Good morning. Here’s the latest news to start your day:
Plus, the Bezos wedding is beginning. We have more on that below. But first, we look at the state of the economy.
Your questions about the economyIn a recent newsletter, we asked readers for your questions about the economy. You wondered about tariffs, real estate, Trump’s “big, beautiful bill” and more. Today, reporters at The Times answer. The bill and the economyI’ve read about how the bill could hurt the economy. But are there any parts of it that mainstream economists believe will help? I’m specifically curious about any new provisions, not extensions of expiring policies. — Kerry Bloomfield from Minneapolis Ben Casselman, The Times’s chief economics correspondent, writes: Yes, there are some parts of the bill that economists think would be good. Many endorse a provision that would let businesses deduct costs of building new factories, which could encourage new investment. Other provisions — such as imposing stricter work requirements for public benefits like Medicaid — win support from economists who lean conservative but aren’t outside the mainstream of the profession. Still, as your question suggests, economists across the ideological spectrum say the overall bill would hurt, in part because of its cost. It would add trillions of dollars to the debt at a time when economists worry about the risks posed by the country’s record debt levels. What, exactly, are the tax breaks I keep hearing about in the “big, beautiful bill” that will favor the most wealthy? — Molly from Illinois Andrew Duehren, who covers taxes, writes: There are a few. First of all, much of this tax bill is dedicated to extending tax cuts that Republicans first put in place in 2017. So without this bill, Americans who earn more than $626,000 would face a 39.6 percent tax rate instead of 37 percent. Another measure in the bill would extend a deduction for owners of many businesses. Americans making more than $1 million reap the lion’s share of this tax break. Then there is the estate tax, the levy collected on rich Americans’ assets when they die. Under the bill, the tax would kick in only for Americans worth more than $15 million. Without the bill, the level would drop to $7.14 million next year. What is happening with the housing market? I’ve been told for years that it’s a bad time to buy, which is confusing and distressing as a wannabe first-time homeowner. — Kaitlyn from Portland, Ore. Nikita Stewart, The Times’s real estate editor, writes: Kaitlyn, there’s a saying in residential real estate: Date the rate; marry the house. Rates can be lowered, but the amount you spend on a house is permanent. Still, this is not a great time for buyers. As of Wednesday, a 30-year fixed mortgage rate was 6.81 percent. And from what I can see in Portland, buyers are in a competitive market, despite those rates. The advice of real estate agents is to perhaps look at more affordable suburbs. Think about how much space you need. Can you live in smaller quarters to make homeownership more affordable? If that is a nonstarter, go back to the thought of dating and marrying. Can you find a reasonably priced home now and simply refinance your mortgage in the future? The size of governmentDOGE says it cut a great deal of wasteful spending. So how is it possible that the bill in Congress would increase the debt? Where is all that “saved” money going? — Erica from Austin, Texas Tony Romm, who covers economic policy, writes: The simple answer is that the House tax bill is much, much higher than the amount saved by DOGE. We don’t have a precise accounting of the cuts achieved by Elon Musk and his team of young aides. But Musk said in April that the group would save about $150 billion by the end of the fiscal year. (My colleagues later found big errors in his figure.) Still, the House-passed tax bill is expected to add $3.4 trillion to the debt within the next decade. The Senate’s current version has not been calculated yet.
There’s a lot of talk about Medicaid cuts. But how would the proposed bill affect Medicare? — Laura Classen from Delaware Margot Sanger-Katz, who covers health care policy, writes: The bill makes only a few changes to Medicare. The biggest one affects immigrants. Currently, those with lawful status become eligible for Medicare at 65 if they pay into the system for 10 years, the same way citizens do. The current bill would limit this benefit to immigrants with green cards and those from Cuba. The most dramatic change to Medicare probably won’t happen. A 2010 measure says that laws that increase the federal deficit automatically trigger cuts to government programs, including Medicare. Congress will almost certainly waive the rule before those cuts kick in. Trump and tradeWho collects the tariffs Trump imposes? How much has been collected since he took office? Where does the money go? — Kathryn Anderson from Salvisa, Ky. Ana Swanson, who covers trade, writes: U.S. Customs and Border Protection collects tariff revenue when goods come into the country, often by automatically debiting importers’ bank accounts. The money goes into a general fund controlled by the Treasury Department that pays for lots of different government expenditures. In May, the Treasury took in more than $22 billion in tariff revenue, a record high. That’s more than double the monthly figure during the Biden administration — but still far less than what the government takes in through taxes.
What are some ways Americans have been hurt by Trump’s tariffs? Am I just living under a rock to not have noticed any impact on my budget or spending yet? — Susie Prussack from Spokane, Wash. Lydia DePillis, who covers the economy, writes: Susie, I’m sure you’re not living under a rock. It’s true that tariffs have not made products, on average, more expensive — inflation has fallen slightly over the past few months. One reason may be that companies stocked up on imports before the new duties hit. They say they’re holding off as long as they can before raising prices, hoping Trump will strike trade deals and tariffs will plunge. Still, consumers may notice price hikes on some goods, such as strollers and other baby gear, that mostly come from China. And economists still think the tariffs will lift prices if they stay in place long enough. Do you have questions about the news for The Morning? Ask us here.
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