Larry Kudlow breaks down Trump’s economic policy

Trump needs a big, nice coalition to pass a big, nice reconciliation bill, and that’s what the controversy is about. There are a number of important reasons why President Trump will hold tight to his big, beautiful bill in his meeting tonight with Republican senators, but one almost overlooked reason is the diversity of Republicans in the House, where any truly important legislation requires a coalition. Here’s speaker Mike Johnson making that point today:

Mike Johnson: “I think it makes a lot of sense in terms of what we need to accomplish. The House is a very diverse caucus. The House Republican Caucus is broad with over 200 people who have a lot of different opinions and dynamics in their districts at home and abroad. So, you’ll take that “In consideration and we will do that. Therefore, I believe that if you put all the measures in one package, it greatly increases the likelihood that we will achieve all the objectives of the one-bill strategy.”

Tens of thousands of Amazon workers are returning to in-person work in Washington

I can think of at least four major groups whose votes will be essential to passing President Trump’s agenda. One is the pro-growth tax-cut group. The second is those who want sufficient resources to close the borders. Third are those who will insist on budget cut offsets for PAYGO to offset any of it Spending Overs and fourths are defense-heavy hawks.

I personally support all four, but not everyone in the House GOP conference does. What House Speaker Mike Johnson is saying is that the one-bill strategy is the only way to bring together all these different interests. It is important to note that PAYGO budget cutters will play a critical role in any deliberations – whether it is on this bill, or the next 10, and they are right. There has been blatant disregard for overspending in the budget – in both political parties. This is a one-sided party Impotence The debt boom must stop.

However, delaying the tax cuts would delay the worker boom. Delaying tax cuts will disappoint President Trump’s new Republican working-class coalition. Delaying the tax cuts will delay the next true middle-class boom – which will hurt Republicans in the 2026 midterms. Most tax cuts are only aimed at extending Mr. Trump’s tax cuts through the first term. There is nothing too complicated about it.

Trump’s plan to impose a 15% corporate tax rate, along with tax-free cash tips and overtime pay, are all important measures for economic growth, but there’s nothing difficult about them, either. Additionally, this Trumpian mix of supply-side policies – tax cuts, deregulation, and increased energy production – will finally end Biden’s inflation. Meanwhile, the House of Representatives has already passed Energy Reform Legislation No. 1 and Border Closing Legislation No. 2.

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And as for the various talents, if some of our Republican friends want to double the SALT deduction — well, it’s a beer. Just give it to them.

Finally, and contrary to some fake news reports, Mr. Trump is looking to impose broad global tariffs, which may happen. pays For a lot of tax cuts – and then some. The United States imports about $5 trillion annually, 10% of which is worth $500 billion. That means a lot of tax cuts – and other priorities, too. Besides the need for coalition thinking, people should think about potential tariffs to finance these tax cuts. Believe me, this is not far from President Trump’s mind. This is the riff.

This article is an excerpt from Larry Kudlow’s editorial commentary on the January 8, 2025 edition of “The Kudlow.”