Musk Criticizes Trump’s Big Tax Bill

Happy Wednesday! Have you heard of the "TACO trade"? It's a term describing an approach that investors have reportedly adopted in which they largely shrug off tariff threats by President Donald Trump under the assumption that Trump will back off. The "TACO" stands for "Trump Always Chickens Out." In any case, Trump was asked about it today - and he most certainly did not like the question.

Musk Criticizes Trump's Big Tax Bill

Elon Musk says he's "disappointed" by the costly new tax and spending package that House Republicans passed last week. In an excerpt from a new interview with"CBS Sunday Morning,"Musk says that the bill undercuts the work of his so-called Department of Government Efficiency, or DOGE.

"I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing," Musk said in the clip released last night.

President Donald Trump supports the GOP plan, titled the "One Big Beautiful Bill Act" in keeping with his moniker for the package. It covers much of his domestic policy agenda, including an extension of his signature 2017 tax cuts as well as new tax breaks for overtime pay, tip income and seniors. The bill would also boost defense and border funding while phasing out clean energy tax credits, cutting nutrition assistance and slashing Medicaid spending by tightening eligibility for the program.

Musk criticized the bill and quibbled with its name. "I think a bill can be big or it can be beautiful," Musk told CBS News, "but I don't know if it can be both."

Roadblocks ahead: The bill must still be passed by the Senate, where it is likely to be changed. Sens. Ron Johnson of Wisconsin, Mike Lee of Utah, Rand Paul of Kentucky and Rick Scott of Florida have called for steeper spending cuts and greater deficit reduction.

Trump on Wednesday defended the bill, saying it was constructed the way it was to get the votes needed to pass the House. He warned that, without the bill, taxes would soar as some of his 2017 cuts expire. (He warned of a 65% increase, though analysts say that no income group would see a hike that large.) The president acknowledged, though, that the bill was likely to change in the Senate.

"We will be negotiating that bill, and I'm not happy about certain aspects of it, but I'm thrilled by other aspects of it," Trump told reporters Wednesday. "That's the way they go, it's very big. It's the big, beautiful bill. But the beautiful is because of all of the things we have, the biggest thing being, I would say, the level of tax cutting that we're going to be doing."

Musk, who wore a shirt reading "OCCUPY MARS" for his CBS interview, has already indicated he'll be stepping back from government and politics and focusing more on his businesses, particularly carmaker Tesla, which has seen sales tumble and investors grow concerned amid waves of protest against Musk and DOGE.

Musk, the world's richest person, who donated nearly $300 million to help Trump get elected, said last week that he would dramatically cut back his political spending. "In terms of political spending, I'm going to do a lot less in the future," he said via video to an economic forum in Qatar. "I think I've done enough."

Trump Will Ask Congress to Approve $9.4 Billion in DOGE Cuts

As conservative frustration bubbles up on spending in the GOP plan and the lack of congressional follow-through on DOGE cuts, the blame lies mostly with the White House, not Congress; it's the White House that has been slow to send lawmakers the rescissions package that fiscal hawks want to see, even after indicating weeks ago that the request to claw back some funding was coming.

That's about to change. Trump's budget director, Russell Vought, said in a television interview Wednesday that the White House will be sending a small package of requested spending cuts to Congress next week. The $9.4 billion in rescissions - proposed cuts to funding Congress has already allocated -will reportedly focus on foreign aid programs as well as funding for NPR and PBS. The total savings represent just a small fraction of the more than $1.6 trillion in annual federal discretionary spending - and a tiny slice of the $2 trillion in DOGE cuts that Musk had initially floated as a target ... or the $1 trillion he later suggested ... or the estimated $175 billion DOGE claims to have saved.

Speaker Mike Johnson said in a post on X that the House would move quickly once it gets the White House rescissions package. "The House is eager and ready to act on DOGE's findings so we can deliver even more cuts to big government that President Trump wants and the American people demand," he wrote, adding that the House will also use the appropriations process to implement Trump's 2026 budget.

Vought told the Fox Business Network that if Congress approves this round of cuts, the Trump administration will request more.

Pressure from the Right: Conservatives have long called for the DOGE cuts to be codified and have begun to express frustration with the lack of action from the Republican-led Congress.

"We have a Republican Congress, and to this day - we're in the end of May, past Memorial Day - and not one cent in DOGE cuts have been implemented by the Congress," Florida Gov. Ron DeSantissaidin a speech on Tuesday. "I don't think there's any question that DOGE fought the Swamp, and so far the Swamp has won. And that's just unfortunate, but I don't think you can look at this any other way."

DeSantis called for a balanced budget amendment to the Constitution and term limits for members of Congress.

**The bottom line:**Musk and some GOP lawmakers have been frustrated by the level of spending in the Republican budget bill and the lack of action so far to formalize DOGE cuts. A White House rescissions package is about to land in Congress, and lawmakers will then have 45 days to take it up. It's still not completely clear whether Republicans will be able to pass the proposed cuts. Lawmakers can also amend the White House package and excise changes they don't want.

Fed Officials Worried Tariffs Could Spark Stagflation

Policymakers at the Federal Reserve expressed concerns at their meeting earlier this month that higher tariffs imposed by President Trump could raise prices while slowing economic growth - a combination known as stagflation, in which inflation and unemployment rise at the same time.

Released Wednesday, theminutesof the meeting held May 6-7 indicate that the outlook for the economy has weakened, as "trade policies implied a larger drag on real activity" than earlier estimates suggested. At the same time, inflation, which had previously been projected to decline, is now projected to rise "markedly" this year.

With one eye on the stagflationary threat, the Fed intends to hold steady on its interest policy until a clearer picture of the direction of the economy emerges.

"Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer," the minutes say. "Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken."

Number of the Day: $44 Billion

As President Trump takes steps to reduce the number of foreign students in the U.S. as part of his battle against institutions of higher education, some economists are taking note of the potential economic costs.

The U.S. attracted more than 1.1 million students from foreign countries during the 2023-2024 school year, and they collectively contributed about $44 billion to the U.S. economy, according to an analysis by NAFSA, the Association of International Educators, per The Washington Post.

The nonprofit group, which works with educators and institutions involved in international education,estimatesthat one new job in higher education or related sectors is created for every three foreign students. That translates to about 378,000 jobs nationally at current levels.

Nicholas Barr, who teaches at the London School of Economics, told the Post that the impact of foreign students extends far beyond tuition payments, and includes money spent at restaurants, bars, hotels and airlines, as well as on rents.

"America is shooting itself in the foot big time," Barr told the Post.

Fiscal News Roundup

• White House Plans - at Last - to Send Some DOGE Cuts to Hill –
• Trump Asking Congress to Help With $9.4 Billion in DOGE Cuts –
• Elon Musk Says Trump's Agenda Bill 'Undermines' DOGE Mission –
• Trump Downplays Musk's Tax Bill Criticism –
• GOP Rejects 'Millionaire Tax' Pitch, Advancing Breaks for the Rich –
• Fed Worried It Could Face 'Difficult Tradeoffs' if Tariffs Reaggravate Inflation, Minutes Show –
• Trump Administration Moves to Upend $37B Affirmative Action Program –
• DoD Ends 'What You Did Last Week' Email, Asks Civilians for Ideas to Cut Waste –
• Fewer International Tourists Are Visiting the US - Economic Losses Could Be 'Staggering,' Researchers Estimate –
• U.S. Ships Championed by Trump Cost 5 Times as Much as Asian Ones –
• Japan's Debt, Now Twice the Size of Its Economy, Forces Hard Choices –
• CDC Blindsided as RFK Jr. Changes Vaccine Recommendations –
• NYC Congestion Toll Brings In $216 Million in First Four Months –

Views and Analysis

• How the Government Makes a $3.8 Trillion Educated Guess –
• Can Trump Give Harvard's Funding to Trade Schools? Education Experts Say It May Not Be That Easy –
• Will Democrats Rescue the National Debt? –
• Tariffs May Cost the GOP in 2026 –
• The White House Keeps Promising 'Lifesaving' Aid That's Not Coming –
• GOP's Budget Package Proposes to Cut Benefits and Raise Fees for Legal Immigrants –
• Here's How Much International Students Contribute to the U.S. Economy –
• In Arizona County That Backed Trump, Conflicted Feelings About Cutting Medicaid –