MOOSPEAK: JUL03.2025
A Unique Piece of Legislation
Congress often feels compelled to name important pieces of legislation something other than “Bill # such-and-such”. Marketing demands a catchy name. Normally, the name the politicians apply reflects exactly what the people want but the precise opposite of what the bill is about or will do. The infamous “Inflation Reduction Act” a few years back that led to 40-year record inflation is a case in point. “The Affordable Care Act” which has nearly tripled health insurance costs since it passed forcing millions onto Medicaid roles is another.
The One Big Beautiful Bill Act (OBBBA), signed this weekend by President Trump, then is somewhat unique. Its name is not a complete misnomer. It may, in fact be 90% accurate. First, there is only one bill if only because the Republicans weren’t sure they had two in them. Second, OBBBA is big, as is most federal legislation. At 1100 pages, it’s certainly bigger than anyone with a life would care to read, but it is much smaller than past 20,000-page bills that Congress had to pass to find out what was in them. Third and fourth, it is not only a bill but an Act because it was actually passed by both houses of Congress and signed into law by a President. That leaves “Beautiful” as the only descriptor in the title open to challenge. Beauty of course is in the eye of the beholder. If we allow that “beautiful’ is only a 50-50 prospect and depends on who’s looking, we still find that 4.5 of the 5 words in the title are arguably accurate descriptors. By legislative nomenclature’s historical standards that is remarkable.
Politicians increasingly have the problem of being deemed liars. Naming legislation in a way that does not immediately call one’s truthfulness into question could be a revolutionary development for them. Instead of picking names that specifically promise things that they do not intend to deliver, pols could pick subjective, warm and fuzzy names that don’t pin them to an outcome that isn’t going to happen. Should they ever seek rehabilitation from a life of mendacity this might be a place to start.
Democrats and Republicans will argue over the merits of the new legislation and each of its constituent parts, but investors can agree that the markets’ biggest concern— uncertainty— has been alleviated. Tax policy has become permanent. Spending has been set, and the debt ceiling is out of the way. Unfortunately, the Act does not appear to bring the Federal deficit anywhere close to balance unless growth picks up. That may be bad for the taxpayer, but it is not necessarily bad for stocks. Next week, the US tariff regime will begin to be clarified.