We can’t continue to cut taxes without significantly reducing spending.

The House reconciliation bill recently passed by Republicans is a mixed bag. The Senate now has a chance to get it right. In doing so it should focus on two things:

With that in mind, here are a few things I would like to see done in the Senate.

First and foremost, senators should make the pro-growth provisions permanent. According to the Tax Foundation, ignoring the debt drag, the House bill would boost GDP by roughly 0.6 percent over the long term. That figure would rise to 1.2 percent if it includes permanent full expensing for business investments. If the Senate further expands expensing to include structures and other productive investments, growth could reach about 1.6 percent.

Second, senators should make sure that these improvements don’t further enlarge the deficit. The Senate should offset the revenue loss by rolling back the bill’s unnecessary subsidies. Adam Michel at Cato highlights several clear targets for cuts. I too would prioritize the following:

• Scale back, or eliminate, the expanded $40,000 SALT deduction cap, currently set to benefit taxpayers earning under $500,000. The original $10,000 cap imposed in 2017 was a vital and excellent reform. Returning to the old system subsidizes high-income taxpayers in high-tax states at everyone else’s expense. Alternatively, removing the retroactive side of the provision would be a step in the right direction.

• Reject the $5 billion scholarship tax credit. Not only is it likely unconstitutional, but it risks greater federal control over private education and undermines recent state progress on education freedom.

• Eliminate the expanded employer child-care credit. It encourages shifting pay into child-care benefits instead of wages, replicating the problematic employer-based health-insurance model. The same goes for credits for paid family leave, low-income housing, student loans, seafood processing, rural development, pass-through businesses, farmers, adoption expenses, and biofuels. While the House bill begins phasing out many of the Inflation Reduction Act’s green subsidies, the Senate should push for their total repeal.

There are way more suggestions of tax subsidies available to lower the deficit here.

On the spending side, health care and food stamp reforms in the bill look significant on paper, but they’re modest compared with the massive expansions that took place under the Biden administration. The Senate should be bolder than the House. Medicaid reforms should address this core problem: the federal government currently pays more to cover able-bodied adults than pregnant women and vulnerable populations like children and the disabled. A sensible step, in addition to the ones already taken, would be reducing federal payments for able-bodied adults from 90 percent down to 80 percent, redirecting some savings toward better care for genuinely vulnerable populations.

If you must have something called a Trump account, move away from the baby bonus and instead create universal savings accounts — call them Trump accounts if you will.

At the end of the day, and considering our fiscal situation, we can’t continue to cut taxes without significantly reducing spending. I strongly favor lower taxes, but lower taxes must go hand-in-hand with a smaller government. The Republican habit of cutting taxes while increasing spending inevitably burdens future generations with higher taxes, slower economic growth, and the harmful consequences of mounting debt. It means that the Senate has both a crucial opportunity and an obligation to focus the bill more clearly on sustained growth and fiscal responsibility than the House version did.