Trump Backs $4.5 Trillion Tax Cut Plan

Reuters
Reuters
By Michael Rainey

Happy Wednesday! President Trump told Congress today how he wants to handle his tax and spending plans for next year, clearing up some issues for lawmakers while likely creating new ones. Meanwhile, a senior Republican senator said negotiations over the current year's spending bill "are not going well" ahead of a March 14 shutdown deadline. Senate Appropriations Chair Susan Collins said negotiators have yet to agree on the toplines for the 12 annual spending bills, raising the odds that Congress will need to pass another short-term spending patch, or perhaps even a full-year measure that holds spending at current levels until the beginning of the new fiscal year in October.\n\nHere's what you need to know.

Trump Says He Wants 'One Big Beautiful Bill'

President Donald Trump on Wednesday waded into the race between the Senate and the House to pass a budget reconciliation bill, telling Republicans in the upper chamber to defer to the House and its strategy of passing one major piece of legislation that delivers on much of the new administration's agenda, rather than the Senate's two-bill approach that would delay tax reform until later in the year.

The House legislative package would pave the way for a $4.5 trillion tax cut and fund a range of Trump's policy priorities, while the Senate's roughly $340 billion budget blueprint focuses on quickly funding defense and border initiatives.

In a post on his social media platform, Trump praised both Republican-lead chambers for their efforts, saying they were doing a "SPECTACULAR job." But he made it clear that he prefers the House's approach over that of the Senate, saying "the House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it!"

Trump called on Congress "to pass the House Budget to 'kickstart' the Reconciliation process, and move all of our priorities to the concept of, 'ONE BIG BEAUTIFUL BILL.'"

The reconciliation process allows the Senate to pass a budget bill with a simple majority rather than 60 votes, and until today, Trump had said he was fine with either the Senate's or the House's approach.

Congress reacts: Senate Majority Leader John Thune, who had announced plans to push ahead this week on the Senate version of the budget, was taken by surprise by the Trump announcement. "Did not see that one coming," he said. But he said he intends to continue working on the Senate bill.

"We're planning to proceed. ... We're interested in what the House can pass," he told reporters Wednesday. "We've got a lot to do and the tax components of it, the deficit-reduction components of it are things that we're going to have to, at some point, agree on. But in the near term, the president has asked for resources to secure the border, we know we have to rebuild our military, and those are priorities that are addressed in the targeted bill that we put together."

Speaker Mike Johnson celebrated Trump's announcement, which could help him lock down Republican votes in a narrowly divided House. "House Republicans are working to deliver President Trump's FULL agenda - not just a small part of it," he said in social media.

The House is currently on a one-week break, and Johnson plans to hold a vote on the GOP budget resolution next week. In addition to $4.5 trillion in tax cuts, the House plan calls for $2 trillion in spending cuts and a $4 trillion increase in the debt ceiling, while providing about $300 billion for border security and the military. The budget resolution is just an outline, however, and it's expected to take weeks or perhaps months to hammer out a final agreement.

Medicaid in the crosshairs? In an interview with Fox News that aired Tuesday night, Trump vowed to shield the country's most popular social programs from budget cuts. "Social Security won't be touched, other than if there's fraud or something. It's going to be strengthened," Trump told Sean Hannity. "Medicare, Medicaid - none of that stuff is going to be touched."

The pledge may be difficult to keep, however, if Republicans continue to pursue the House budget plan, as Trump has called on them to do. Although the details are not fully fleshed out, the House plan outlines $2 trillion in spending cuts, and budget experts say the math requires a big chunk of that reduction to come from Medicaid.

"The budget Mr. Johnson negotiated, a first step in passing that agenda, calls for around $880 billion in cuts to Medicaid, in an effort to counterbalance a portion of the tax cuts," Margot Sanger-Katz of The New York Times wrote Wednesday.

Democrats were quick to point out the apparent contradiction. "Last night, Trump promised he wouldn't touch Medicaid. This morning, Trump endorsed the House Republican plan to slash Medicaid," Sen. Elizabeth Warren said on social media. "It's smoke and mirrors: Trump and Republicans are plotting to take away health care from millions of people to pay for tax breaks for billionaires."

Even some Republicans are expressing concerns about making deep cuts in Medicaid, and Trump's declaration to shield the program may force GOP lawmakers to go back to the drawing board on their budget plan. "I would not do severe cuts to Medicaid," Sen. Josh Hawley said Tuesday,

Steve Bannon, Trump's former chief adviser, delivered a warning on the issue. "A lot of MAGA is on Medicaid," Bannon said last week on his podcast. "If you don't think so, you are dead wrong. Medicaid is going to be a complicated one. You just can't take a meat ax to it, although I would love to."

Musk Teases Idea of 'DOGE Dividend' Refund Checks

The White House is making big claims about the amount of savings that DOGE is generating and will generate through slashing jobs and identifying "fraudulent" spending, and Tesla CEO Elon Musk said Tuesday that he would ask President Trump if the federal government could send out something like a refund check to taxpayers based on the purported savings.

In response to a comment on X about "a 'DOGE Dividend'-a tax refund check sent to every taxpayer, funded exclusively with a portion of the total savings delivered by DOGE," Musk said he "will check with the President."

The comment on X came from James Fishback, an investor who recently pitched himself as a replacement for Vivek Ramaswamy, the one-time Republican presidential candidate who was initially part of the DOGE leadership team before stepping aside in January. Fishback proposed that the government could return $1 out of every $5 saved, which he estimated could produce $5,000 checks for American households, assuming Musk hits his $2 trillion savings goal.

While the proposal no doubt has its appeal, especially for Trump's and Musk's most loyal and fervid supporters, budget experts say it's a long shot at best. Although DOGE claims it has saved about $8 billion so far, that number is very much in question, and it looks like $4 billion may be close to the truth - hardly enough to fund a major refund program.

Jessica Riedl, a budget expert at the conservative Manhattan Institute, said Musk has still not explained how he plans to get anywhere near the level of savings he has promised, suggesting any refund would be meager - and bad policy to boot.

"Given the very small share of federal spending that has been reduced, the American people could possibly take their dividend to Starbucks for half off of one coffee," Riedl told The Washington Post. "When the budget deficit is $2 trillion and Congress is going to add hundreds of billions of dollars more, any savings should go to deficit reduction, rather than another tax rebate."

Social Media Post of the Day

In what will be a Rorschach test of sorts for Americans across the political spectrum, President Trump declared on social media Wednesday that he is ending the congestion pricing program in New York City. In doing so, he appeared to refer to himself as "THE KING" - an appearance hammered home by an image of Trump in a golden crown set against the New York skyline.

The congestion plan, which began on January 5, charges drivers $9 to enter lower Manhattan, and the funds raised by the user tax are dedicated to public transit. Trump has said he opposes the program, which was backed by the New York business community but criticized by many suburban commuters. The U.S. Department of Transportation said Wednesday afternoon that the Federal Highway Administration has "terminated approval" of the program.

New York Gov. Kathy Hochul said she would seek to preserve it. "We are a nation of laws, not ruled by a king," Hochul said in a statement. "The M.T.A. has initiated legal proceedings in the Southern District of New York to preserve this critical program. We'll see you in court."

 

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