Copy of AFF Sentinel V22 #01-Start of 2025 Rocky But Hopeful
- Steve Dittmer
- Jul 22
- 5 min read
Encouraging But It Won't Be Easy
Steve Dittmer | AFF Sentinel
Colorado Springs, CO
Originally sent to subscribers 01/05/25
We’ve recently discussed the strategy for attacking deficit spending and budget planning for this 119th Congress.
We follow Larry Kudlow, President Trump’s former director of the National Economic Council closely and he’s been fiercely advocating one reconciliation bill for weeks. He knew what happened to Trump’s 2017 tax bill and was actually around when a similar thing happened to Ronald Reagan.
The tax cuts that stimulated growth in the economy didn’t happen until the last day of 2017, delaying the growth until after the 2018 midterms, which cost the Republicans seats in Congress. The same thing happened to Reagan, delaying the growth long enough that seats were lost in the midterms.
Some folks have been advocating for two reconciliation bills, one relatively quick on the border and energy provisions that many feel could be easily passed and then a tax bill in the second half of the year. Tax bills are necessarily complex, because of the many provisions in thousands of pages of statutes and the influence of many lobbyists defending many interests.
Kudlow is not alone. The fear is that delaying tackling a complicated tax bill until late in the year would not provide a bill soon enough to fulfill Trump’s promises to voters. It would not boost an economy that needs quick help or add to the Republicans’ majority in Congress.
By the way, the present state of the economy is the subject of disagreement right now. While 2024’s GDP growth was surprising to many and the stock market performed better than most expected, there is still inflation to deal with and government spending way in excess of what we can afford. And Biden’s people are spending everything they can get their hands on in the last waning days of power, like climate change and student loan forgiveness.
In fact, economist Steve Moore said Trump’s biggest challenge will be taming inflation, given what’s already been spent, the stickiness of inflation and prices and what Biden’s people are still piling on.
The question is, now that the uncertainty of the Biden administration’s trajectory has been removed and optimism of consumers has certainly improved, will that help keep beef demand up in 2025? A fast reconciliation bill that boosts consumer buying power is what we need.
Trump is reportedly in favor of “one big beautiful bill,” evidently Speaker Johnson agrees and many commentators have said quickly exploiting the momentum from the election would be what voters expected and what they feel they need.
The Freedom Caucus has a plan that requires two bills and Sen. Majority Leader John Thune was in that camp last fall.
Of course, the struggle to elect a House speaker illustrates the difficulty in getting the Republican House together on major issues. The two-bill advocates feel that a first quick bill that provides money for quickly securing the border and deporting illegals would be the best way to get those actions started. Then the tax bill would be next.
Jason Smith, chairman of the House Ways and Means Committee, is adamant that there must be one bill. Congress has seldom passed more than one reconciliation bill in a year. With the small majority and the difficulty in getting everyone together obvious, what makes anyone think it could happen this time, he asked.
Several people have cited the debt ceiling struggle as a reason to not go for two reconciliation bills. We agree that was not a pretty process. But there are reasons for optimism in that process, too. Firstly, the Republicans -- with Trump’s help -- rejected the first omnibus-style bill with all kinds of Democrat spending in it. Secondly, they killed the second better but not great bill. Thirdly, they passed a stripped down bill. Fourthly, we hope Speaker Mike Johnson learned a lesson -- that enough Republicans are willing to fight to stop spending that he can hold the line against Democrat big-spenders in the future.
Dan Clifton pointed out that this needs to be viewed on two levels: presidential actions and legislation. President Trump can reverse dozens of Biden’s border executive orders immediately, no legislation needed. He can reverse things like Biden’s ban on LNG facilities. Clifton is CEO of Strategas and has observed every tax bill in the last 25 years, he reminded Kudlow on the latter’s radio show.
Congress could then put Trump’s executive orders into legislation by summer. The Republican Congressional voting margins will actually shrink until special elections are held in April and May to replace members joining Trump’s Administration.
There is more uncertainty about Biden’s planned proclamation banning leasing in both the Atlantic and Pacific Oceans, as there is some precedent and legal authority involved.
Clifton also pointed out the possibility that the fastest drop in oil prices could come “geopolitically,” rather than from increased domestic activity. He, Kudlow and others have noted that there is a “war premium” in today’s oil prices that would disappear if Trump could expeditiously facilitate an end to the war in Ukraine and the conflict in the Middle East.
Several commentators have said that the tax bill keeping the 2017 law’s corporate tax rate of 21 percent or even lowering it to 15 percent would spur much economic and wage growth. Also critical is the expensing provisions returning to 100 percent from the 20 percent it has shrunk to now.
John McIntyre of Real Clear Politics advised the Republicans to be ferocious right out of the box and ignore the yelling from the bureaucrats and the media.
Speaking of tone-deaf and clueless, economist Steve Moore noted that there are actually some Senate Republicans sending up trial balloons about raising the corporate tax rate to 25 percent.
Some have also pointed to the speaker’s vote as further proof of Trump’s influence on national affairs. Three holdouts, Reps. Ralph Norman of South Carolina and Keith Self of Texas had joined Thomas Massie of Kentucky in voting for names other than Johnson earlier in the first round of voting.
Johnson has said he did not make any promises to Norman and Self for changing their vote to make him speaker. The story making the rounds is that Rep. Nancy Mace pulled Norman and Self into an office off the House floor and called Trump, who had called Norman earlier in the day from the golf course. Trump told the two they were jeopardizing everything people voted for in November.
That apparently did the trick, following earlier calls in the day and the two finally changed their vote.
Trump can’t seem to avoid making history on the golf course -- that has nothing to do with golf.
We’ll take it.
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