US Senator Peter Welch of Vermont Talks CBO’s New Tax and Tariff Estimates
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Democratic Senator Peter Welch of Vermont. He's a member of the Senate Finance Committee and it's great to have you back, Senator, on Bloomberg TV and radio. I'd like to start with the CBO since we were just talking to Senator Hagerty about that. It is quite the dual headline today. The tax bill would add $2.4 trillion to U.S. deficits, but at the same time, the CBO is estimating that Donald Trump's tariffs could cut the budget gap by even more, $2.8 trillion. So will tariffs pay for the tax cuts?

No, I mean, I actually see it exactly the opposite way. It's $5.2 trillion that is essentially going to be added to the deficit. Here's how, okay? The CBO says it's a $2.4 trillion deficit buster right now. The tariffs, the question on tariffs is who pays?

Are those paid by foreign governments? That's essentially what President Trump is asserting. But when I talk to folks, farmers, they're paying 25% more for their fertilizer. When I talk to steel manufacturers that use steel, they're paying 50% more. So that revenue is a tax that's paid by our businesses.

and by our consumers. And you're seeing the president trying to shield that by telling Walmart to eat it. They're not going to do it any more than any other supplier can. So that's really bogus. Everybody knows we're going to pay those tariffs.

Well, as we consider the way in which tariffs, Senator, factor into this revenue picture, knowing there could be revenue lost as a result of these tax cuts, it is worth noting that taxes are not the only thing in this one big, beautiful bill. It also is intended to raise the debt ceiling by $4 trillion, at least the version that passed the House. And President Trump today suggested the debt ceiling should be abolished entirely, actually saying he agrees with your colleague, Democratic Senator Elizabeth Warren of Massachusetts, who we spoke with

about that earlier today. This was her live reaction, sir. Let's listen together.

I think that Donald Trump and I, hey listen, I'm ready to join up with him and make that happen. We need to get rid of the debt ceiling altogether. Not extend it, not say, ooh, while this is going on, this budget negotiation, let's just roll out a few trillion dollars more in the debt ceiling. Nope. That has gotten us into trouble before. It continues to get us into trouble. Donald Trump is right. Let's get rid of it altogether.

Is this an effort you too would sign on to, Senator? You know, I think the debt ceiling is a bit of a sideshow here at this moment. The question really, with or without the debt ceiling, should we be raising the debt by $2.4 trillion when we're going to pay for that by kicking 16 million people off of health care on the Medicare program where we're going to make folks who are on the Affordable Care Act lose it because they won't be able to afford it?

when families that depend on nutrition benefits and the SNAP program are going to lose that. So, you know, what I see here with the economic policy of Trump is, one, tax cuts that are not going to be pro-growth. I do disagree with Senator Haggree.

to a deficit that is going to result in higher interest rates. It means higher car payments for folks, higher cost of mortgages, and of course any businesses that want to borrow money are going to pay more. So what I'm concerned about is not the policy of the debt ceiling. I'm concerned about the policy of fiscal policy of increasing the debt that's going to increase our interest rates and doesn't go into any productive pro-growth activities.

Senator, I know you're joining forces with the aforementioned

Elizabeth Warren on an inquiry into Republicans' effort to use something called the current policy baseline. Our audience here on Bloomberg is pretty familiar with it at this point. It essentially sets the baseline for this entire construct when it comes to how to pay for these tax cuts. You're arguing it amounts to magic math and a sleight of hand. This was back in February when the inquiry was launched. What have you come up with? Right.

This is a political debate where the proponents of the tax cut are trying to make it appear as though it's not going to result in a deficit by doing essentially magic accounting. I mean, the bottom line here is we should have an on-the-level debate. The CBO says this will add $2.4 trillion to the deficit. So the question is, is it worth it? What are we going to get out of it? Who's going to win? Who's going to lose? That's really the heart of this question.

Well, as we consider the CBO score, not just of this bill, but what you were speaking about a moment ago, Senator, they're scoring on tariffs as well, who ultimately will bear the cost of them. I would like to ask you, given you were just part of a congressional delegation to Canada over the Memorial Day recess, about Canada in particular. As earlier today, we spoke with Danielle Smith, the premier of Alberta, and this is what she had to say about the prospects of trade negotiations going well between our two countries.

In Canada, there's optimism. I just this week met with my counterparts, the 13 premiers, as well as the federal prime minister. And because we've got G7 taking place in the coming weeks in my home province of Alberta in Kananaskis, I think that everybody's hopeful that it would be really nice either just before or during or just after to announce that there has been some kind of detente or interim step towards getting to a comprehensive renegotiation of trade.

Senator, did you leave your trip to Canada feeling like they are ready to make a deal? And do you think the same of the Trump administration? Well, the tone that I just heard is the tone I heard there. They regard themselves as our closest allies and I regard us as their closest ally, especially those of us like Kevin Cramer of North Dakota on the border, me, Vermont, Senator Shaheen on the border. But the reality is there was really significant change

heartburn on the part of Canadians with the 51st state discussion, the Governor of Canada discussion. And what is happening right now is our farmers, like in Vermont, they're paying 25% more for their fertilizer. And they're tight margins. They can't make it. Our tourism is collapsing with the Canadians. Senator Sheehy mentioned that the manufactured products that used to be going to Canada from

New Hampshire are really way down. So the real world impact of these tariffs is affecting business. The other thing that's really problematic is the president has changed his tariff policy 22 times already. And what I hear from businesses, we were down at Orvis

in southern Vermont, there's no way they can plan with this constant situation up and down. The business folks wake up and they look at the news or they try to find from whatever source they can, what are our tariffs today? And folks who have products coming in on a boat, they don't know whether to accept delivery because of the ever-changing nature of these tariffs. So the chaos is really tough.

Well, if in fact we are on track to some progress here, Senator, just to get back to the question, is there any chance you could see the framework of a deal or something more robust around the G7 in the weeks ahead?

You know, the reality is none of us know. You know, I know as much as you know. So we ask somebody and we get some of the latest information. We read what's on the news and what's on the blurbs. But the fact is there's been no coherent policy that has been sustainable. That's the constant changing.

In truth, none of us know. And it's not as important that I know. It's really important that a farmer knows what are they going to pay for fertilizer. It really is important what a manufacturer knows what they're going to have to pay for steel or aluminum. And stability is so essential. And it doesn't matter whether you're a Republican business that might have voted for President Trump or you're a business where you voted for Harris. The bipartisan nature of this policy is to inflict pain on everyone.

All right, Senator, we appreciate you joining us. Democratic Senator Peter Welch of Vermont, thank you for your time.

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