20 May 2025
A Policy Take On The "Big Beautiful Bill"
Major Spending Cuts. . .Changes to Medicaid and Health Insurance Marketplaces: The Energy and Commerce Committee’s proposal includes changes to major federal health programs. It would cut Medicaid spending by imposing work requirements for able-bodied adults without dependents, increasing eligibility checks to twice a year, reducing the Federal Medical Assistance Percentage (FMAP) for states covering undocumented immigrants, introducing cost-sharing for Medicaid expansion enrollees, banning new or increased provider taxes used to draw federal funds, and capping provider payments at Medicare rates. It would also codify proposed changes to the federally subsidized Health Insurance Marketplaces that would reduce participation in the Marketplaces. These proposals would reduce the deficit by more than $900 billion over the budget window.Changes to the Supplemental Nutrition Assistance Program (SNAP): The Agriculture Committee’s proposal would reduce spending on SNAP by more than $290 billion over ten years. The bill would shift a significant portion of SNAP benefit costs to states with a new cost-sharing formula linked to payment error rates. It would also create additional work documentation requirements, limit the growth of the Thrifty Food Plan, shift administrative costs to states, and make other changes to reduce federal SNAP costs.Changes to student loans: The Education and Workforce Committee’s proposal would eliminate subsidized and income-driven loan repayment plans, impose new overall limitations on student borrowing, and tighten Pell Grant eligibility. Altogether, the Education and Workforce Committee’s proposal would reduce spending by $350 billion over the budget window. Under federal budget accounting rules, the lifetime subsidy costs of student loans are measured on an accrual basis and recorded up front. As a result, almost $200 billion of the Committee’s total savings are recorded in the budget immediately in Fiscal Year 2025.
Trump's Tax Proposals For Tips, Overtime, And Social Security Are Skimpy
No Tax On Tips
Trump initially promised to end taxes on tips while campaigning in June in the swing state of Nevada. The hospitality industry is huge in Nevada, making up more than 20% of jobs in the state. The pledge didn't make it into the draft bill but did make it into the chairman's amendment, introduced on Monday.As proposed, tip income would be temporarily deductible—only for tax years 2025 through 2028—for individuals who work in what are considered “traditionally and customarily tipped industries.” (According to the proposal, that would only include industries that accepted tips on or before December 31, 2024—Treasury is directed to make a list of those that qualify.)
Some media and social media reports I've seen say that this is not allowed for non-itemizers, but the bill language states that it is an "above the line deduction" available to non-itemizers. But many tipped workers only pay FICA payroll taxes and state income taxes on tips anyway (due to the large standard deduction and the fact that many tipped workers work part-time).
Self-employed persons, like Uber and Lyft drivers, would also qualify for the break as currently written.Highly compensated employees (those who make over $160,000 in 2025) would be excluded. And, in a nod to concerns that all of the sudden, clever tax lawyers, business owners and others could wiggle their way into a no-tax-on-tips zone, Treasury is directed to craft regulations or other guidance to “prevent reclassification of income as qualified tips... to prevent abuse of the deduction.”It's important to note that this is a federal income tax deduction, not an exclusion. That means that tips would still be reportable—and taxable at the state and local level. It also means that tips would remain subject to payroll taxes, including Social Security and Medicare, for employees.Employers will get a break, however, via a tip credit. The deduction, which has been in place since 1993 for restaurants, is known as the 45B credit and allows for a rebate on the entire employer side of FICA taxes on tips. The instructions for claiming the 45B credit made clear it covers tips to employers involved in "providing, delivering, or serving food or beverages for consumption." The result is that tips provided elsewhere—like in salons—are subject to payroll taxes for both employees and employers, even though not a penny goes to the salon.The most recent tax bill proposes to change that by extending the benefit to the beauty industry. Under the amendment, section 45B would be amended to include barbers and hair care, nail care, esthetics, and body and spa treatments.
No Tax On OvertimeTrump also promised to eliminate taxes on overtime pay. That pledge was originally made in September 2024, during a speech in Tucson, Arizona. That break also didn't make it into the draft bill, but did make it into the chairman's amendment.As proposed, workers who receive overtime would not have to pay taxes on that extra compensation. For purposes of the rule, overtime compensation is defined as the amount paid in excess of the employee’s regular rate—only the overtime compensation is part of the break. While taxpayers wouldn’t have to itemize to take advantage of the benefit, it would be temporary—only for tax years 2025 through 2028.This tax break is also proposed as a deduction, not an exclusion. That means that overtime pay would still be reportable, and, as with tips, overtime pay would remain subject to payroll taxes, including Social Security and Medicare, for employees.Quick Payroll Tax PrimerConfused about the employer versus employee sides of payroll taxes? For wage earners, Social Security and Medicare taxes are called FICA (Federal Insurance Contributions Act) and are taken out of your paycheck. Taxes on self-employment income are sometimes called SECA (Self-Employment Contributions Act) taxes since self-employed persons pay both the employee and employer contributions.If you're employed, you pay Social Security tax at a rate of 6.2% as the employee, and your employer pays the same tax rate on your behalf. If you're self-employed, you are responsible for both parts.Social Security taxes are subject to a wage cap. That means you pay Social Security taxes on your earnings until you hit the magic number. After that, your wages are no longer subject to Social Security taxes. For 2025, the magic number is $176,100. That means that whether you make $1,000 or $100,000, you will pay Social Security taxes on your income. But if you earn $176,101? You'll pay Social Security taxes on the first $176,100, but not on the extra dollar. And if you earn $1,176,100? Same result: you'll pay Social Security taxes on $176,100, but not on the extra million.In contrast, all wages are subject to Medicare taxes. If you're employed, you pay Medicare tax of 1.45% as the employee, and your employer kicks in tax at the same rate. As before, if you're self-employed, you'll pay both portions, for a total tax rate of 2.9%.High-income taxpayers are also subject to an additional Medicare tax of 0.9% tacked onto wages that exceed $200,000 for single filers—those thresholds are $125,000 for married taxpayers filing separately and $250,000 for married taxpayers filing jointly.If you're a wage earner, your employer collects your Social Security and Medicare payments and remits both their portion and your share to the government. Self-employed persons pay the IRS directly. Retaining payroll taxes on tips and overtime may mean a bigger bite at tax time, but there is an upside: No matter who pays, these taxes are credited toward your retirement benefits.
No Tax On Social SecurityLast year, also on the campaign trail, Trump promised to exempt Social Security income from tax. The idea was popular, but likely because many people do not understand how Social Security income is taxed. The majority of people who get Social Security do not pay federal income tax on those benefits—according to the Social Security Administration, only about 48% of people pay federal income taxes on their benefits (though some studies suggest that the percentage is higher).If your only source of income is your Social Security check, your benefits are generally not taxable. You may not even need to file a federal income tax return.If you receive income from other sources, your benefits would not be taxed unless your combined income exceeds the base amount for your filing status, and then, the taxable amount is based on income. No one pays federal income tax on more than 85% of their Social Security benefits.There is no language in the draft bill or the amendment that would further exempt Social Security from tax. However, the proposal does include a new—also temporary—deduction of $4,000 for the tax years 2025 through 2028.The deduction would be available to taxpayers who itemize and those who claim the standard deduction. It would begin to phase out once income hits $150,000 for married taxpayers filing jointly and $75,000 for all other taxpayers (disappearing completely when modified adjusted income reaches $350,000 for married taxpayers and $175,000 for all other taxpayers).To claim the deduction, you would have to have a Social Security number and, if married, your spouse would also have to have a Social Security number.The deduction is not the same as a refundable credit. That means you will not receive a benefit if you have little to no taxable income—the case for most Social Security recipients. The deduction simply disappears. Realistically, the deduction won't help seniors with little to no other income sources outside of Social Security and will primarily benefit those with income in addition to Social Security.
What Comes NextYou can see the original draft version of the bill before the markup here. The Smith amendment version is here.The bill is still working its way through the House where Republicans hold a slim majority. Even if it's approved, the House bill must conform to the Senate version to be signed into law.
From Forbes.
Who could claim a $10,000 deduction on car-loan interest?The bill also includes a deduction worth $10,000 on the interest on auto loans for vehicles, if that vehicle’s “final assembly” occurs in the United States. It’s a reflection of the Trump administration’s stated mission to nudge more manufacturing back to America — and then reward consumers for buying American-sourced products.The deduction amount starts phasing out at the $100,000 mark for individuals and $200,000 for married couples filing jointly. It completely ends when modified adjusted gross income goes past $150,000 for individuals and $250,000 for couples.Cars are expensive, though. People paid more than $47,000 on average in March for a new vehicle, according to Cox Automotive. So buyers who want to take advantage of the potential break would have to start planning a major purchase.If the bill became law, the deduction on car-loan interest would be in place from tax years 2025 to 2028.
19 May 2025
U.S. Apparently Ditching Robotic Combat Vehicle Program
The U.S. Army is apparently cancelling the Robotic Combat Vehicle program (RCV). Like the JTLV, this was one of the technologically and militarily more sound new programs in the Army, so I'm not really sure why this decision was made (which may very well be for unsound reasons, given the track record of the Trump administration). (The U.S. Marine Corps continues to support the JTLV and doesn't understand the Army's action on that program either.)
The RCV program put considerable firepower in a low weight, easy to deploy package, while reducing the extent to which soldiers are in harm's way. And, it did not appear to be facing significant cost overruns, delays, or strong technological challenges. Four working prototypes were competing and all of them functioned quite well. And, it isn't a terribly expensive program as major military procurement programs go.
The report is attributed to the Breaking Defense newsletter, apparently in reference to this story:
WASHINGTON — An Army two-star general has told staff that the service expects to halt work on its embattled Robotic Combat Vehicle (RCV) program and pause a new howitzer competition, according to several service and industry sources.The news was delivered just hours after Defense Secretary Pete Hegseth and top Army leaders unveiled a massive service shake up that will combine Army Futures Command and Training and Doctrine Command, and stop production on the new light tank, the M10 Booker.“Here’s what we believe is true of today, RCV will stop development. The future of the robotic software program is unknown,” Program Executive Officer for Ground Combat Systems Maj. Gen. Glenn Dean wrote in an internal Army email Thursday, according to one of the industry sources. Four other sources told Breaking Defense they were aware of or saw the email.An Army spokesperson did not immediately respond to questions about this letter or new details about expected program cuts. However, three Army sources confirmed that RCV would not move forward, despite a previously expected contract award.In early March, Breaking Defense first reported that industry sources had been notified that Textron Systems’s Ripsaw 3 had won the RCV competition and the service was preparing to ink a deal with the victors. But around that same time, Army leaders identified RCV as one program to cut as part of the 8 percent budget drill to realign funding toward higher priorities, one service official told Breaking Defense.“We need robotic combat vehicles, but we want a consortium of vendors to bring their robotics and the best software folk,” that first Army sources explained today. “We don’t want to downselect just to one vendor and pay almost $3 million per copy.”A second Army source confirmed that rationale, noting that the idea is to select the “absolute best next-generation robotic for the warfighter,” and the decision was made to open it up industry again. (This was a second go around, of sorts, for the RCV program after the service revamped the acquisition strategy).
Dean’s email also included a line saying that “Artillery modernization is still on ‘pause’ for the moment,” which appears to be a reference to a potential competition for a new self-propelled howitzer that has been closely watched by industry.After cancelling work on its Extended Range Cannon Artillery (ERCA) platform last year, the Army started a globetrotting roadshow evaluating existing self-propelled howitzers. Service officials decided they wanted to forgo another foray into developing their own and will launch a full and open competition.The plan had been to release a Phase I request for proposal in mid-February, Dean previously told Breaking Defense, but that document still has not been published. It is unclear if the Army will launch forward with the competition later than expected but clarity may only come once the fiscal 2026 budget request is released.In addition to the RCV hit and howitzer still up in the air, the Army announced Thursday it will stop producing Humvees and Joint Light Tactical Vehicles.In his email, Dean confirmed the fate of several other programs affected.“M10 Booker will not move into full-rate reproduction, and it is unknown if the Army will field the systems currently in production or buy any additional [low-rate initial production] quantity,” he added. “AMPV [Armored Multi-Purpose Vehicle] production will be reduced to minimum sustainment rate but mitigated by Ukraine buyback. Stryker will not award further production orders in accordance with the AROC [Army Requirements Oversight Council].As Dean wrote in his email, it is not clear what the service will now do with the 80-plus Bookers it has acquired. They could be fielded in a limited quantity or even stripped of sensitive components and sold to foreign countries.Speaking to reporters at the Pentagon on Thursday, Army Secretary Daniel Driscoll called the Booker acquisition decision “a classic example of sunk cost fallacy, and the Army doing something wrong.”“We wanted to develop a small tank that was agile and could be dropped into places our regular tanks can’t. We got a heavy tank,” he added.While these are the programs negatively impacted, it’s not all bad for planned modernization programs, with Dean saying the service wants to “accelerate” development of the Bradley replacement — dubbed the XM30 — and development of the future M1E3 Abrams main battle tank.Even before the Trump administration was sworn in, Army Chief of Staff Gen. Randy George was outspoken about his desire to cut programs he viewed as ineffective or too costly.“I’m tied to overall capability,” the four-star general told Breaking Defense during a March interview at Ft. Irwin, Calif. “How we do that is probably going to change … [and] with what equipment.”“Look at how much has changed in technology just in the last couple years, it would make sense that we probably wouldn’t buy the same things that we’ve been buying for a long time,” George added.
Defense contracts from all sectors have been bracing to see how this pans out with the ground vehicle sector preparing for the worst.
Buddhism And The State
Again, as was also the case in so many Buddhist countries, the success of Buddhism relied heavily on its connections to the court. In Korea, the tradition of “state protection Buddhism” was inherited from China. Here, monarchs would build and support monasteries and temples, where monks would perform rituals and chant sutras intended to both secure the well-being of the royal family, in this life and the next, and protect the kingdom from danger, especially foreign invasion.…As in China, the Korean sangha remained under the control of the state; offerings to monasteries could only be made with the approval of the throne; men could only become monks on “ordination platforms” approved by the throne; and an examination system was established that placed monks in the state bureaucracy. As in other Buddhist lands, monks were not those who had renounced the world but were vassals of the king, with monks sometimes dispatched to China by royal decree. With strong royal patronage, Buddhism continued to thrive through the Koryo period (935-1392), with monasteries being granted their own lands and serfs, accumulating great wealth in the process.
Education And Church Attendance In The U.S. And In Europe
The relationship between education and church attendance in the U.S. is the opposite of what you would expect in the U.S. according to data in this blog post.
In the U.S., more education corresponds to more church attendance (New Hampshire, Maine, and Wyoming are exceptions to that trend and a number of states seem to be bimodal with the least and most educated people both attending church at higher rates), while in Europe (except for the formerly Communist Lithuania and Slovakia) more education corresponds to less church attendance (although the least religious countries like Finland, France, Germany, Hungary and Iceland, are quite flat and the education-church attendance relationship basically breaks down).
I don't think that this means that more educated people in the U.S. are more religious, however.
Rather, I think that it means that more educated people who are religious are much more diligent in attending church regularly as their religion dictates (in part because they have more time to devote to church attendance), than less educated people who are religious but not very diligent. As one comment to the post notes, free time to spend on anything but working, eating, sleeping, and the basic needs of your household is increasingly a luxury good.
There is solid evidence (for example from Pew) that more educated American are less religious in terms of belief and the importance of religion in their lives (although the magnitude of this difference isn't as big as one might intuitively expect), but this isn't necessarily inconsistent with higher religious attendance by more educated people, if more educated people who are religious attend church more regularly than less educated people who are religious.
Also, there is evidence that students and college graduates of more elite institutions are much more secular than college graduates of less elite institutions.
To the extent that Pew and the U.S. survey cited in the blog post are at odds, however, Pew is more credible and has a long track record of accurate data in this area.
Also, it is worth noting that a variety of measures have shown that reported church attendance in the U.S. is much higher than the levels of actual church attendance. See, e.g., here and here. So, survey data on church attendance may not be the most accurate measure of actual behavior.
I also don't give much credit to an anecdotal evidence based book pointing to a religious revival among Gen Z people in the U.K., which does more to capture the changing flavor of religiosity among the minority of young people there who are religious, than capture of growing rate of religious affiliation among British youth.
I also suspect that there is a generational factor. The trend towards more secularism in Europe is 30-40 years older than it is in the U.S. So, older educated Europeans are much more secular than older educated Americans, an effect which may swamp differences in rates of secularization among younger people by level of education. Further, education levels rose sooner in the U.S. than they did in Europe, so in Europe, education level is a better proxy for age than in the U.S.
It is also worth noting that the European data breaks out far more detail among non-college graduates and among non-high school graduates. In part, this reflects larger numbers of immigrants to Europe with very low levels of formal education, and immigrants, in general, tend to be more religious (because religion thrives when it defends a threatened culture). Apart from people who didn't graduate from high school, the European data is quite flat.
U.S. Data
16 May 2025
How Should The U.S. Military Be Organized?
Team Death
In the "they didn't teach us this in law school" department:
15 May 2025
Residential HVAC Economics And Environmental Considerations
I live in a 100 years old house in central Denver with natural gas boiler driven steam heat radiators (the steam heat boiler was originally coal fired, which is not an option now, then converted to gas, and then replaced) and a swamp cooler. (I'm looking at this now because my 24 year old swamp cooler is replaced for the first time today.)
Is this the best choice from a cost perspective?
Yes.
Is this the best choice for the environment?
Probably, although a heat pump is quite competitive from an environmental perspective and will grow more attractive as the power grid in Colorado becomes greener over the next decade or two.