Connect with us

Congress

How Trump’s Very MAGA Tax Cuts Break with GOP Tradition

Published

on

For decades, Republicans have extolled the virtues of removing loopholes and carveouts from the tax code, arguing it would make the system fairer and more efficient, while allowing for lower overall tax rates.

“The tax code is littered with hundreds of preferences and subsidies that pick winners and losers and create complexity,” House Republicans led by then-Speaker Paul Ryan and then-Rep. Kevin Brady, said in their 2016 tax plan. “Instead of free-market competition that rewards success, our tax code directs resources to politically favored interests, creating a drag on economic growth and job creation.”

Fast forward to the present day, and one thing is for sure: President Donald Trump’s One Big Beautiful Bill is not an exercise in tax simplification.

Instead, it began with a push to extend the party’s 2017 tax cuts — which despite some streamlining also introduced some complexity — and piled more on top, in line with a slew of presidential campaign promises. Add in a heavy dose of congressional politics, and the result was a sprawling and quirky piece of legislation that is distinctively Trumpy: lower taxes and a bigger pile of tax breaks.

“It’s certainly a departure from what Republicans were trying to do in 2017 and broadly a departure from what Republicans have been arguing for decades about tax reform,” Kyle Pomerleau, a senior fellow at the conservative-leaning American Enterprise Institute, told me.

The question, though, is not just whether doing your taxes is complicated and annoying. It’s whether that complexity serves a particular purpose. For example, a provision in the GOP bill allows businesses to deduct expenditures on machinery and equipment entirely from their taxes, which could both encourage investment and support Trump’s reindustrialization goals.

For other key parts of the bill, several economists I spoke with worried it is the worst of all combinations: increasing the debt to pay for tax breaks that lead to neither growth nor other economically useful outcomes.

“I don’t want to say it’s vote-buying because that’s probably a normative statement that is outside of my wheelhouse, but … there’s not a lot of pro-growth stuff,” said Kent Smetters, a University of Pennsylvania business professor who serves as the faculty director of the Penn Wharton Budget Model.

Take, for example, Trump’s popular campaign promises of no tax on tips and no tax on overtime. In some cases, those provisions simply reward people for their existing lifestyle. In others, it might lead businesses to restructure how they pay their employees.

It’s obviously great news either way for the employees who benefit. It’s just unclear why the government is choosing to reward these particular subsets of workers over others. (It is presumably not an accident that Trump promised this tax perk to voters as he was pushing in the last election to win Nevada, a state where many hospitality and gaming industry workers rely on tipped income.)

And cutting taxes without finding some way to offset the lost revenue — either by closing loopholes to broaden the scope of people and businesses that are taxed, like in 1986, or through some other method — leads to increased debt that can itself be a drag on growth. After all, investors are lending the money to the U.S. government rather than doing something else with it. And even after spending cuts, the new GOP tax law is still expected to add trillions to deficits over the next decade.

“The money has to come from somewhere,” said Alan Auerbach, a professor at the University of California at Berkeley.

In that sense, the tax cuts under President George W. Bush weren’t the ideal way to structure policy either, as they mostly just lowered rates while increasing the debt. But this bill? “It’s worse than the Bush tax cuts because the scale is so much bigger, and there’s a lot more weird stuff in it,” Auerbach said.

The gargantuan scale and eccentricity of the tax package is a reflection, above all, of the president who propelled it into law, and it reveals how much the Republican Party has changed under his leadership. In the 2016 GOP policy document, under Ryan and Brady’s direction, the party cited tax reform legislation passed in 1986 — which decreased the number of tax brackets, slashed deductions and lowered rates — as a guiding light, saying the party’s goal was to “replicate and build upon this achievement.”

But this is now the party of Donald Trump, not Ronald Reagan.

Trump, in a 1999 Wall Street Journal op-ed, referred to the bipartisan 1986 law as “an offense against the working man,” decrying the removal of certain deductions as “predictably disastrous.”

Now the Trump administration needs to defend the law and all its peculiarities.

Joe Lavorgna, who works at the Treasury Department as a counselor to Secretary Scott Bessent, said many critiques of the new law miss the point. A critical priority for Trump, he said, was avoiding the expiration of the 2017 tax cuts, which would have led to higher tax rates and therefore slower growth.

He said language that allows people to deduct the interest they pay on auto loans for American-made cars, for example, will help boost the goal of having a “vibrant, healthy” domestic car industry.

Lavorgna also said the provision removing taxes on overtime will lead to more output. “Anything that incentivizes people to work an extra hour because they’re not going to be taxed on it or be taxed at the same rate” creates benefits for the economy, he said. “It’s not a giveaway. They’re creating something.”

As for no tax on tips? That will “help people who have been under significant cost of living pressure,” he said.

Ultimately, what’s clear is that cutting taxes is still the centerpiece of the Republican Party — the rallying cry that could bring together a fractious governing coalition.

But tax reform? That conservative dream seems to have died quietly.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Congress

Why Democrats’ New York gerrymander won’t be as aggressive as the GOP’s efforts

Published

on

ALBANY, New York — With Democrats’ national redistricting calculus now in disarray over Friday’s court order blocking new Virginia maps, party leaders are looking to New York as a prime opportunity to keep pace with Republicans.

But as top Democrats in the Empire State move ahead with their attempt to redraw lines in 2028, they’re also far more likely to pull their punches in the ongoing gerrymandering wars.

The Supreme Court’s decision last week to end a key provision of the Voting Rights Act allows states to break up districts previously drawn to accommodate minority voters. Republicans in states like Alabama and Tennessee are rushing to take advantage by dissolving majority Black districts. In New York — the state where Democrats have the most to gain by drawing new lines — there’s virtually no appetite to respond in kind, underscoring a looming barrier for blue states in the redistricting fight.

“People were walking across bridges and being mauled, and have lost their lives for these rights,” New York Senate Majority Leader Andrea Stewart-Cousins said of the VRA. “These laws are there because there has been a real effort to disenfranchise certain people, certainly Black people, from being able to vote. So we want to protect that.”

In the coming weeks, New York lawmakers are expected to begin the lengthy process of approving a constitutional amendment that would let them redraw congressional lines in 2028. If successful, the measure stands to turn a state with 19 Democrats and seven Republicans into one with a 22-4 or 23-3 edge.

Such an outcome is akin to what Republicans pushed through in Texas last summer — but not as extreme as the 9-0 Republican map Tennessee lawmakers drew Thursday by eliminating a Black majority district in Memphis.

In New York, a 26-0 map isn’t plausible. But in a deep blue state where Democrats routinely receive around 60 percent of the vote in statewide races, maps that feature tendrils extending from the Bronx and Brooklyn into the furthest regions of upstate and Long Island are possible. And such a reconfiguration would give Democrats an even greater advantage compared with maps they’ve floated in the not so distant past.

Doing that would require eliminating districts that were protected by the VRA until last week. Those districts include the Brooklyn seat held by House Minority Hakeem Jeffries, who said last month that Democrats need to “fight back with every tool available.”

Rep. Alexandria Ocasio-Cortez also emphasized the urgency Democrats are feeling Friday at an event honoring Rep. Jan Schakowsky in Chicago, stressing that the court order blocking new maps in Virginia “puts responsibility — even greater responsibility — to those of us in this room, specifically in New York and in the state of Illinois.”

“We have power here in this room to help balance the scale, and we are now in a national fight in order to do that,” she said. “The decisions we make on the city level, the state level and on the federal level, with our representation is part of a much larger story.”

In practice, though, New York’s Democratic leaders do not appear inclined, at the moment at least, to similarly weaponize the newfound ability to disempower Black voters.

“I don’t think we want to roll back protections for minority communities in New York,” said Senate Deputy Leader Mike Gianaris, who’s led his conference’s redistricting efforts since 2012.

The fact that keeping these districts intact is a core personal political belief for leaders like Stewart-Cousins — and a political third rail for everyone in the state’s Democratic Party — will likely limit how aggressive Democrats approach redistricting.

Consider the electoral math on Long Island, where two Democrats and two Republicans now occupy House seats. Maps floated before the 2022 redistricting process would have squeezed many Republicans into just one district, giving Democrats a narrow edge in three.

Expanding that to a 4-0 advantage would require completely ignoring political and demographic boundaries. And states now have the authority to do that under the Supreme Court’s recent decision. Picture a scenario where Democrats slice up blue districts in Brooklyn and Queens and merge them with the purple and red ones to the city’s east — a serpentine seat joining Bedford-Stuyvesant with the Hamptons, for example.

Drawing lines like that isn’t possible, though, without turning historically Black strongholds like those represented by Jeffries and Reps. Yvette Clark and Gregory Meeks into districts with white majorities — or eliminating the Asian plurality in Rep. Grace Meng’s district, or the Hispanic majority in Ocasio-Cortez’s seat. And doing that is almost certain to draw intense pushback from organizations whose support is needed to win approval for the planned 2027 redistricting referendum.

“It’s really, really important that we are at the table from the beginning of this process so that the parties, as they start to course correct, are not overcorrecting,” said L. Joy Williams, the NAACP New York State Conference’s president.

“Voter disenfranchisement doesn’t require malicious intent,” she continued. “In people’s pursuit of political power, if they are doing it at the expense of voters, that’s a problem, and your course correction could inadvertently disenfranchise more people.”

The first occupant of Clarke’s Brooklyn district was former Rep. Shirley Chisholm, after the seat was created in 1966 through the VRA. That district, and the desire to protect its legacy, drew more attention than any in the state during public hearings before the 2022 redistricting — underscoring how much blowback there would be to splintering it in an attempt to boost Democratic odds in Suffolk County.

But it’s far from the only seat in New York that was kept safe due to the VRA.

As Democrats revisited the maps in 2024, the easiest gerrymander in the state would have been blending the seat then held by former Democratic Rep. Jamaal Bowman with the neighboring one held by Republican Rep. Mike Lawler. Doing so would have paved the way to transforming districts with a 29-point Democratic edge and a 1-point Republican edge, respectively, into two districts with 14-point Democratic advantages.

There were concerns about drastic changes to Bowman’s map, though. Overhauling a district where 60 percent of the residents are minorities could have led to a legal challenge under the VRA. And while that’s no longer the case, Democrats still appear inclined to resist aggressively splitting that seat.

“We believe in democracy,” said Stewart-Cousins. “We’re very concerned that we are in a place where not only do we need to defend against the radical remaking of how we do democracy, but that we’re actually defending the very existence of democracy in a multiracial society.”

—Shia Kapos contributed reporting

Continue Reading

Congress

Republicans clash over policy wishlist as they seek to boost their midterm message

Published

on

With six months before the midterm elections, many congressional Republicans are hoping they’re not done legislating yet.

A party-line bill funding immigration enforcement and White House security measures is now on a path to passage. But many in the GOP are already making a wishlist for yet another bill they want to pass under the fast-track budget reconciliation process.

The imperatives, they say, are clear: Their party needs to do more to address cost-of-living matters before voters go to the polls in the fall.

“The American people universally want us to do more than what we’ve already done,” Rep. Eric Burlison (R-Mo.) said in an interview.

Affordability, he added, “is the No. 1 issue that people are dealing with right now.”

It won’t be that easy. Not only are there different perspectives in the GOP over how to address high prices, the discussion over party-line legislation is tied up with a host of unrelated issues that could easily derail the delicate reconciliation process.

Those include funding for the ongoing war in Iran, tackling social service spending and a controversial elections bill that has stalled in the Senate — all of which have been subject of intraparty clashes this year.

While doubts have long persisted about the ability of the GOP’s thin House and Senate majorities to pass a followup to last year’s “big, beautiful bill,” the progress on the immigration enforcement bill has raised expectations that a third bite at the apple might be possible.

But nothing has motivated GOP lawmakers like the prospect of going into campaign season without having a robust agenda to run on — especially with the Iran conflict pushing fuel prices up about 50 percent in recent months.

Rep. John Rutherford (R-Fla.) said he doesn’t want the war “to sideline us because of the fuel prices back here in America,” adding that “we’ve got to move quickly.”

“If we can get these affordability things fixed,” he said, “the American public will keep us in the majority.”

Here are five major areas of active GOP discussions:

Affordability sweeteners

If Republicans can agree on anything, it’s centering any additional reconciliation bill on addressing cost-of-living concerns. If the legislation comes together, it will likely be a grab-bag affair.

With a bipartisan housing bill stalled out for now, GOP lawmakers are discussing incorporating components of that measure into the party-line package that would benefit first-time home buyers, according to four people granted anonymity to share details of private conversations.

Members are also discussing allowing “portable mortgages” and other ideas aimed at addressing borrowing rates — something a top Trump pollster told Republicans to focus on as far back as December.

Many Republicans are also eager to address rising health care costs, even if the topic stands to prompt fierce GOP infighting.

“Health care reform should be a part” of any new bill, Rep. Rob Wittman (R-Va.) said in an interview. “That’s another thing that’s driving costs.”

While Republicans allowed enhanced Obamacare tax credits to expire last year and are highly unlikely to revive them, Wittman said other smaller-bore GOP policy ideas in the health care space could make it into law.

A ‘fraud’ crackdown

The most sweeping and controversial piece of the GOP reconciliation push surrounds an effort to root out alleged fraud in social service programs that many conservatives claim could amount to tens of billions of dollars.

House Budget Chair Jodey Arrington (R-Texas) is cheerleading for the crackdown, which would focus on programs administered by states. Arrington is also eyeing some Obamacare cuts aimed at making the program more “efficient.”

An effort to roll back Medicaid and food-aid spending generated huge internal problems during last year’s megabill debate, but Arrington said the GOP could not skip a chance to crack down on wasteful spending.

“It’s all over the people’s government, and we’ve got to do what we did in SNAP and Medicaid, and make sure that the tax dollars are flowing to the people who need them — to American citizens who depend on these programs,” he said.

But there is wariness among more vulnerable Republican members who could be subject to a barrage of campaign attacks about safety-net cuts.

“Don’t mix a lot of other stuff in there that could put members in a precarious position back home,” Rep. Jeff Van Drew (R-N.J.) said in an interview, calling for a “very narrow” bill instead.

Iran war money

With Democrats unlikely to consent to any war funding, especially with hostilities unresolved, many Republicans want to add tens of billions of military dollars to a reconciliation bill to prevent a Senate filibuster.

Arrington, a fiscal hawk, said he expected Republicans to include “around $100 billion” to replenish military munitions amid the Iran conflict, along with additional defense funding.

“And then I think probably everything north of that is, how do we make our military more nimble, more effective, and how do we plan for deterrence and readiness in the future?” he added.

A larger Pentagon package could get more Republicans on board, but it would also force them to scramble for steep spending cuts to pay for it. A handful of at-risk Republicans are nervous about that idea, with some floating a separate package with new Ukraine aid as a way to entice some Democrats.

More tax cuts

The megabill was centered on massive tax cuts, and House Ways and Means Chair Jason Smith (R-Mo.) is not about to pass up another chance to do more.

Some GOP lawmakers, including Sen. Ted Cruz of Texas, are eyeing a cut on capital gains taxes by allowing taxpayers to adjust those gains for inflation.

Smith and Arrington, along with other committee chairs and senior Republicans, tried unsuccessfully to press Speaker Mike Johnson to expand the scope of the pending immigration enforcement bill to include tax cuts and other policies.

“Opening the tax code should be part of this exercise,” Arrington said.

Parts of SAVE America Act

With the elections bill known as the SAVE America Act stalled in the Senate for the foreseeable future, some Republicans want pieces of the legislation to be included in a third reconciliation package.

Senate Budget Chair Lindsey Graham (R-S.C.) said he plans to draft a fiscal blueprint for what’s being touted as “Reconciliation 3.0” with those pieces in mind. House Administration Chair Bryan Steil (R-Wis.) has also circulated a list of election integrity proposals that could be added to another party-line bill.

But the conservative hard-liners who are pushing for the SAVE America Act are highly skeptical that any meaningful provision of that bill could survive the strict Senate budgetary rules governing what can be included in a reconciliation bill.

They instead want the Senate to take up the elections measure as is — even if it means discarding the filibuster.

Continue Reading

Congress

Lutnick admits to having prolonged ties to Epstein in closed-door interview

Published

on

For reasons he said were “inexplicable,” Howard Lutnick acknowledged visiting Jeffrey Epstein’s island seven years after he claimed to have severed his relationship with the convicted sex offender, according to lawmakers present for the Commerce Secretary’s closed-door testimony Wednesday.

The acknowledgment, however, did not satisfy Democrats on the House Oversight and Government Reform Committee participating in Wednesday’s interview with Lutnick as part of the panel’s ongoing investigation into Epstein’s crimes and the powerful people in his orbit.

“He was evasive, nervous — he was dishonest,” Rep. Suhas Subramanyam (D-Va.) told reporters during a break in the hourslong proceedings. “He would not admit to lying, which he clearly did.”

In an interview, Rep. Yassamin Ansari (D-Ariz.) further suggested that if her party retook the House majority, Democrats could call Lutnick back in for additional questioning in a public hearing — or, at the very least, testify under oath on video.

“They deserve to see the sweat on the secretary’s brow as he struggles to answer basic questions about his lies to the American people,” said Rep. James Walkinshaw (D-Va.).

Lutnick appeared before lawmakers Wednesday for a transcribed interview, not a deposition, meaning he did not need to take an oath of honesty and the proceedings were not recorded on video.

Still, House Oversight Chair James Comer (R-Ky.) warned, “If we find that there were any misstatements by Lutnick, it’s a felony to lie to Congress, and you’ll be held accountable.”

Comer also defended his decision not to require Lutnick’s interview be videotaped, saying the panel would release a transcript to the public and it will be up to the American people to “judge whether [Lutnick’s] credibility was damaged or not.”

Lutnick has not been accused of any wrongdoing in connection with Epstein’s crimes. But he has been under scrutiny from members of both parties since federal materials in the Epstein matter revealed the longtime Cantor Fitzgerald CEO visited Epstein’s now-infamous retreat in the U.S. Virgin Islands in 2012. He had originally said he broke ties with Epstein in 2005.

But the stakes are high for Lutnick — the first Cabinet secretary to testify before the Oversight Committee with a congressional majority of the same party in recent history, according to Comer. Prior administration officials were ousted by President Donald Trump soon after politically damaging appearances before lawmakers on Capitol Hill — notably Homeland Security Secretary Kristi Noem and Attorney General Pam Bondi.

Even the Kentucky Republican acknowledged to reporters before the interview Wednesday that Lutnick “wasn’t 100 percent truthful” in the past when describing the timeline of his relationship with Epstein.

According to one person granted anonymity to describe the closed-door proceedings, Lutnick told the Oversight panel that he was neighbors with Epstein between 2005 and 2019.

Around the time that Lutnick and Epstein became neighbors, Lutnick and his wife met Epstein for a 10-to-15 minute coffee, during which time he received a tour of Epstein’s home and viewed a massage table that has become synonymous with Epstein’s sexual exploitation of trafficked women, the person added.

Lutnick told congressional investigators that he decided then he did not want to associate with Epstein. But Lutnick admitted he, his family, and friends had a short lunch in 2012 at Epstein’s island home, according to the person with knowledge of the interview. He recalled being unsettled that Epstein’s assistant had found out he was in the U.S. Virgin Islands to extend the invitation in the first place.

Committee Democrats told reporters that Lutnick ultimately could not explain why he went to Epstein’s island, with Ansari saying the Cabinet official described the decision as “inexplicable” and that their interactions were “meaningless” and “inconsequential.”

Lutnick also said he and Epstein met in 2011 to discuss renovations on Epstein’s home in Manhattan and that he never saw Epstein engage in inappropriate conduct with young women, the person familiar with the interview said.

Rep. Ro Khanna (D-Calif.) said that Lutnick admitted to conferring with the administration about the Epstein saga. But, Walkinshaw said, Lutnick would not answer questions about whether he spoke with Trump in advance of his testimony Wednesday.

A Commerce spokesperson did not immediately respond to a request for comment.

Comer and Rep. William Timmons of South Carolina were the only Republicans present for the testimony Wednesday. But Comer disputed the accusation he was intentionally scheduling interviews with high-profile witnesses like Lutnick during congressional recess weeks or session days where most members fly back to their districts.

He also did not rule out videotaping the committee’s upcoming interview with Bondi, whose testimony was subpoenaed prior to her removal from office. She is scheduled to appear before the panel on May 29.

Continue Reading

Trending