Copy of AFF Sentinel V22 #19-What Are Members Elected to Do?
- Steve Dittmer
- Jul 22
- 4 min read
Is It to Advance USA or Help Themselves?
Steve Dittmer | AFF Sentinel
Colorado Springs, CO
Originally sent to subscribers 03/11/25
Edi. Note: The House passed the C.R. today, meaning it will be up to the Democrats in the Senate whether to join with the Republicans to pass it or shut some functions of the federal government down.
If one believes that keeping the tax structure we have had since 2017, with perhaps a couple of additions and getting the tax rates even lower, then the question is, what is Congress doing about it?
It should come as no shock to citizens who have been paying attention that common sense and the expressed wishes of voters are not necessarily front and center.
The fundamental question members of Congress need to ask themselves is, were you elected to accomplish things for America or were you elected to get yourself re-elected.
Because cutting spending and eliminating government programs is not easy and it may affect individuals who voted for you. But, as we have said many times before, in times of difficult questions, the answer must be to revert back to first principles. And those are the principles that created and have guided America for 249 years.
So what is holding up the most important piece of legislation in decades, the reconciliation bill key to Trump’s second term?
There is some difference of opinion between the House and Senate as to how much money Tom Homan and DHS is going to need to conduct the biggest deportation in history. But they should be able to work that out. We haven’t heard a word about boosting permits and removing red tape regarding energy.
We’ve talked about the tax baseline and whose to use. The House bill uses the “current-law” baseline method, which assumes the current law is set to expire after 2025 and any extension is a cost to the government. Some Senators favor the “current-policy” baseline, which holds that any extensions are not a cost. That makes it simpler to keep the tax policy we’ve had plus any new changes permanent.
This is Congress. They ought to be able -- and the law regarding reconciliation gives them the authority -- to decide which baseline they can use.
There is nothing to decide on keeping the current tax rules -- we don’t like constantly referring to an extension -- when they have been the tax regulations for seven years. Don’t keep them and it amounts to the biggest tax increase in decades. Automatic recession. Optimism evaporates.
No brainer.
The biggest hold ups are spending cuts and other tax provisions.
There are the other promises Trump made, like no tax on tips; no tax on Social Security (a percentage is taxed for certain income levels now) and no tax on overtime.
Perhaps one of the most important provisions would be immediate (retroactive to Jan. 20) expensing for equipment and factory construction plus accelerated depreciation. Economic growth would explode if that is confirmed.
Reducing the corporate tax rate to 15 percent is not only growth-inducing for businesses, cutting the corporate tax rate in 2017 engendered the first real wage growth in years.
Republicans in high state tax blue states are leery of eliminating or not increasing the SALT (state and local tax deductions) in the new tax bill. Democrats want it increased.
We haven’t seen any logic in the rest of the country subsidizing states like New York, California and Illinois that can’t handle their spending and have monster state taxes.
We like Steve Forbes’ idea. Do away with SALF deductions and instead, take the two tax brackets that would cover most of those folks -- 22 and 24 percent -- and cut them to 15 percent. That would offset the loss of the SALT deduction and incentivize them to work harder.
House Minority Leader Hakeem Jeffries claimed on Monday that Democrats have the Republicans on the run, over the economy, over health care, especially Medicare and the Republican “tax scam.”
Regardless of the Democrats’ political confusion, the stickiest problem is going to be spending cuts coming out of all places, the Energy and Commerce Committee. We’re not sure how Medicaid is under those committees but it’s not only Democrats who are worried about Medicaid. Moderate Republicans with large groups of Medicaid recipients among their constituents are worried to. The House bill targets $880 billion in savings from those two committees.
There were 34 million people on Medicaid in 2000 but nearly 80 million now (Medicaid.gov). Between fraud and abuse of the system and requiring the able-bodied to work, can Congress find $880 billion in savings here and other programs? Republicans are trying to slow the increase of Medicaid costs, while eliminating improper use of Medicaid funds.
One problem: the Senate is scheduled to be out of session for three of the next six weeks after this one.
One way or another, the two houses need to hammer out this reconciliation bill because our economy needs them to get it done by -- we like Larry Kudlow’s idea -- Memorial Day. Tom Homan needs the money, we need the energy sector to know what they can do and when and, most crucially, all businesses and taxpayers need to know what the tax rules will be pronto. None of this Congressional infighting and dillydallying until next fall.
Remember, the faster Congress cuts tax rates, the sooner we increase federal government revenue to help shrink the deficit.
The 2017 tax bill wasn’t passed until the last days of the year, so the growth didn’t happen in time to show results for the 2018 midterms. The Republicans lost seats and the economy lost a year. We can’t afford that mistake again, following on the struggling economy Biden left us with.
Several prominent commentators have said they are not thrilled with the sequence of major events -- with tariffs coming first and the tax reform next. But that is what we are dealing with now and Congress getting things hammered out on the tax bill pronto is critical.
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