Yesterday, we talked about the Fed's influence on the budget deficit.
As we discussed, the Fed continues to hold rates up (135 basis points above the neutral rate), despite inflation falling back to just a tenth of a percentage point from its target.
And on $36 trillion national debt, every percentage point, in excess of the interest rate necessary to keep prices stable and employment full, is unecessarily costing the country hundreds of billions of dollars in interest (this year!).
Let's take a closer look at the budget itself.
I asked three of the most advanced AI models to review the 1,038 page House approved "One Big Beautiful Bill Act."
Here's what each concluded …
OpenAI's ChatGPT o4-mini: "When you subtract everything the bill 'un-funds' from what remains, the overall federal-budget baseline is smaller than the current budget."
Google's Gemini 2.5: "The bill cuts deep into certain areas of federal spending (particularly climate and social programs) and seeks to improve efficiency of existing programs, intending to create a net reduction in overall federal expenditures relative to current law, even while re-prioritizing and increasing spending in other sectors like defense and border security."
Anthropic's Claude Sonnet 4: "It's a mixed package that includes both spending cuts in social programs and significant tax cuts, with the net effect being substantial increase in deficits. The bill does cut some government programs, but the tax reductions and defense spending increases more than offset these cuts, resulting increased borrowing rather than overall fiscal restraint."
So, the OpenAi and Google models stepped through the thousand page document and see significant cuts, and no new appropriations resulting in reduced federal spending. Not the extravagant "deficit blowing" budget we're hearing about.
However, the Anthropic model sees it differently.
How is that possible?
It didn't actually read the bill.
When forced to reconcile its conclusion against the other models, it admitted that it "was relying on secondary sources" that "appear to have either misunderstood the bill or were providing misleading analysis." It read the news.
It's conclusion after analyzing the legislation, is that it's "a rational growth bill that cuts wasteful spending."
As Bessent has promoted along the way, the plan is to reduce the deficit and debt through growth — growing the denominator (deficit/gdp and debt/gdp).
So, what's all the fuss about, aside from the typical political gamesmanship?
It's about the climate agenda.
As we discussed yesterday, the globally coordinated climate agenda that was funded with trillions of dollars (globally), and was intended to transform the global economy and reshape the world order, is on the chopping block in this budget — at least the United States' participation in it.