Time for tax cuts

OPINION:

Businesses are desperate for the certainty they need for planning. As trade wars raise doubts about the final cost of production, resolving the issue of expiring tax cuts will soothe another source of Wall Street’s jitters.

The “one big, beautiful bill” that President Trump sought as a vehicle to make his 2017 tax cuts permanent just returned to the House. The president gave his full approval to this version, the Senate-passed budget blueprint, because it builds on the spending reductions identified by the Department of Government Efficiency.

After crunching the numbers, the Tax Foundation found that the tax cut extension would boost gross domestic product by 1.1% and provide an extra 3.4% in after-tax income for taxpayers. Knowing this relief won’t be going away provides long-term certainty.

Senators also included an extra $175 billion to secure the border and support the administration’s deportation efforts. The bill provides $1.5 trillion in additional tax relief over the next decade, presumably including the promised “no tax on tips.”

Proposals are a bit vague because the budget is nothing more than a list of top-line targets. Each congressional committee fills in the details later in the process.

“This is the mechanism we have to advance the Trump agenda in a big way and deliver results to the American people — all those who voted for these big changes,” House Speaker Mike Johnson said in a press conference Tuesday. “Passing this amendment just allows us to get off the sidelines. … It’s the kickoff, so to speak.”

The actual work of allocating funds is step two, known as reconciliation. As those decisions are made under expedited rules requiring only 51 votes in the Senate, they can overcome Democratic resistance. The congressional leadership and the White House are united on this strategy, but not everyone is happy with where things are headed.

Citing the Congressional Budget Office, the House Freedom Caucus noted that the deficit rose to $1.3 trillion in the first half of the fiscal year, which began under President Biden in October. That 10% flurry of last-minute spending cost taxpayers $317 billion. Fiscal conservatives argued that there is not nearly enough urgency behind the push to address the runaway deficit.

It’s a fair point, but DOGE has fundamentally changed the game. Congressional budget targets won’t matter if Elon Musk’s team is allowed to continue auditing federal inefficiency to justify dropping superfluous agencies and departments.

Washington has never seen a more serious drive for restraint coming from the top. “I am for major spending cuts! We are going to do reductions, hopefully in excess of $1 Trillion Dollars,” Mr. Trump wrote on X on Tuesday.

Congress hasn’t produced a balanced budget since the days of Speaker Newt Gingrich. There is no majority of legislators capable of resisting the urge to throw cash at every perceived problem. The only responsible alternative is to outsource this fundamental duty to this president.

The House and Senate should codify the administration’s fiscal diet with rescission packages approving the DOGE adjustments. Under budget rules, rescissions need only a majority vote to pass, again evading the prospect of interference.

When businesses see how serious the government is about slimming down so taxpayers and businesses can keep more of their own money, confidence will return. That’s exactly what the market needs right now.