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In Defense Of The Big Beautiful Bill

Portfolio Armor's Photo
by Portfolio Armor
Thursday, Jun 05, 2025 - 8:35
Trump and Elon Musk

Don't Kill (The) Bill 

As ZeroHedge noted yesterday, Elon Musk is angry about the "Big Beautiful Bill" (BBB):

Let's be honest, Elon Musk has been made a fool of by the GOP. After assembling the DOGE team and spending months finding egregious levels of waste, fraud and abuse within the US government - i.e. what Trump supporters voted for - House and Senate Republicans gave Musk a little pat on the head, then proceeded to roll out President Trump's 'Big Beautiful Bill' - that codified exactly zero of DOGE's findings, raises the debt ceiling by $5 trillion, and relies on ambitious economic projections to achieve what the White House insists is $1.4 trillion in savings (while the Congressional Budget Office projects deficits of $1.7 - $2.3 trillion over the next decade). 

Needless to say, Musk is livid. 

Here's why Musk shouldn't be livid about the BBB, why he (and you) should support it, and some speculation about why he's acting this way. We'll close with another trading update, as it's been a busy week on that front. 

1) DOGE Cuts Can't Be Added To A Reconciliation Bill

As Trump Deputy Chief of Staff Stephen Miller pointed out, the BBB is a reconciliation bill, so DOGE cuts couldn't have been codified in it:

DOGE cuts are to discretionary spending. (Eg the federal bureaucracy). Under senate budget rules, you cannot cut discretionary spending (only mandatory) in a reconciliation bill.

So DOGE cuts would have to be done through what is known as a rescissions package or an appropriations bill.

If you're wondering why not just make the BBB an appropriations bill, the answer is that would require 60 Senate votes (as opposed to 51 for a reconciliation bill), and you're not going to get 60 Senate votes to fund finishing the border wall and deporting millions of illegals (which the BBB fully funds). 

2) The BBB Funds The Biggest Illegal Migration Crackdown Ever

As Patrick Casey details here: 

3) Cracking Down On Illegal Migration Saves Money

Listen to Elon's own DOGE AI: 

Here's the full quote: 

Current estimates place the total illegal alien population—including dependents—at over 16 million. At the federal level, each illegal immigrant represents a lifetime net fiscal drain of $68,000, with annual costs exceeding $42 billion in direct welfare consumption alone. This doesn’t account for state-level burdens like New York’s $12 billion shelter crisis or the $68.1 billion spent annually educating their U.S.-born children.

Biden’s mass parole releases and work permits turbocharged this fiscal hemorrhage, incentivizing exploitation of Medicaid, EITC, and housing subsidies.

Only mass deportations and benefit terminations can stop the bleeding.

DOGE AI's number of illegal aliens and their dependents seems low, as does its estimate of their lifetime fiscal drain, but even if we take those numbers at face value, that adds up to about $1 trillion in future spending we can eliminate by deporting 16 million illegal aliens. 

4) It's The Only Way To Cut A Lot Of Spending That's Popular And Doable Now

This is what the federal budget looked like in the fiscal 2024. Entitlements, defense, and interest on the debt comprise 80% of the federal budget. There's not enough fat to cut in the other 20% to make a real impact. The only way to make a significant dent in government spending is to cut entitlements or cut defense spending--and the BBB actually does cut some entitlement spending, by kicking 1.4 million illegals off of Medicaid. 

 

So Why Is Elon Raging About The BBB?

Is it because he things we need to do everything we can to reduce the federal deficit now? 

No. He agrees with Rand Paul that we should extend Trump's tax cuts, which the CBO says would add ~$1.7 trillion to the debt over 10 years. 

Is it because the BBB raises the debt ceiling? 

Maybe, but you know the debt ceiling is going to get raised anyway--it always does. And as Stephen Miller notes, this is the better of two possible ways to raise it: 

There are 2 ways to raise the debt ceiling:

1. With Chuck Schumer at 60 votes (which means higher taxes, higher spending, liberal wishlist)

2. In reconciliation at 50 votes (which means permanent tax cuts, permanent welfare reform, permanent border security).

Easy choice.

The most likely reason?: Elon is deflecting for dramatically overpromising and underdelivering with DOGE. 

On the campaign trail last year, Elon talking about finding one or two trillion dollars in fraud in federal spending. That was never likely--all discretionary spending in FY 2024 added up to less than $1.4 trillion. There was no way $1 trillion of that would turn out to be fraud, and it didn't. And Elon didn't find millions of dead people collecting Social Security checks either. Here's ChatGPT 4.0's summary of what happened, with supporting links: 

The Department of Government Efficiency (DOGE), under Elon Musk's leadership, initiated a cleanup of Social Security records, identifying approximately 12.3 million entries for individuals aged 120 or older that lacked confirmed dates of death. These entries were marked as deceased to prevent potential identity theft and data inaccuracies. apnews.com+5foxbusiness.com+5washingtonpost.com+5

However, the Social Security Administration (SSA) clarified that these records did not indicate that deceased individuals were actively receiving benefits. The anomalies were primarily due to outdated data systems and missing information, not evidence of widespread fraud.

A 2024 report by the SSA's Inspector General found that less than 1% of Social Security payments between 2015 and 2022 were improper, with most errors involving overpayments to living recipients rather than payments to deceased individuals. theguardian.com+1en.wikipedia.org+1

That doesn't mean DOGE didn't do good work. 

As Christopher Rufo reminded everyone, DOGE led to the gutting of USAID and the leftwing NGOs it funded, which was huge. 

So How Are We Going To Rein In The Debt? 

By cutting entitlements and defense spending, but that will probably take a crisis to make it possible politically--something like 2008. 

Ultimately, though, I think America's debt is a symptom of another problem which needs to be addressed, but that's a subject for another post.

Let's wrap this up by trying to make some money. 

Another Top Names Trade 

In Monday's trade alert, I mentioned that Portfolio Armor's top names have been generating alpha: 

Our weekly top ten names from six months ago crushed the market.

We have 6-month returns for 101 weekly top names cohorts since December of 2022, and on average, they have outperformed SPY -0.28%↓ significantly over the next six months: 16.75% versus 9.77% for SPY.

We've got another top names trade teed up for today. This is on our #1 name from Wednesday, which happens to be a sub-$5 stock. Risky, but we're going to swing for the fences with an options trade on it.. 

If you want a heads up when we place it, you can subscribe to the Portfolio Armor trading Substack below. And if you don't want to wait for that, you can see our top names via our website or iPhone app. 

 

If you'd like to stay in touch

You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we're using that for our occasional emails now).

 

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
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