Congress

Wall Street’s debt warnings went unheeded as GOP pushed megabill forward

Published

12 months ago

July 9, 2025

As congressional Republicans advanced their megabill in recent months, many fiscal hawks in the party figured they had a powerful force on their side: wary titans of finance who had started sending powerful signals that their appetite for purchasing U.S. debt was not, in fact, endless.

Turns out Wall Street was barely a bump in the road.

In passing the One Big Beautiful Bill Act last week, GOP leaders blew past a host of warnings to potentially add several trillion dollars of additional borrowing — brushing off concerns that they were missing a late opportunity to put the nation on a more sustainable fiscal trajectory in favor of piling on expensive new tax cuts.

The whole episode was a stark display of how short-term rewards and Trump’s demands outweighed any anxieties about long-term calamity — even from a constituency as powerful as Wall Street, whose major players are reliable financiers for politicians of both parties.

Some heavyweights like JPMorgan Chase CEO Jamie Dimon and billionaire investor Ray Dalio emerged as clarion voices for fiscal rectitude. Many others kept quiet on macroeconomic issues and advocated instead for the extension of tax cuts to promote economic growth — and, frequently, their own personal welfare.

Rather than send a big, beautiful signal to the bond markets that discipline would finally be restored, Republicans appear to have done the opposite: Yields on 10-year Treasuries have crept up around 18 basis points over the past week as market watchers ingested tariff news, but also openly wondered if either party is capable of reigning in the roughly $36 trillion national debt.

“If one of the goals was to calm the bond market down, I wouldn’t take much comfort from the past couple of days,” said economist Ed Yardeni, who coined the term “bond vigilantes” to describe investors who undertook massive selloffs of bonds to protest Fed policies in the 1980s.

“The act is not designed as a deficit reduction act. It’s designed as, ‘Let’s cross our fingers and hope that lower taxes boost economic growth again fast enough to bring in revenues,’” he added.

“Growth” was the word repeatedly invoked by President Donald Trump and his allies on Capitol Hill, who relied on rosy economic projections developed inside the White House to argue that the bill’s tax cuts would essentially pay for themselves.

Outside observers saw an entirely different kind of growth: Independent forecasters — including the nonpartisan in-house scorekeepers at the Congressional Budget Office — predicted the added debt created by the bill would increase federal borrowing costs, swamping any economic gains reaped through the tax cuts.

It’s a version of the “debt spiral” that many fiscal doomsayers have warned the U.S. might be entering after spending decades as the world’s safest investment. Lawmakers heard those calls loud and clear at various points recently.

In May, Moody’s Ratings downgraded Treasuries from their prior top rating, citing “persistent, large fiscal deficits [that] will drive the government’s debt and interest burden higher.” In late March, a group of House Republicans heard directly from Dalio, who urged them in a private briefing to start bringing annual deficits down to 3 percent of GDP. Deficits are currently running more than twice that.

Members were already spooked by the spike in Treasury yields after Trump rolled out his sweeping “Liberation Day” tariffs in April. Dalio told them that an even steeper selloff could occur if they didn’t get the nation’s fiscal house in order. The concern seemed to be confirmed when yields for 20 and 30-year Treasuries closed out above 5 percent the day that the House passed the sweeping legislation.

Still, the GOP did not end up heeding Dalio’s warning, and last week he said on X that he now expects sizable increases of government debt relative to GDP. That, in turn, would lead to “unimaginable” tax increases or spending cuts — or, perhaps more likely, inflationary money-printing.

He said that “big, painful disruptions will likely occur” if lawmakers can’t bring the deficit down to 3 percent of GDP.

Earlier on, GOP lawmakers on the House Budget Committee Republicans had taken Dalio’s message to heart, and his March briefing was part of what led House Budget Chair Jodey Arrington (R-Texas) and Budget Vice Chair Lloyd Smucker (R-Pa.) to craft a provision in the House bill linking the amount of tax cuts to spending cuts in the domestic policy legislation.

But when the Senate took up the House products, Senate Republicans added hundreds of billions in tax cuts to the legislation while jettisoning north of $200 billion in spending cuts because they didn’t adhere to Senate budget rules. With pressure from the White House, Senate Republicans forced their product down the throats of fiscal hawks in the House.

As a result, the bill ended up missing the mark on the House framework by around $600 billion dollars, according to the nonpartisan Committee for a Responsible Federal Budget.

“The one piece that I wish was stronger coming out of the Senate was the offset provision, the deficit-neutral principle that was hard-wired into our budget resolution,” Arrington said in an interview after the House passed the final legislation.

Arrington, who authored an austere balanced budget he dubbed “Reverse the Curse” before ultimately supporting Trump’s deficit-busting bill, said he was “not sure either party is unilaterally” capable of changing the nation’s fiscal path. He suggested Congress would have to turn to a bipartisan commission, similar to one established in 2010 under former President Barack Obama, to address the issue.

Outsourcing the hard trade-offs necessary for deficit reduction is one thing; mustering the political will to enact them is another. The megabill drama showed that the issue is hard to crack for even the most powerful lobbies, said Andrew Moylan of Arnold Ventures, a think tank endowed by billionaire investor John Arnold that advocated an array of policies to help close the fiscal gaps in the GOP’s megabill.

“I think that it’s going to be difficult for any actor, whether it’s a Wall Street person or a policy organization or grassroots group or whatever, to have an impact on this debate that helps us reduce deficits unless constituents are feeling pain that they feel like Congress needs to help address.”

Some in the House GOP are hoping that they’ll have a chance to enact additional spending cuts in further party-line bills this year as well as through the appropriations process. Many conservatives said they were reassured by 11th-hour conversations they had with White House budget chief Russ Vought before the final vote.

“You’re going to see a lot of fiscal restraint to add to this growth picture,” said Rep. Andy Barr (R-Ky.), a House Financial Services Committee member. “So growth, fiscal restraint — that will ultimately send the virtuous signal to the bond market.”

Barr said he also supports updating leverage requirements for banks to encourage them to purchase more Treasuries, which could help bring yields down.

As for Democrats, Rep. Ro Khanna of California laid out a progressive debt reduction plan in June that would cut the deficit by $12 trillion through reforms to defense contracting, a crackdown on “corporate profiteering” in Medicare and tax hikes for billionaires and companies.

In an interview Monday, Khanna predicted that serious deficit reduction would most likely occur under a Democratic trifecta rather than as part of a bipartisan effort.

Republicans, Khanna said, “have to be willing to raise taxes on the wealthy. That’s a philosophical difference. The math just doesn’t work without raising taxes on the wealthy.”

Congress

Bill Gates denied association with Epstein’s crimes in closed-door Hill interview

Published

1 hour ago

June 23, 2026

Blue Light Newsroom

Tech mogul Bill Gates told the House Oversight Committee he was aware of Jeffrey Epstein’s prior sex crime conviction but that he did not know Epstein was continuing to engage in misconduct at the time of their acquaintance, according to a transcript of his testimony.

In his transcribed interview with the panel earlier this month as part of its ongoing Epstein investigation, Gates recounted details of his dealings with Epstein over the years — which extended from 2011, when he was first introduced to Epstein, to 2014, when he realized Epstein would not make good on his promise to steer donors towards Gates’ philanthropic work.

“I was aware that he had a criminal conviction,” Gates said, according to the transcript. “I knew that it was of a sexual nature, but, no, I don’t think I … dug into the specifics, although I probably should have.”

Gates’ decision to shrug off the conviction from 2008 underscored the extent to which many of those who chose to associate with the disgraced financier opted to ignore potential warning signs of impropriety. It was not until more than a decade after his first brush with law enforcement that Epstein was arrested on federal sex crimes charges; he died by suicide in jail in 2019 while his case was pending.

Gates’ relationship with Epstein has drawn new scrutiny since materials released by the Justice Department revealed new details about their relationship. In one draft correspondence contained in the so-called Epstein files, Epstein appears to have written and sent to himself a letter to Gates, where he alleged that Gates asked Epstein to “delete the emails regarding [his] std” and give him antibiotics to “surreptitiously give to Melinda [French Gates].”

Gates has denied that allegation and, during his interview with the Oversight Committee, Gates questioned whether Epstein was attempting to blackmail him.

“Now that I see the January release of documents, it appears that in many cases he, at least in emails to himself, was sort of rehearsing how either he or he coaching someone else might choose to blackmail me, but none of those messages were ever sent to me,” Gates said. “You know, I never paid Jeffrey Epstein anything.”

He also said that Epstein “certainly wasn’t a friend,” and insisted he never engaged in sexual conduct or received massages from individuals introduced to him by Epstein. And despite knowledge of his 2008 conviction, Gates said he was unaware at the time of their relationship that Epstein was a registered sex offender. He also said he never visited Epstein’s island.

The Oversight Committee also on Tuesday released a transcript of its June interview with Lesley Groff, one of Epstein’s former assistants who was among those named as a potential co-conspirator as part of Epstein’s non-prosecution agreement in 2007. She was never charged with any wrongdoing and, according to the transcript, recalled that law enforcement’s decision came as a surprise.

“I am not a conspirator, and I never would have agreed to this language,” she said, according to the transcript. “Their unilateral decision to label me as a potential conspirator remains my scarlet letter.”

Like others who have come before the panel, Groff claimed she was unaware of his crimes during the time of her employment and that Epstein, following his 2008 conviction, said that he was “set up.” Groff said she believed him, so she continued to work for him.

“I also saw the same VIPs continue to surround Epstein after his conviction,” she explained as a rationale for maintaining her own ties.

For instance, Groff told the Oversight Committee she “would connect phone calls” between President Donald Trump and Epstein multiple times a year.

Trump has not been charged with any wrongdoing tied to Epstein, but his relationship with the financier has raised eyebrows while fueling speculation that the administration has been working to cover up its connections — including by pushing back against making the Epstein files public last year and then slow-walking their release.

The Justice Department has defended its handling of the files’ release, and Trump has maintained he broke off his relationship with Epstein years before his death.

Congress

Senate votes to halt Iran war despite Trump’s push for peace deal

Published

3 hours ago

June 23, 2026

Blue Light Newsroom

The Senate on Tuesday voted to cut off the U.S. military campaign against Iran, handing a fresh loss to President Donald Trump despite his attempts to convince lawmakers and the public that a deal to end the war is at hand.

Four Republicans broke ranks to help approve a resolution to block further military action unless it is green-lighted by Congress.

The war powers measure is largely symbolic — the resolution cleared Tuesday doesn’t go to the president to sign or veto. But the bipartisan 50-48 vote is a damaging milestone for the Trump administration: Both the Senate and House have now weighed in against the Middle East conflict that’s stretched on for more than 100 days. The same measure passed the House in early June after months of close calls.

Congress

Housing bill threatened in GOP elections-bill spat

Published

4 hours ago

June 23, 2026

Blue Light Newsroom

The long-anticipated bipartisan housing bill is under threat from a Florida Republican who threatened to “shut the floor down” if House GOP leaders move forward with passing it Tuesday.

Rep. Anna Paulina Luna said Republicans instead need to prioritize passage of the SAVE America Act, the GOP elections bill that has been stuck in the Senate for months. Speaker Mike Johnson has scheduled a Tuesday evening vote on the housing bill in hopes of sending it to President Donald Trump for a planned Wednesday signing at the White House.

Luna posted her threat on social media Tuesday afternoon and later specified in an interview that she would oppose procedural measures teeing up GOP-backed legislation going forward if party leaders didn’t abandon their plans to hold the housing bill vote via special fast-track procedures that would effectively sideline Republican hard-liners.

Luna cannot single-handedly block those procedural votes, but she said there is “a group” of lawmakers who would join her. She separately called on Trump to veto the housing bill in a bid to force the SAVE America Act to be added to it.

Johnson plans for now to proceed with the Tuesday evening vote on the housing bill, according to two people granted anonymity to discuss internal conversations. If Luna and her unnamed allies follow through with their threats, they could derail a pair of appropriations bills set for House consideration this week and potentially freeze the floor indefinitely given the GOP’s razor-thin majority.

“I have been telling them,” Luna said of her complaints to GOP leaders.