The Big, Beautiful Tax Bill Is Shrinking | The New York Sun


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Internal GOP Divisions Threaten Trump's Tax Plan

The Republican Party faces internal divisions over President Trump's tax and spending package, originally dubbed "one big, beautiful bill." Disagreements over spending cuts between conservatives favoring deep cuts and moderates concerned about the impact on social programs are hindering progress.

Shrinking Tax Cuts

The inability to reach a consensus on spending reductions could lead to a smaller tax cut package than initially envisioned. The proposed $4.5 trillion package may shrink to $4 trillion, and the possibility of making the cuts permanent is fading. The White House is even considering allowing the top marginal income tax rate cut to expire, raising it from 37 percent to 39.6 percent for the highest earners.

Budgetary Challenges

The plan depends on Republicans identifying $1.5 trillion in federal budget cuts (down from an initial goal of $2 trillion). House Republicans are demanding real spending cuts to avoid increasing the deficit, rejecting budget gimmicks. Senators are also pushing for significant budget reductions. The complexity and scale of the bill are leading to growing frustration within the party.

Concerns and Criticisms

Concerns include:

  • Disagreements within the GOP over spending cuts
  • Potential for smaller tax cuts or tax increases
  • Difficulty in achieving the required deficit reduction
  • Complexity and size of the proposed bill

Some Republicans suggest a piecemeal approach might be more effective than a single, large bill.

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Is it just us or does President Trump’s tax and spending package — “one big, beautiful bill” — appear to be shrinking? From within the GOP comes griping that it cuts spending too much. Others fret that it doesn’t cut enough. Now comes talk of scaling back the renewal of Mr. Trump’s first-term tax cuts, which would mean a tax increase for some. The disarray is such that, the Hill reports, one unnamed Republican senator warns of a “train wreck.”

“We can’t really get on the same page,” the stressed senator protests. That’s partly a result of what the Hill describes as “growing tensions” between GOP conservatives, who favor “deep cuts to government spending,” and the party’s moderates, who worry about “the impact on Medicaid and other federal benefits.” An inability to reach consensus on spending reductions could imperil the renewal of the Trump tax cuts. 

That’s the warning from the chairman of the House Budget Committee, Congressman Jodey Arrington. He reckons a less ambitious tax cut could result if the Republicans can’t get their act together. Mr. Arrington laments that some of his fellow Republicans “talk a big game” about budget cuts when they’re in the minority. Yet now “Democrats scare some of my members,” he says. “They paralyze our conference.” 

The end result of the Democrats’ fear-mongering over spending cuts, Mr. Arrington says, is to “frighten us into inaction.” That concern is echoed by remarks today — “behind closed doors” — by Speaker Johnson, who, Politico reports, suggests that reducing the level of spending cuts will lead to a “smaller tax cuts package.” That could mean a tax cut renewal to the tune of $4 trillion, not the $4.5 trillion first envisioned, and a failure to make the cut permanent.  

Adding to the confusion is the fact that even the White House is considering waving the white flag on the tax cut renewal. A proposal is afoot, per the Hill, to “allow the top marginal income tax rate cut that Trump signed into law in 2017 to expire at the end of the year for the highest-income Americans.” That means the top rate would jump to 39.6 percent from 37 percent for the highest earners, while all others would keep the lower rates set in 2017. 

Even the $4 trillion number, though, depends on Republicans finding $1.5 trillion to cut from the federal budget, Politico reports, which is far from certain, after the goal of cutting $2 trillion was jettisoned. The challenging budgetary math is underscored by the demand on Wednesday by more than 30 House Republicans who are holding the line on federal red ink. They warned Mr. Johnson that the budget bill “must not add to the deficit.”

While these House fiscal hawks acknowledge that renewing Mr. Trump’s tax cuts “will generate $2.5 trillion in additional growth” by fostering faster growth, they are insisting that “the deficit reduction target must be met with real, enforceable spending cuts — not budget gimmicks.” In the upper chamber, too, there is a push by Senators Johnson, Lee, and Scott of Florida to dial down the annual federal budget to $6.5 trillion from $7.3 trillion.

Mr. Johnson goes so far as to aver that the House goal of cutting just $1.5 trillion over the next decade is “a joke,” noting that it amounts to but $150 billion a year. The tumult over the budget bill is getting to the point where Senator Cramer of North Dakota says that it was a mistake to plan on a single overarching bill — no matter how bigly, beautiful, and such a measure might seem — rather than pushing the GOP agenda piecemeal. 

“I’m trying to resist saying, ‘I told you so,’” Mr. Cramer, who frets that the vast bill is “very, very complicated,” said. He speaks of “frustration” among the solons that “the big, beautiful bill thing” might be “getting away a little bit. It’s too much — it might be too much.” We favor Mr. Trump’s big, beautiful bill, but the GOP is behaving like followers of the economist E.F. Schumacher, who came up with the idea that “Small Is Beautiful.”

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