Despite a hiccup in the Budget Committee, Speaker Mike Johnson (R-LA) and House Republicans deserve praise for quickly moving President Donald Trump’s One Big Beautiful Bill through the committee process. It now seems on track for passage before Memorial Day.
But as much progress as the House has made toward making individual tax rates from the Tax Cuts and Jobs Act of 2017 permanent, spending reductions in the bill have been pushed far into the future, some of them until after Trump leaves office, while all new tax loopholes are opened immediately. It’s easy to give concessions and hard to make people do what’s right, but that is the job voters sent their representatives to Congress to do, and in this, they are failing.
Both parties play games with spending programs that are notionally temporary to massage their costs down. But just because it is a bipartisan charade does not mean the GOP should get away with it this time around. The sheer number of proposed temporary measures and the delayed spending cuts would make the bill less of a landmark accomplishment, and more of a temporary band-aid — one big beautiful punt into Neverland.
On the spending side, two of the largest cuts have been put off until a year after Trump leaves office, and another has been pushed beyond the next midterm congressional elections. The Medicaid work requirements for able-bodied adults, which would save $301 billion over 10 years, do not apply until 2029, and the repeal of former President Joe Biden’s Inflation Reduction Act spending, saving $193 billion, also doesn’t kick in until that year. That gives monopolist hospital chains and green energy lobbyists four more years to get the cuts reversed. States have two years to undo the bill’s food stamp cost-sharing requirements, which save $128 billion and don’t kick in until October 2027.
These delays are the biggest “tell” that Congress members are thinking more about retaining their jobs and the prestige of being on Capitol Hill than they are of what is good for the country.
On the tax goodies side, Trump’s campaign promise of “no tax on tips” made it into the bill, and naturally, this fiscal candy is to be made available immediately. It is, equally predictably, supposedly phased out after 2028 so that the lost revenue does not upset the math of the bill’s supposed bottom line number. But who really believes that Congress, in four years, will allow the big tax hike on service workers that would take place if tips were taxed again? Trump’s “no tax on Social Security” promise did not make it into the legislation, but a boosted standard deduction, raised to $4,000 for people over 64, did. Even though that policy starts immediately and runs only through 2028, it still came with a $72 billion price tag.
People who are wealthy enough to itemize their taxes but still need to take out loans for their cars will be able to deduct $10,000 a year in car interest loan payments. How expensive are these cars that people pay $10,000 a year in interest? Apparently, the Congressional Budget Office believes enough people will qualify for this new loophole that it will deliver $58 billion in benefits through 2028 before it expires.
All this fiscal chicanery is an insult to voters’ intelligence and bad policy. A good tax code is simple, transparent, neutral, and stable. The TCJA moved the tax code excellently in the right direction by closing loopholes and lowering rates. Its one fault was that it was not permanent (thus being somewhat unstable), but the One Big Beautiful Bill fixes that for the individual tax rates. Unfortunately, everything else in the legislation is the opposite of good tax policy.
IN PRAISE OF TRUMP’S MR. FIX IT, MARCO RUBIO
The legislation creates new loopholes that complicate the tax code and favor some taxpayers over others. These are almost all temporary, making the code much more unstable.
Compromises often have to be made to pass legislation, and a perfect policy goal can become the enemy of a good policy outcome. However, as Republicans look forward to using the reconciliation process next year, we hope their final product is closer to the simplicity of the TCJA, and not the mess that has become the One Big Beautiful Punt.
This article was originally published at www.washingtonexaminer.com
