Trump and Republicans in Congress eye an ambitious 100-day agenda, starting with tax cuts
WASHINGTON — A tax break for millionaires, and almost everyone else. An end to the COVID-19-era government subsidies that some Americans have used to purchase health insurance. Limits to food stamps, including for women and children, and other safety net programs. Rollbacks to Biden-era green energy programs. Mass deportations. Government job cuts to “drain the swamp.”
Having won the election and sweeping to power, Republicans are planning an ambitious 100-day agenda with President-elect Donald Trump in the White House and GOP lawmakers in a congressional majority to accomplish their policy goals.
Atop the list is the plan to renew some $4 trillion in expiring GOP tax cuts, a signature domestic achievement of Trump’s first term and an issue that may define his return to the White House.
“What we’re focused on right now is being ready, Day 1,” said House Majority Leader Steve Scalise, R-La., after meeting recently with GOP colleagues to map out the road ahead.
The policies emerging will revive long-running debates about America’s priorities, its gaping income inequities, and the proper size and scope of its government, especially in the face of mounting federal deficits now approaching $2 trillion a year.
The discussions will test whether Trump and his Republican allies can achieve the kinds of real-world outcomes wanted, needed, or supported when voters gave the party control of Congress and the White House.
The past is really prologue here, as Lindsay Owens, executive director of the Groundwork Collaborative, recalls the 2017 tax debate. Trump’s first term became defined by those tax cuts, which were approved by Republicans in Congress and signed into law only after their initial campaign promise to “repeal and replace” Democratic President Barack Obama’s health care law sputtered, failing with the famous thumbs-down vote by then-Sen. John McCain, R-Ariz.
The GOP majority in Congress quickly pivoted to tax cuts, assembling and approving the multitrillion-dollar package by year’s end.
Since Trump signed those cuts into law, the big benefits have accrued to higher-income households. The top 1 percent — those making nearly $1 million and above — received about a $60,000 income tax cut, while those with lower incomes saw little more than a few hundred dollars, according to the Tax Policy Center and other groups. Some people ended up paying about the same.
“The big economic story in the U.S. is soaring income inequality,” said Owens. “And that is actually, interestingly, a tax story.”
In preparation for Trump’s return, Republicans in Congress have been meeting privately for months and with the president-elect to go over proposals to extend and enhance those tax breaks, some of which would otherwise expire in 2025.
That means keeping in place various tax brackets and a standardized deduction for individual earners, along with the existing rates for so-called pass-through entities such as law firms, doctors’ offices, or businesses that take their earnings as individual income.
Typically, the price tag for the tax cuts would be prohibitive. The Congressional Budget Office estimates that keeping the expiring provisions in place would add some $4 trillion to deficits over a decade.
Adding to that, Trump wants to include his own priorities in the tax package, such as lowering the corporate rate from 21% to 15%, and eliminating individual taxes on tips and overtime pay.
However, Avik Roy, president of the Foundation for Research on Equal Opportunity, argues that blaming the tax cuts for the nation’s income inequality is “just nonsense,” emphasizing that tax filers across the income ladder benefited. He points to other factors, including the Federal Reserve’s historically low interest rates that enable cheap borrowing, particularly for the wealthy.
“Americans don’t care if Elon Musk is rich,” Roy said. “What they care about is, what are you doing to make their lives better?”
Lawmakers typically seek to offset the cost of policy changes with budget revenue or spending reductions elsewhere. However, in this case, there are almost no agreed-upon revenue raisers or spending cuts in the annual $6 trillion budget that could cover such a significant price tag.
Some Republicans argue that tax breaks will pay for themselves through trickle-down revenue from potential economic growth. Trump’s tariffs floated this past week could provide another source of offsetting revenue.
Some Republicans contend there is a precedent for simply extending the tax cuts without offsetting the costs since they are not new changes but existing federal policy.
“If you’re just extending current law, we’re not raising taxes or lowering taxes,” said Sen. Mike Crapo, R-Idaho, the incoming chairman of the Senate Finance Committee. He described the criticism that tax cuts would add to the deficit as “ridiculous.” There is a distinction between taxes and spending, he said, “and we just have to get that message out to America.”
[p]The upcoming months promise to be pivotal as Trump and congressional Republicans attempt to enact their ambitious agenda while addressing the complexities of fiscal policy and economic inequality. The path forward is set to redefine the priorities and goals of American governance in an era filled with challenges and debates.
