Staff Reports
President Trump, in a move reminiscent of a high-stakes poker game, is once again at the negotiating table with congressional Republicans, this time over a tax package that a budget watchdog has estimated could cost anywhere from $5 trillion to a whopping $11.2 trillion over the next decade. While Trump is bolstering support for various tax changes, the Committee for a Responsible Federal Budget is cranking out frighteningly large numbers that may make even the most optimistic accountant’s hair stand on end.
The proposed changes are not just the latest whims of a few rogue politicians. It seems these ideas are gaining traction among Republicans in Congress, potentially becoming part of a budget reconciliation package. This strategy allows the GOP to sidestep the dreaded filibuster in the Senate, where they are practically begging for a friendlier 60-vote threshold. However, it remains to be seen whether they will go for a massive single bill or roll it out in a more manageable two-bill approach. Either way, they appear determined to hit the ground running.
One major player in this potential financial circus is the Tax Cuts and Jobs Act from 2017, affectionately known as Trump’s tax reform. Extending this act could come at the cost of a staggering $3.9 trillion to $4.8 trillion. Moreover, if expanding the State and Local Tax deduction (SALT) is on the table, that would tack on anywhere from $200 billion to an impressive $1.2 trillion.
Then comes the hilarious part about eliminating taxes on tips. This proposition alone, a favorite of Trump’s campaigning, is projected to cost federal tax revenue anywhere from $100 billion to $550 billion. How does one even begin to assess the impact of such numbers? Further complicating matters, insights into other exemptions, such as knocking federal taxes off overtime pay and Social Security benefits, reveal potential costs ranging from a modest $250 billion to a jaw-dropping $3 trillion. Clearly, the road to tax reform is paved with hefty financial roadblocks.
All the tax cuts likely to be included in Trump and GOP's forthcoming reconciliation billhttps://t.co/YoUXWfWZKR
— The C-Span Review (@CSpanreview) February 10, 2025
As Republicans engage in spirited debates over which spending cuts to incorporate into this full reconciliation package, House Speaker Mike Johnson has taken a stab at suggesting around $700 billion in cuts. Yet that number might as well be a drop in the bucket, as the conservative House Freedom Caucus is passionately calling for even more drastic measures. Meanwhile, Elon Musk, the ever-inventive CEO of Tesla and SpaceX, is zeroing in on identifying waste and fraud within government departments. His role as the head of the new Department of Government Efficiency has him aiming to find significant savings specifically at the United States Agency for International Development (USAID). However, how much cash he can actually save remains to be seen.
In the backdrop of all this financial maneuvering, Trump’s administration is positioned to introduce border security funding measures alongside the tax changes and spending cuts. This all must pass the scrutiny of Elizabeth MacDonough, the Senate parliamentarian, whose approval is vital to the GOP’s dreams of reform. With Senate Budget Committee Chair Lindsey Graham also throwing around a $342 billion budget resolution framework that conveniently avoids any tax changes, the Republican-led scripts are thickening, with anticipation of what this year may hold for America’s fiscal future. It’s a race against time to see if America will be treated to tax cuts or left hanging in the balance.
