“Don’t come back and send us a bill that’s going to ratchet up deficits. We can’t have that. And by the way, I think the overriding governing principle ought to be watch the bond markets.”
That was Representative Chip Roy, a Texas Republican, speaking on CNBC shortly after voting for the One Big Beautiful Act bill, which will ratchet up deficits. As he spoke, producers juxtaposed a graphic showing bond rates going in the wrong direction.
Yahoo! Finance reported yesterday morning, “The 30-year Treasury yield is now trading at its highest level since 2007, climbing above 5.1% following a weak Treasury auction and renewed fiscal concerns … after the House approved President Trump’s sweeping tax reform package, reigniting investor anxiety over the country’s worsening fiscal trajectory.” The New York Times noted, “The 30-year yield is trading about 0.7 percentage points higher than its low in April—a huge move in such a short time in that market.”
Roy belongs to the House Freedom Caucus, supposedly the fiercest budget hawks in Congress. They supported Representative Mike Johnson for House Speaker on the condition that “any reconciliation package reduces spending and the deficit in real terms with respect to the dynamic score of tax and spending policies under recent growth trends.” Several Freedom Caucus members said they would vote against the bill before they did just that, surrendering to the president and House Republican leadership.
The chickenhawks can’t keep their story straight about why they caved. A Freedom Caucus statement on X boasted that they “delivered the votes necessary to advance President Trump’s agenda” after negotiating “five times the deficit reduction originally proposed.” Roy didn’t go full gaslight, admitting to Roll Call, “We got some good cuts,” referring to faster phase-ins of Medicaid’s work requirements and phase-outs of the Inflation Reduction Act’s green energy tax credits, “but it just still blows a lot of deficits in the first few years.”
Roy is showing greater candor, yet trying to have it both ways. You can’t claim “we can’t have” a bill that “will ratchet up deficits” and admit it “still blows a lot of deficits.”
One week ago, Representative Josh Brecheen of Oklahoma and a Freedom Caucus member posted on X, “After a meeting with the CBO this morning, it’s clear we don’t know the true cost of this bill or whether it adheres to the Budget blueprint. We have a duty to know the true cost of this legislation before advancing it. If we are to operate in truth, we must have true numbers—even if that means taking some more time to obtain that truth.” CBO had no chance to review the bill’s final version, yet Brecheen and his Freedom Caucus brethren voted for it anyway.
Updated numbers would have made it harder for the Freedom Caucus to look their constituents in the eye. Before the final changes, several analyses of the preliminary version of the bill, from Congress’s in-house Congressional Budget Office and independent outfits, showed the spending cuts didn’t come close to offsetting the costs of the tax cuts. That includes a “dynamic score” analysis conducted by the conservative Tax Foundation, which projected an additional $3.3 trillion in deficits over 10 years. No way tweaking the timing of Medicaid and clean energy cuts would close a $3.3 trillion gap because the total cost doesn’t come near that number.
Republican hypocrisy, including Freedom Caucus hypocrisy, regarding deficit reduction is not new. When Democrats control Washington, Republicans get the fiscal vapors, fainting over every spending proposal. When they control Washington, they write billions and trillions of IOUs to dole out tax cuts. Giving away money is politically easy. Cutting spending is politically hard.
This time was supposed to be different. Since the pandemic, the debt as a percentage of Gross Domestic Product has blown past 100 percent. Republicans won control of the White House and Congress last year on promises to balance the budget, claiming to be willing to take drastic action. After all, Trump’s Department of Government Efficiency (DOGE) was willing to inflict all sorts of harm to cut federal spending, lay off more than 100,000 civil servants, and decimate entire departments.
Yet DOGE only claims to have saved $160 billion, which isn’t that big a dent in a nearly $7 trillion budget, and probably isn’t true. An analysis by the Partnership for Public Service found that DOGE has cost taxpayers $135 billion after accounting for paid leave, rehiring workers fired by mistake, and decreased productivity.
Freedom Caucus members, however, never claimed they would leave the cutting to Trump and Elon Musk. With the House majority so narrow, they could oust any Speaker who didn’t deliver on real deficit reduction.
Once again, the Freedom Caucus blinked. They are too cowardly to live up to their ideals if it means standing up to Trump, who traveled to Capitol Hill to browbeat the Freedom Caucus holdouts and rally the entire Republican Conference.
To be fair, their cowardice is politically rational. History shows that most voters don’t care about red ink, and many Republican voters do care about who Trump endorses in GOP primaries. The Freedom Caucus hasn’t paid a price for hypocrisy before. Why give up on hypocrisy now?
Here’s why: As Roy said, “Watch the bond markets.” Part of why Treasury yields have soared may be because Republicans raised expectations that this time there’d be real deficit cutting. A member of the Federal Reserve, Christopher Waller, told Fox Business Network, “Everybody I’ve talked to in the financial markets, they’re staring at the bill, and they thought it was going to be much more in terms of fiscal restraint, and they’re not necessarily seeing it.”
If rates remain elevated, that will have real-world consequences for average voters. As CNN’s David Goldman explained, “Higher bond rates are also going to make life more expensive for everyday Americans. Many loans pegged to Treasury yields, such as mortgages, credit card rates, and auto loans, are rising as bond yields grow. That could slow down the economy, taking some of the power out of the tax cut bill, which is expected to help juice the economy.”
The Senate is unlikely to accept the House bill as is, and a bicameral compromise will be necessary to get the One Big Beautiful Bill monstrosity on Trump’s desk. That means the Freedom Caucus will have one last chance to prove they are not cowards.
That’s too risky a bet for my money, but unfortunately, the bond market isn’t a safe bet anymore.
