Trump Tax Cuts 2.0 Can’t Wait

During the years of President Trump’s first term, real average weekly wages, also known as take-home pay, rose more than 9 percent. During the Biden years, take-home pay plunged 3.6 percent for his entire term up until now. One more stat: median household incomes during the Trump years rose $7,700 pre-Covid, adjusted for inflation. During President Biden’s term, median incomes rose only $1,000.Those two numbers, take-home pay and median income, have a lot to do with Trump’s landslide election victory. These were the kitchen-table issues for Trump’s working-class majority that spanned all races and cut so heavily into the Democrats’ former coalition. The economy ranked first in every poll. When working folks are losing money and they can’t afford gasoline, groceries, electricity, new cars, or new homes — color plays no role. It’s about the economy. And more than enough people remember how good they had it during the Trump years and how poorly they had it during the Biden-Harris years.Here’s my point: the sooner Trump can restore the blue-collar boom, the stronger his political position will be in Congress and all around the country. That is why I’m concerned that the new administration may not start their legislative agenda with tax cuts. We are hearing that there will be two reconciliation bills. The first tackling energy, defense, and the border. The second would reauthorize expiring tax cuts later in the year. I don’t think tax cuts should wait. Just as I don’t think Trump’s working-class coalition thinks tax cuts should wait. They want better take-home pay and lower inflation. I’m all in favor of whatever it takes to produce 3 million more barrels of oil a day and bring down gasoline to $2 a gallon. I’m totally in favor of building the wall in order to close the border. And, if we’re going to shift from Mr. Biden’s appeasement to a Trumpian policy of peace through strength, we will need a stronger and more efficient Pentagon. Leaving tax cuts in the dust for some later date does not strike me as a good idea, though, in economic or political terms. Why not one large-scale reconciliation bill? Which, until recently, was being promoted by the House majority leader, Steve Scalise, and others. Push the boundaries of fiscal policy to include all of the previously discussed areas. Remember the 3-3-3 formula of Trump’s designee for Treasury Secretary, Scott Bessent? Three percent or better growth. Reduce the deficit to 3 percent or less of GDP. And add 3 million more barrels a day. All good. Tax cuts will help enormously to get us above 3 percent growth and reignite the blue-collar boom. And people should be listening to Senator Crapo, who’s expected to lead the Senate Finance Committee next year, who said that “the cost of legislation should be measured against current policy. Which assumes the popular Trump tax cuts will be extended forever.” Mr. Crapo has noted on this show that, in terms of scoring protocols by the Congressional Budget Office, if you let spending go on forever, thereby increasing every year, nobody scores that as a higher deficit. For some reason, though, if you let tax cuts go on forever, they want to score that as a huge deficit increase — with a static score, as a $4 trillion hike. That’s nonsense. If continuing spending is current policy, continuing tax cuts should be current policy.“And let me tell you another interesting thing,” Mr. Crapo told me a couple of weeks ago. “Under the spending protocols that we use, and the scoring protocols, extending current spending does not score as a deficit. But extending current tax [cuts] scores as a deficit. That’s unbelievable.”And, by the way, those same Trump Tax Cuts 1.0 from the 2017 Tax Cuts & Jobs Act have yielded an enormous revenue windfall. Economist Larry Lindsey in a report last summer noted that the corporate income tax cut alone has produced more than 30 percent higher revenues than originally predicted by CBO in 2016, the year before the Trump tax cuts were passed. And the top 1 percent of taxpayers continue to pay more and more of the total share, now coming to nearly 46 percent, which is a good reason to cut those individual tax rates as much as possible. Plus, the importance of the 1099 small business tax deduction. And remember small business folks with their LLC’s pay the individual income tax rate. And Steve Forbes is right — reducing the capital gains tax will not only power economic investment and productivity and growth, it will also generate a great revenue windfall just as it has in the past. The sooner Trump Tax Cuts 2.0 can get moving in Congress, the happier those working-class Trump voters will be. And the faster the blue-collar boom will reignite. From Mr. Kudlow’s broadcast on Fox Business Network.

Trump Tax Cuts 2.0 Can’t Wait

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