after that, too, which was there's a certain amount of voter data available publicly. You can also buy certain amounts of voter data, too. He said that the voter data had been hacked. and bought and stolen. So I think it's important to find out more about how this was actually obtained and what was actually obtained. Reality is that a foreign adversary could learn a lot about Americans from accessing U.S. voter roles. So that's a kind of worrisome thing if it is indeed true. And although it's only one piece, if you had that information, it increases the ability of a foreign actor to really cause chaos and election. election day if they can access live databases or manipulate entries because suddenly they'd have the ability to know who was voting and where and how and that would actually be very concerning Notably, though, the U.S. has never accused China of tainting or manipulating or deleting voter records. So obtaining the data is one thing. Acting on it is another one, and it's important to make that distinction. He also, you know, leveled a very serious claim about a cover-up, arguing that there were members of the intelligence community that deliberately took information that should have come to the president and made sure that he didn't see it. Now, again,

He actually used the word raw intelligence in the part of this speech. And that phrase really jumped out at me because raw intelligence flows into our intelligence agencies all the time. And a lot of it is incorrect or completely misdirectional. It's intentionally created. If anyone should know that, it should be Donald J. Trump, who had to deal with this with something called the Russia dossier that was fed to the FBI and ended up cause. massive controversy and great disruption to his first term. And, of course, a completely bogus document. So what often happens is intelligence, bureaucracies will take all this raw intelligence and then make certain judgments about how believable it is or not. And it's based on their best judgments of what is believable that makes it to the president. So all of this is going to require a whole lot of sorting out. You know, there's a benefit to noting to people all the time that the kind of ultimate goal. of some foreign adversaries is indeed to interfere in and disrupt another country's elections. We constantly have to be on guard from that. I think it's going to be important to go through what was out there. I didn't see anything that sort of jumped out that instantly made me say like, oh my gosh, like this is shocking and now we need to rethink what happened in 2020. He didn't. But I do think that it requires some more investigation. By the end of the speech, that all of this was sort of aimed at the president once again. saying, and this is why we have to pass the Save America Act, which in my mind has now become this like political stick the Republicans have picked up and are just beating themselves with over and over. And they're not going to win this fight. So I'm not quite sure. why the president thinks it's beneficial to make this all about a Republican failing to do this, when in reality, the very simple pieces of this bill about voter ID and citizenship and registration are pretty well supported by most Americans. And you ought to be talking about why Democrats and Democratic states are so unwilling to adopt them themselves. Hang tight. We'll be right back after one more break. Still running global payroll like a relay race? Deal replaces fragmented payroll vendors with one global system, no third parties. Higher manage and pay teams in 150 plus countries with in-house local experts and white glove delivery. And deal plugs into what you already use, Workday, SAP, NetSuite. Operate like a local, everywhere. Visit d'eel.com slash WSJ. That's d'eel.com slash WSJ. Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker, play the Opinion, Potomac Watch podcast. From the opinion pages of the Wall Street Journal, this is Potomac Watch. Given the range of claims, though, advanced by President Trump, I think it's important to make some distinctions. I mean, it's one thing to... disrupt an election. And it's a different thing when you're talking about claims of actual fraudulent ballots being submitted or counted. You know, an election system has a lot of layers to it. There's voter registration. Then there's people who submit forms and they are requesting an absentee ballot. Then there's whether the absentee ballot comes to them and is voted and then is returned. And then the process of verifying and finally counting that ballot.

And the security gets higher as you go through that process. Let's listen to another allegation that President Trump raised during this prime time address. In 2020, Michigan State Police raided a Democrat, get out the vote organization, corrupt group in Muskegon. And we're so concerned by what they found. They were just so concerned. They couldn't believe it, actually, that they contacted the FBI in Detroit. The documents state that some canvassers admitted to FBI agents that they signed voter registration forms and other people's names, submitted fraudulent registration for people who did not exist, and received gift cards tied to their number of applications that they produced. I think that's a case in point because it raises to my mind. more questions than it really answers. Certainly, if that's true, and it's not hard for me, at least to imagine, you know, outfits that are compensating people with gift cards per the volume of registration applications that they put forth might end up with some fraudulent applications at the end of the process. But the question then is whether those applications were actually processed by election officials or whether they were rejected, whether there are any ballots that were actually requested under those registrations. records. If somebody submits a fraudulent voter registration application in someone else's name and that ballot goes to the person that is noticeable. And You know, the person who didn't request the ballot can report it or not return the ballot. If there was phantom people that were reported and if there's phantom people that they tried to register, were there any ballots that were actually under those names? President Trump did not really explain that, at least in this address. He also cited a 2020 National Intelligence Council memorandum saying this. We judge that U.S. adversaries, including at minimum Russia, China ran in North Korea. as well as non-state groups have the capability to compromise U.S. election infrastructure. But election infrastructure, again, I think includes all of the stuff we're talking about voter registration databases and so forth. And thankfully, since President Trump declassified and released this memo, we can go look at it and read parts of it that he did not quote during this address, including this. We assess that vote tabulation systems would be difficult to manipulate. on a wide enough scale to compromise election results. The systems in each voting location are not connected to the internet or to each other. And many methods for exploiting them rely on physical proximity. So Alicia, that is the difficulty, I think, of parsing some of these allegations is there are a lot of different ones that affect a lot of different aspects of elections. And the seriousness of them vary if we need to increase our cyber defense. of some of those state election databases, by all means, let's do that. But that is not really an issue that is being addressed by the Save America Act. Right. So I would hope that the administration and what's the agency known as CISA, which is within the Department of Homeland Security, is working with states to harden their cybersecurity to prevent any compromisation.

pass for you to trust elections. And nothing else is more important than that. This is our number one agenda. A bill that cannot pass the Senate in the form that it is in. It's simply not going to pass. Why? Mostly because Democrats oppose it. And we have a filibuster. And, you know, you can rave all you want well. Republicans should just blop the filibuster to do this. But it's not going to happen. Okay. So that's the bottom line. Not going to happen. So you've set yourself up. for failure. And now the best you can hope, maybe out of this reconciliation process, is that you are going to get a fallback in which you can offer a pot of money for some people to maybe decide to implement these roles, the states that don't now. They probably won't. And I think that this is where Thom Tillis's point. is really important, which is it's a good thing that we have decentralized elections. For those of us who believe in federalism, we like the fact that states get to run their own elections. And by the way, that's some of the nervousness that even some Republicans have about the SAVE Act, which is not that they don't agree with the concept of proving your citizenship and not that they don't agree with the concept of having to show voter ID, but rather that they're very nervous about the idea of the federal government be going down the road of beginning to impose election requirements. This is what Democrats normally want to do so they can take over elections at a federal level. The reality is that most jurisdictions in the country, already have a form of voter ID. And increasingly, states in the last few years have also been doubling down on the citizenship requirement, passing legislation, setting up better procedures to make sure that citizenship is proved as you go to register to vote. The remaining states, whatever they pass through, Congress related to save, it's not going to change your minds. California, I'm sure Alicia would back me up here, is not going to implement new voter ID laws just because the federal government says here. we'll give you a little bit of money, you know, because they view this as an article of faith that they don't want them. Now what happens, right? Now, the best you can come up with is, well, we kind of maybe passed a little tiny thing that sort of might help just a little. And the rest of the base is saying, what have you done for me lately? I just don't really understand what they were thinking in this. Thank you, Kim and Alicia. Thank you all for listening. You can email us at pw podcast at WSJ.com. If you like the show, please hit that subscribe button. And we'll be back next week with another edition of Potomac Watch. Access to affordable credit helps me pay my employees that I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durban Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it. Don't they? Tell Congress, stop the Durban Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.