Donald Trump’s tax plan could revitalize the economy, but Congress and the president need to stick the landing. The legislation as it stands is too expensive.
Trump celebrates for 100 days at Michigan rally
President Donald Trump held a rally in Macomb County, Michigan, to celebrate his first 100 days in office.
I have four kids and spend more than $1,000 per month on groceries. Spending $250 each week doesn’t get me the amount of food it used to, either, much to my teenagers’ chagrin.
From 2020 to 2024, food prices rose almost 24%, as the inflation rate soared. Inflation has slowed to 2.4%, which was lower than expected in March, but the aftershock from years of compounding prices remains.
From single parents to the East Coast elite, blue-collar trade workers to Bitcoin billionaires, paying more for everyday goods hurts.
President Donald Trump barreled into office with a mandate from voters to fix the economy: Lower taxes, reduce inflation and restore good-paying jobs for ordinary Americans.
On the tax front, Treasury Secretary Scott Bessent has vowed to pass Trump’s “big, beautiful bill,” which promises multiple tax cuts, by Independence Day.
The bill includes an extension of the 2017 Tax Cuts and Jobs Act, and it may eliminate taxes on tips, overtime income and Social Security benefits.
The bill also is awash in additional spending, which is counterproductive to efforts to reduce inflation and threatens to pile up even more debt.
Republicans in Congress are struggling to work out the details of the proposed tax cuts, including a cap on the federal reduction for state and local taxes. But little else will matter if Trump and congressional Republicans don’t enact legislation that helps people with kids, like me, and other Americans who have little margin in their paychecks.
Trump’s right to fix the economy with tax cuts
Trump has disrupted norms and angered critics in his attempt to retrofit our economy. It’s been a bumpy ride already.
Gross domestic product in the first quarter shrank a small amount, mostly because of Trump’s tariffs. Fears of a recession have grown, and Trump’s approval ratings have dropped, largely because of the economic uncertainty he’s created.
It’s not all bad news. Employers hired solid numbers of new workers in March and April, and the unemployment remains at a low 4.2%. Stock markets, which declined at a brutal pace in the first quarter, have rebounded nicely in the past couple of weeks. And the Federal Reserve might cut interest rates, which should ease Americans’ cost of borrowing and fuel more growth in the markets.
But extending Trump’s tax cuts will be the best stimulus for the economy. Most Americans don’t realize how vital that extension is for their finances. In 2017, Trump’s tax cuts increased the standard income deduction from $6,500 to $12,000 for individual filers and from $13,000 to $24,000 for joint returns.
The average household received a tax cut ranging from $1,500 to $3,000 a year.
“The 2017 tax cuts that they’re extending were, full stop, a good pro-growth reform,” Adam Michel, director of tax policy studies at the Cato Institute, told me. “It simplified tax paying, lowered taxes and ensured that more (goods were) made in the United States. Investment is the back bone of long-run economic growth that leads to higher productivity and higher wages and businesses doing more activity than elsewhere.”
Michel, however, said the plans to eliminate taxes on tips, overtime and Social Security are “expensive gimmicks that don’t make the package more pro-growth.”
He dismissed progressives’ argument that the tax bill will help only wealthy Americans.
Trump’s ‘big, beautiful bill’ would spend too much
Trump’s massive bill does have a downside: It’s packed with too much spending.
The Congressional Budget Office has projected a 2025 fiscal year deficit of $1.9 trillion, about the same as last year’s deficit. Continuing to pile up debt fuels inflation and slows economic growth.
Texas Republican Rep. Chip Roy has been harping on the dangers of more deficit spending.
“If we don’t cut spending along with tax cuts, the inflation tax will continue to drain American prosperity,” Roy recently posted on X.
He reluctantly voted for an early version of Trump’s tax legislation, but said he was promised cuts to entitlement programs and the elimination of clean energy tax credits in the final bill.
Trump’s tax plan could revitalize the economy, but Congress and the president need to stick the landing. The legislation as it stands is too expensive.
As Michel said, “A spending cut today acts like a pro-growth tax cut” in the future.
Why not do both? My grocery bill − and yours − depends on it.
Nicole Russell is a columnist at USA TODAY and a mother of four who lives in Texas. Contact her at nrussell@gannett.com and follow her on X, formerly Twitter: @russell_nm. Sign up for her weekly newsletter, The Right Track, here.