Trump needs one big, beautiful coalition to pass one big, beautiful reconciliation bill and that's the subject of the riff. There are a number of important reasons for President Trump to hang tough on his one big, beautiful bill in his meeting tonight with Republican Senators, but one almost overlooked reason is the diversity of House Republicans, where really any significant legislation requires a coalition. Here's Speaker Mike Johnson making the point today:
MIKE JOHNSON: "I think it makes the most sense with regard to what we need to achieve. The House is a very diverse conference. The House Republican Conference is a broad and has over 200 people with lots of different opinions and dynamics in their districts at home and so, you're going to take that into account and we will. So, I think if you put all the measures into one package and it increases greatly the probability of us achieving all of its objectives. That's why we've been focused on the one bill strategy."
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I can think of at least four key groups whose votes will be necessary to pass President Trump's agenda. One is the pro-growth supply-side tax-cutting group. Second is those who want sufficient resources to close the border. Third is those who will insist on budget cutting offsets for PAYGO to balance out any spending increases and fourth are the heavy-duty defense hawks.
Personally, I'm in favor of all four, but not everybody in the House GOP conference is. What Speaker Mike Johnson is saying is that the one-bill strategy is the only way to cobble together all these different interests. It's important to note that the PAYGO budget-cutters are going to play a crucial role in any deliberations – whether it's on this one bill, or the next ten and they are right. There's just been a flagrant disregard for budgetary overspending – in both political parties. This uniparty deficit and debt bonanza has got to stop.
That said, delaying tax cuts will delay the blue-collar boom. Delaying tax cuts will disappoint President Trump's new Republican working-class coalition. Delaying tax cuts will delay the next real middle-class boom – which will hurt Republicans in the 2026 midterms. Most of the tax cut work is just to extend Mr. Trump's first term tax cuts. There's nothing terribly complicated about that.
Trump’s plan for a 15% corporate tax rate, along with tax-free cash tips and overtime pay, are all important economic growth measures, but there's nothing hard about those, either. Plus, this Trumpian mix of supply-side policies – tax cuts, deregulation, and more energy production – will finally end Bidenflation. Meanwhile, the House has already passed H.R.1 for energy reform and H.R. 2 for border closing.
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As far as various knick-knacks, if some of our Republican friends want to double the SALT deduction – fine, it's small beer. Just give it to them.
Finally, contrary to some fake news reports, Mr. Trump is looking at a broad-based universal tariff, which could pay for plenty of tax cuts – and then some. The U.S. imports about $5 trillion-worth per year, and 10% of that is $500 billion-worth. That buys a lot of tax cuts – and other priorities, as well. Beside the need for coalition-thinking, people should be thinking about the tariff potential to finance these tax cuts. Believe me, it's never far from President Trump's mind. That's the riff.
This article is adapted from Larry Kudlow’s opening commentary on the Jan. 8, 2025, edition of "Kudlow."
