In this year’s election, the Republican Party secured the majority in both houses of Congress, which will enable President-elect Trump (formerly President Trump) to advance a tax-cut agenda aimed at corporations, workers, and retirees. This will test Trump and the Republican Party’s commitment to the goal of controlling the $35 trillion federal government debt.
According to Reuters on Wednesday, some Republican lawmakers indicated that early priorities following Trump’s inauguration are expected to include extending Trump’s tax policies from 2017, providing funding for the US-Mexico border wall, cutting unused funds for Democratic programs, abolishing the Department of Education, and limiting the power of institutions like the Consumer Financial Protection Bureau.
Republican leaders believe that these priorities are crucial steps in ensuring robust economic growth and employment in the country, as well as strengthening immigration control.
House Majority Leader, the second-ranking Republican in the House, Steve Scalise, took to the social platform X after Trump’s election to express: “It’s time to get to work. We will work together to make America great again.”
However, as the cost of federal borrowing rises, with debt interest for the 2024 fiscal year surpassing $1 trillion for the first time ever, this poses a significant challenge for Republicans. They have consistently advocated for reducing the over $1.83 trillion deficit projected for the 2024 fiscal year, and Trump’s tax agenda could potentially plunge the government further into tens of trillions of dollars in debt.
According to nonpartisan Committee for a Responsible Federal Budget data, Trump’s proposed tax cuts, ranging from extending the 2017 tax measures to eliminating taxes on tips, overtime pay, and social security benefits, could add $7.5 trillion to the US debt over the next decade.
In response, some staunch conservative Republicans believe significant tax reform is necessary aside from welfare cuts to offset the cost of Trump’s tax cuts.
Senator Ron Johnson stated, “We either make significant changes now or are forced to make them in a terrible debt crisis.”
House Freedom Caucus Chairman Andy Harris remarked, “Our goal is to reclaim around $1 trillion from the so-called Inflation Reduction Act passed by the Democrats in 2022, which was laden with green energy tax credits.”
Additionally, Republicans propose enhancing economic growth and streamlining the federal government by establishing a new Department of Government Efficiency to offset lost tax revenue.
Reuters reported that Trump announced on Tuesday the establishment of the Department of Government Efficiency (D.O.G.E), appointing Elon Musk and former Republican presidential candidate Vivek Ramaswamy to jointly lead the department with the aim of improving government efficiency.
Musk previously suggested that federal budgets could be cut by at least $2 trillion. According to Congressional Budget Office estimates, total federal spending for the 2024 fiscal year is expected to be $6.75 trillion, with discretionary spending (including defense) projected at $1.9 trillion.
Analysts point out that if Democrats oppose Trump’s tax agenda, Republicans could utilize a parliamentary tool called “budget reconciliation” to achieve their goals, enabling them to pass relevant legislation while bypassing the Senate’s filibuster rule requiring 60 out of the 100 senators to agree on most laws.
Republicans used “budget reconciliation” in the first two years of Trump’s term, and Democrats also employed it in the first two years of controlling Congress during President Biden’s term.