How About an Even Bigger and More Beautiful Bill?

President Trump has given the Republican Senate a green light to make the “one big, beautiful bill” even bigger and more beautiful.Here’s what he said on Sunday: “I want the Senate and the senators to change, you know, to make the changes they want and we’ll go back to the House and we will see if we can get them. In some cases, those changes maybe are something I’d agree with, to be honest. You know, it happens.” Mr. Trump added: “I think they’re gonna have changes. Some will be minor, and some will be fairly significant.”However, also on Sunday, Speaker Johnson warned his Republican Senate colleagues not to fiddle with the House version too much.So … let the games begin.Yet the House version is certainly a lot better than the mainstream liberal media is making it out to be.Many folks keep saying it would increase the budget deficit by $3 trillion over the next 10 years.Well, it would be impossible not to increase the deficit by some amount, simply because President Biden left the GOP with a legacy of $2 trillion deficits as far as the eye can see.So, unless you believe the budget could be balanced in the next year or two, which is an absolute impossibility, people who say the deficit is going to go up are just not being practical.And the new pro-growth Trump tax cuts are still being scored all wrong. The Congressional Budget Office and the House Budget Committee are still scoring the tax cuts as a revenue loss of something just less than $4 trillion over 10 years.Yet I think, and I hope, the Senate version will use a current policy baseline, which is really a common-sense idea.If you see your taxes rising by 10 percent, you’d know that that’s a major tax hike — no matter what the CBO has to say about it.If your taxes come down, for individuals and small businesses for example, common sense tells you that that’s going to spur additional economic activity. Just as the 2017 tax cuts did. Speaker Gingrich believes the GOP should be saying more about this: that all the Democrats are voting for a $4 trillion tax hike. And that Republicans will not permit such a tax hike.Beyond that, supply-siders like myself would argue that passing a Republican tax cut will move the economic growth needle to at least 3 percent — and add something like $4 trillion to the revenue line, which would of course reduce the Biden deficits that much faster.Even so, the House Budget Committee version reduces the important fiscal benchmarks substantially.Mr. Biden’s federal spending as a share of GDP, which at its worst was 25 percent and in fiscal year 2025 is estimated at 22.8 percent, is projected to fall to 21.6 percent by 2034 under the House Republican plan.As a share of GDP, the deficit drops to 4.4 percent from 7.2 percent. And the debt falls to 121.6 percent of GDP from 124 percent.Even on a static basis, $3.7 trillion in so-called tax cut costs is offset by $1.5 trillion of spending cuts.So, on a CBO scoring basis — which I reject — the net costs would still only be at $2.2 trillion over 10 years.And as economists Dan Clifton and Joe Lavorgna have been pointing out, we’re on a yearly run rate of $200 billion in tariff revenues using the 10 percent universal baseline tariff. And that comes to $2 trillion over 10 years. Which neutralizes any of the so-called tax cut deficits.So, let’s hope that Senate Republicans produce bigger tax cuts and score them properly with a growth-oriented current policy baseline. And find — yes — even deeper spending cuts.The fact remains, though, that the House did a much better job than your local newspaper or TV station is telling you.From Mr. Kudlow’s broadcast on Fox Business Network.

How About an Even Bigger and More Beautiful Bill?

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