Will Trump II See the Return of Fiscal Conservatism?

Since President Ronald Reagan rode the supply-side revolution to the White House, Republicans have been unified on tax policy. Tax cuts are good, big ones even better, and government revenue once reduced shall never be increased again—we solemnly swear. President George W. Bush’s top legislative priority upon taking office was a massive tax cut. President Donald Trump’s one legislative achievement in his two years when the GOP held both houses of Congress was another massive tax cut.

The Trump tax cut, formally the Tax Cuts and Jobs Act of 2017 (TCJA), consisted mainly of temporary provisions that expire next year. The stage is thus set for a legislative “battle royale” that will turn in part on who the 2024 election installs in power at each end of Pennsylvania Avenue. But the long-standing conservative consensus is now teetering, and even if Republicans win the presidency and both houses of Congress, TCJA’s extension is no sure thing.

In some reporting, making TCJA permanent and perhaps cutting taxes even further are top priorities for both Trump’s advisors and congressional leaders. But prominent House leaders like Rep. Tom Cole (R-OK), chair of the House Appropriations Committee, and Rep. Jodey Arrington (R-TX), chair of the House Budget Committee, have indicated they believe tax increases need to be on the table in pursuit of deficit reduction. According to Rep. Jason Smith (R-MO), chair of the House Ways & Means Committee, some colleagues even want to raise the corporate tax rate. Economists at the most established right-of-center institutions, like Kyle Pomerleau at the American Enterprise Institute and Brian Riedl at the Manhattan Institute, have endorsed Arrington’s sentiment.