Large, Unfavorable Tax Bill Looms in Congress – MishTalk

TL/DR –

The Wall Street Journal reported that several GOP lawmakers could potentially obstruct President Trump’s proposed tax and spending package due to differing opinions on certain issues. Some Republicans, known as ‘budget hawks’, require that tax cuts be coupled with major spending cuts, while others, known as the ‘Medicaid Defenders’, oppose the plan to make deep cuts to Medicaid, warning it could harm constituents. Another group, the ‘SALT Caucus’, has insisted that their support for the tax bill hinges on increasing the cap on state and local tax deductions, with some GOP lawmakers from states with higher living costs and property taxes threatening to withdraw their support if the cap is not raised.

Will the Tax Bill Sink or Swim?

The fate of President Trump’s ‘Big Beautiful’ Tax Bill lies in the hands of GOP lawmakers as reported by The Wall Street Journal. While some Republicans support the overall tax and spending package plan, others have non-negotiable issues that could impact its success.

The proposed tax law, which aims to extend expiring parts of the 2017 tax law, introduce new tax breaks, increase border spending, and cut other government outlays, faces opposition from deficit hard-liners who insist on significant spending cuts. The House budget currently calls for $1.5 trillion in spending cuts over a decade, a figure these Republicans are determined to achieve.

Simultaneously, Medicaid defenders are voicing concerns about the potential impact of these spending cuts on low-income constituents. Deep reductions in Medicaid coverage could harm GOP efforts to retain their House majority in 2026.

Another group to watch is the SALT Caucus, Republican lawmakers who demand a higher cap on state and local tax deductions. Several members threaten to oppose the GOP package if this cap isn’t raised. This move could, however, reduce revenue that can be used in other areas.

Republicans benefiting from the Biden administration’s Inflation Reduction Act are warning against clawing back funding and limiting tax credits for clean energy projects. They argue that doing so could lead to significant disruptions for the American public and weaken the country’s position as a global energy leader.

The Potential Winners

• Medicaid Defenders
• SALT Caucus
• Inflation Reduction Act protectors
• The Industrial-Military Complex

The outcome of this tax bill may become more complicated as the negotiation process progresses. Democrats, more than Republicans, want the SALT deduction restored, which primarily benefits wealthier taxpayers. As the bill negotiations continue, both Democrats and Republicans may reveal a desire for a simpler tax code.

The Hard Liners

The hard liners may use inflated growth figures to justify their support for the bill. Other deficit hard-liners, however, could capitulate under the threat of being primaried or in exchange for increased military spending.

The Expected Outcome

Compromise in Congress often leads to increased spending rather than reductions. Consequently, the budget deficit is likely to expand significantly. Expect the wave of cheering for this ‘Big Beautiful’ Tax Bill from President Trump, his loyal followers, and hypocritical deficit hawks in Congress and on Wall Street.

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