House Speaker Mike Johnson faces a significant challenge in balancing President Trump’s ambitious tax cut proposals with fiscal responsibility.
The proposed tax cuts could cost between $5 trillion and $11.2 trillion over a decade, according to the Committee for a Responsible Federal Budget (CRFB). These cuts include extending Trump’s 2017 tax reforms and new proposals to eliminate taxes on tips, overtime pay, and Social Security benefits.
Despite Mr. Trump’s call for a “BALANCED BUDGET!!!” on social media, achieving this goal appears highly challenging. The current fiscal year already shows a $711 billion deficit, and the federal budget hasn’t been balanced since the Clinton administration. Mr. Trump’s commitment to not cutting Social Security and Medicare further complicates the task.
The largest portion of the projected costs ($3.9 trillion-4.8 trillion) would come from extending the 2017 tax cuts. Republicans are considering using a “current policy baseline” approach that would essentially reset these costs to zero. Additional costs would come from tax exemptions on tips, overtime, and Social Security benefits ($900 billion to $5 trillion) and lifting the $10,000 cap on state and local tax (SALT) deductions ($200 billion to $1.2 trillion).
Mr. Johnson, working with a slim Republican majority in the House, must navigate between hard-line and moderate Republicans to find acceptable spending cuts to offset these tax reductions. The budget blueprint will be crucial for the reconciliation process, which Republicans plan to use to pass the legislation without Democratic support in the Senate.
Read more: Speaker Johnson says tax cuts will be offset with spending cuts
This article is written with the assistance of generative artificial intelligence based solely on Washington Times original reporting and wire services. For more information, please read our AI policy or contact Ann Wog, Managing Editor for Digital, at awog@washingtontimes.com
The Washington Times AI Ethics Newsroom Committee can be reached at aispotlight@washingtontimes.com.