Elon Musk Denounces Trump’s ‘Big Beautiful Bill’
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The GOP's one big beautiful bill heads to the Senate as Elon Musk turns against it, calling the legislation a, quote, disgusting abomination, unquote. Meantime, Iran's supreme leader rejects a nuclear deal offered by the Trump administration. Welcome, I'm Kyle Peterson with The Wall Street Journal. We're joined today by my colleagues, editorial writers Kate Batchelder-Odell and Elliot Kaufman.

Republicans have now narrowly gotten their one big beautiful bill through the House, but that was only half of the battle on Capitol Hill. Kate, what are you hearing from the Senate side now about how the upper chamber, as we say, intends to proceed on this GOP legislation?

and how senators might or might not try to change the details. I'd say, first off, there is a lot of pressure to keep the draft as close as possible to the House draft because it was such a heavy lift to get that bill through the House. But I think the Senate has its own prerogatives and should put its own policy mark on some of the details and provisions. For instance, we've been expecting that the Senate would trim back the big issues

big deduction for state and local taxes that the House passed, $40,000, just a pure giveaway to New York and California and other states with high income and property taxes. The Senate doesn't have the same politics there that require that handout. And so we've been arguing that, hey, you know, the Senate should trim this because it's bad policy. It does nothing for economic growth and living standards or the incentive to work.

So that's an example of something that I think the Senate should do. But where there's a lot of pressure now, just pass what we sent you, don't make us go through this headache exercise again, trying to get it through the House or for the House and Senate to have to go to a conference or...

So there is a tremendous amount of pressure to pass the bill significantly as written in the House. But for example, there are some changes that really need to be made that I think the Senate understands. One that comes to mind is just the House and the way they wrote their bill. They made some of the best provisions temporary. Some of the bill's provisions that do boost growth and are thus change the incentives are

Thank you.

that they need to reject this framework that they're totally boxed in by the House. I think, for instance, some House members were negotiating knowing that the Senate was going to make changes and are prepared to accept less. And so I think the Senate has an obligation to make the bill good policy and not just slam through whatever the House sent them because there are real shortcomings in the House's bill.

And the difficulty with that always is that if the Senate decreases that SALT deduction giveaway, for example, that might cause some sticking points back in the House when it comes back to the passage of a final piece of agreement between the House and the Senate. On the other hand...

Maybe there are ways that the Senate can improve this legislation that could satisfy more House conservatives, for example. Notably, some of the outspoken critics in the Senate seem to be on that conservative side of the spectrum. Ron Johnson of Wisconsin, for example, saying that there need to be more spending cuts really dialed in on that issue. Senator Rand Paul, the

libertarian-ish Republican from Kentucky. And then notably, Elon Musk, who was the president's pretty close ally until about five or six minutes ago, coming out on Tuesday afternoon and blasting this bill, saying on X-Media,

I'm sorry, but I just can't stand it anymore. This massive, outrageous, pork-filled congressional spending bill is a disgusting abomination, unquote. Tell us how you really feel, Elon. Let's listen to a bit of reaction from the Senate Majority Leader John Thune of South Dakota responding to some of this criticism from Elon Musk. We obviously respect everything that Elon did with Doge.

On this particular issue, we have a difference of opinion. And I think it's rooted in the fact that he's accepting the CBO assumptions that are built upon a static scoring assessment of the effect, the macroeconomic effect, growth effect, that these changes will have on our economy. And all the modeling that we've seen suggests that the changes that are being made in the tax policy, particularly making permanent

bonus depreciation, interest deductibility, R&D expensing are going to lead to significant growth. And you couple the growth with the biggest spending reduction in American history, and you will see a reduction, not an increase in the deficit. So we have a difference of opinion. He's entitled to that opinion. Kate, what's your read of how this political argument is shaping up and particularly the role of that Congressional Budget Office analysis of the big, beautiful bill? I think

a couple things can be true at once. I think Ron Johnson is driving an important argument, which is basically that the government should go back to spending the money it was spending around 2020 just to return to pre-COVID spending levels and that that's a reasonable amount of restraint to ask for.

But at the same time, I think it's also true that the $1.6 trillion cobbled together in savings is significant, and it's more significant than what we've seen come out of Congress so far, even if it doesn't make any structural changes to entitlements. It does have some modest Medicaid improvement, and it has more spending restraint.

been much of what's come out of Congress in recent years. So I take the objection seriously, but I do think the spending side of the bill is better than some are giving it credit for. Your question about the Congressional Budget Office, we have talked for a long time on here in our pages about how the budget scorekeepers often don't give Republicans enough credit for how well their policies will work. For example, how much economic growth you can get if you lower certain tax rates.

Back in 2017, this was a major issue, and the budget office makes very low assumptions about how much the economy is going to grow, for instance. And that is one reason why in 2017, the results of economic results of tax reform did overperform what the budget scorekeeper said.

And so now you have this replay of this argument, but I want to add a couple important caveats to it. The reason why Republicans did better than Congress's budget scorekeeper said in 2017 was because of economic growth and because of that economy that voters like, that voters remember about Trump before the pandemic where wages were rising quickly, particularly for low wage earners. But why did that happen? That bill included a large cut to the corporate tax rate down to 21%.

And that was a boon for growth that changed the incentives to invest in the United States. My concern is now is that the current bill doesn't have as much growth in it as that 2017 bill did. So I think Republicans are taking something of a risk here that they don't get the overperformance that they got in 2017, because they've organized the tax provisions of this bill, much

much more narrowly. You know, this tax bill includes a lot of carve-outs for special constituencies, people who work overtime, people who have tipped income, a tax exemption for them. It throws just a bigger deduction at seniors, just as a pure vote-buying exercise. So it focuses more narrowly on some of these

tax carve-outs that the Trump administration seems to think are good politics and are going to play well in the midterms. But I think that creates a real vulnerability for the politics of this bill because I think there's a risk that this bill doesn't produce the growth that it needs to to get that 2019 economy back. And that's why, as I was...

getting into the weeds a little bit at the beginning. That's why it is so important for these sort of arcane provisions like business expensing, for them not to be temporary in the tax bill and for the Senate to make those provisions permanent. I think that the Senate will do that because they understand that.

But even this late in the game, I think the Senate should be looking for some ways to get some more growth juice into this bill. And it's not too late even to shave a little bit off the corporate tax rate, which would at least help them in that direction. That would really help them change the conversation from this pure deficit spending conversation they're having right now. Hang tight. We'll be right back in a moment. The spirit of innovation is deeply ingrained in America, and Google is helping Americans innovate in ways both big and small.

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Perhaps the impetus to get that growth will be improved by shaky news about the economy on Wednesday. Some data out from the payroll firm ADP. Here's the headline at the Journal on the News side. U.S. firms are hiring at the slowest pace.

In two years, it says employers dialed down their hiring, a sign the market may be weakening amid growing economic uncertainty. Just 37,000 jobs created last month. Economists polled by the journal had expected a pickup in hiring to about 110,000.

And so, Kate, that is part of the conversation, too. And the other thing that I think is notable in the political debate is the conversation in Congress is often a question of what is the alternative? And if there is no big, beautiful bill that can get through the Senate here, the alternative is the expiration of those 2017 Trump tax cuts at a cost of something like four and a half trillion dollars taken out of taxpayers' assets.

And taken out of the U.S. economy. And so that is the challenge for the Senate now is trying to figure out how to avoid that tax increase and maybe improve this bill and satisfy some of those conservative critics. On the other hand, any bill that is going to be passed by Congress through this kind of wheeling and dealing negotiation is going to have some ugly parts.

And this one certainly does, admittedly. Yeah, I think you're exactly right that we do live in a world of all available alternatives. And a $4.5 trillion tax increase is not a good alternative. I think that is helping focus Republicans on getting this done. And like I said, you know, we're talking about discrete improvements that the Senate can make, not reinventing the entire system.

product. But I think what helps often in bills like this, to your point about how once it becomes every constituency needs to be mollified and we need to give certain things to different people, it just becomes harder to stitch that quilt together because you create an incentive for people to come back and say, well, this is what we saw with the state and local tax deduction. Well, why not me? Why not 40,000 instead of 30,000? So I think that another practical reason to anchor the bill in those growth positions is because it creates something to coalesce around.

One other quick item I wanted to bring up because it's percolating so much in Washington, too, is Republicans are going to have to talk about the coverage loss estimates that the Congressional Budget Office is putting out. For those of us who were around the Hill during the Obamacare repeal years, these are very powerful politically because Americans see them and think, I don't want millions of people losing their health coverage. And that's what the headlines are.

are telling me is going to happen. My advice to Republicans is they're going to have to address this head on. They're going to have to get into the details and they're uncomfortable on healthcare ever since failing to repeal Obamacare. And they don't like to do this. But the fact is,

is that their bill does things like add a work requirement in Medicaid that you need to work or volunteer if you're an able-bodied prime age adult 20 hours a week. This is not draconian. And if you fulfill it, you do not lose coverage. So when we talk about some of these coverage estimates right now, CBO is throwing out numbers in the millions. Well, millions of these folks are going to be people who would decline to work part time in exchange for taxpayer subsidized health insurance.

So I think Republicans really, if they want to get this bill done, are going to have to engage directly on the substance of what they're doing and not let themselves be swamped by these budget office estimates that are at many times, they're often overestimated just in general, but they're going to have to get into the details of them and explain to the public exactly what we're talking about when we talk about people shifting off of Medicaid coverage. Hang tight. We'll be right back in a moment.

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From the opinion pages of The Wall Street Journal, this is Potomac Watch. Welcome back. Let's start with the news coming out of Iran. After five rounds of talks between Tehran and the United States, the U.S. last week put forward what officials called a term sheet.

And on Wednesday, that was rejected by Iran's Supreme Leader Ayatollah Ali Khamenei, saying this to the American side and others. We say, why are you interfering and trying to say whether Iran should have uranium enrichment or not? That's none of your business. The Supreme Leader posted on the social networking site X.

Elliot, what do you make of this? What are the details of the U.S. term sheet put forward? And what do you make of Iran's rejection of it? Well, it's very interesting because the reaction in the U.S. media to this U.S. offer, U.S. term sheet,

has been big headlines saying Trump allows Iran some enrichment of uranium. And yet Iran is rejecting that very same offer because it denies them enrichment. So which is it? I mean, in a way, it's sort of like Schrodinger's

enrichment here. Will Iran have it or not? The truth is, they're trying to get it both ways. And the way that they end up doing that is by allowing for a temporary period in which Iran will have some limited enrichment of uranium. The U.S. term sheet wants that in

above-ground facilities, not the underground facilities. And then down the road, when there can be construction of a, in essence, new enrichment program outside of

Iran, run by a regional consortium. Iran, a couple Arab states. America involves enriching uranium outside of Iran. So will they ever get to that next stage? We don't know. But the Ayatollah is making it pretty clear he doesn't see any future in which Iran would not be in control of its own domestic enrichment program.

Meantime, this comes on the heels of a couple of reports from the International Atomic Energy Agency, the U.N. outfit, on the amount of nuclear material that Iran has already stockpiled and its deceptions about its ongoing nuclear program. Elliot, I know you've looked at those reports. What do they say about the nuclear program that Iran has been running here now as the U.S. has been trying to put pressure on it to stop? Well, I should say a word about what enrichment is.

actually is and why it matters. Basically, you have to get nuclear fuel enriched to weapons grade in order to make nuclear weapons. There is a civilian level of enrichment at around 3.67%, but even though that sounds small, it's actually two-thirds of the way, 70% of the way, that's seven zero.

to weapons grade. So what has Iran been doing all the while as negotiations have been going on? Iran has been rapidly enriching more uranium to the 60% level. So that's highly enriched uranium, a stone's throw away from weapons grade. It has increased its stockpile of 60% enriched uranium

uranium by 50% since early February. It's been basically adding about one nuclear bomb's worth of highly enriched uranium per month. So it's making its intentions fairly clear here and trying to gain as much leverage as it can.

At the same time, it's been stonewalling, misleading, and outright lying to the nuclear inspectors about its nuclear activities now and in the past. This actually raises serious difficulties for

a deal because if we don't know the current or past state of Iran's nuclear program, it becomes very difficult to monitor what Iran is doing and verify that it hasn't breached whatever limits end up being set in a nuclear deal. A couple of key points to underline here. One is this notion of what the levels of enrichment mean because

I think people sometimes hear that figure. It's 3.67% enriched, and they think that is a long way from 90% enriched. But the way that the science and the math work out, it's about two-thirds of the work is already done. And the second is this point about civilian nuclear reactors. That's what Iran is saying, that it wants to run a civilian program. But correct me if I'm wrong, Elliot, aren't there, I mean, maybe a couple dozen countries that

run civilian reactors and don't have weapons programs like Canada or South Korea. They have civilian power, nuclear power plants, but they don't have nuclear weapons. And so they are importing that fuel. Is that basically the alternative? So,

There are 23 states from Canada to the United Arab Emirates that have civil nuclear energy but do not enrich uranium domestically. They import it, like you said. And that's the safe way to...

Because there is no path to a nuclear bomb when you don't have that domestic enrichment program that you can ramp up very, very quickly, actually. And that's why Trump, his envoy, Witkoff, and many other U.S. officials have made it their red line, no domestic enrichment for nuclear.

Iran. And I would tell you, that's also why Iran has made having some enrichment its red line in these negotiations, because it wants that path to a nuclear weapon. So where do you see this negotiation now going? I mean, this is breaking news that the Supreme Leader of Iran is saying no on ex-formerly Twitter to this proposal by the Trump administration. I haven't seen any reply yet

from the president himself on Truth Social or the White House. But what is the alternative option? Is it more talks? Is it back to maximum pressure? What's your read of the White House there? Well, I would say that the Ayatollah has not so much rejected Trump

The deal, as he has reiterated, his longstanding stance. I would be very surprised if the Ayatollah's negotiators responded with an outright rejection. What they'll probably do is what they've been doing, which is

keep the talks going, say, well, we have a few revisions that we'd like to make to that and sort of reverse all the key points of the offer. And so, like you say, that puts the ball in the White House's court. I mean, is it going to allow that?

and work out some sort of temporary agreement while leaving the key big issues a little vague and then sort of miss the window of opportunity here with Iran, or it has two options.

a military option and a heavy sanctions option. We reported earlier, broke the story about the Trump administration pausing all new sanctions on Iran, not imposing any new ones to try to do anything but throw off, derail talks. That policy appears to have been killed.

after the publication of the editorial. So they will continue with sanctions, but will they slow on them or will they speed them up and actually tell the Ayatollah, there's no time to waste here. You can come to terms or there are much worse options waiting for you. But talk about what that looks like and the window of opportunity here. I mean...

Is it just me that the Trump administration has more leverage, perhaps, than President Obama did when he was in nuclear negotiations with Iran, in part because of the success of Israel in defanging those Iranian proxies, Hezbollah and Hamas, and then striking and debilitating some of the Iranian air defenses? And so the Ayatollah is not feeling as safe there in Tehran, perhaps, as he used to.

That's right. Unless he is talking with the Americans.

That's what provides him safety. And that's what provides his nuclear program safety. It even provides a measure of safety to his economy even before there's been any formal sanctions relief. Iran's currency had been plummeting. It's still, you know, in the toilet. But the fall has been stopped by these talks, which give investors some measure of, okay,

War is not coming. They're going to work something out. So even though he's made it clear that he rejects America's key term,

It is in his interest by far to drag these talks out, keep the Americans going and see if he can get some more terms in his favor. I would just reiterate one last thing. And that is that he had long said he would never negotiate with President Trump, who

who killed his general Soleimani, who backed Iranian protesters, who imposed maximum pressure sanctions on him the first time. He's talking with Trump now, and he is doing that because he had no better choice. He understood the power dynamics at play, and he was compelled back to the table. Now the question is, will Trump use all of that leverage again?

that he has. Thank you, Elliot and Kate. Thank you all for listening. You can email us at pwpodcast at wsj.com. If you like the show, please hit that subscribe button. And we'll be back tomorrow with another edition of Potomac Watch. The spirit of innovation is deeply ingrained in America, and Google is helping Americans innovate in ways both big and small.

The Department of Defense is working with Google to help secure America's digital defense systems, from establishing cloud-based zero-trust solutions to deploying the latest AI technology. This is a new era of American innovation. Find out more at g.co slash American innovation.