It’s the dang politics

Rick Morain

The Trump tax cuts, enacted in 2017, are due to expire at the end of this calendar year, 2025. The new 2025-26 federal fiscal year doesn’t kick in until Oct. 1, 2025. Plenty of time for Congress to decide whether or not to renew the cuts. Right?

Right. But for Washington, even with Republican control of both houses of Congress,  as well as the White House, making that decision seems harder than giving birth. It’s the dang politics again, as it always is these days.

The Republican Party has always branded itself the party of fiscal responsibility. Translation of that phrase: a balanced budget. The GOP has condemned Democrats’ supposed fiscal irresponsibility ever since President Franklin Delano Roosevelt’s administration 90 years ago. For Republicans, federal debt is to government as broccoli was to George H.W. Bush.

But for the past 100 years it’s been all hat and no cattle for the GOP. No Republican administration with a Republican Congress has balanced the budget since before the 1930s.

The party’s sister mantra for a balanced budget is lower taxes. But it’s very hard today to link a balanced budget to reduced revenue.

This year President Trump’s budget calls for a significant increase in spending for defense and border security — and for permanent extension of his 2017 tax cuts. Everyone — including Congressional Republicans — knows that toxic recipe, in order even to approach success, requires draconian cuts to non-defense expenditures, particularly Medicaid.

In the past few decades, messing with Medicaid has caught up to Social Security cuts as a toxic no-no for Congress. The entire House of Representatives, shivering under its closest party balance for many years, is up for election in November 2026. A third of the Senate, also nearly evenly balanced, will also be on the ballot.

Republican members of Congress from swing districts and states — and there are a number of them — fidget about cutting Medicaid, a benefit on which so many of their constituents of modest means and/or advanced age now depend. Consequently, they’re reluctant to sign onto Trump’s “big, beautiful bill” for the budget. Potentially vulnerable Republicans are searching for a way out.

One way to make spending cuts more palatable would be to reduce the potential added budget deficit. But Trump’s plan, according to non-partisan economists (including a study by the Wharton School of Economics at the University of Pennsylvania, Trump’s alma mater), would increase the federal debt by at least $3.3 trillion over the next decade. Some studies say more than that.

When coupled with Trump’s various other tax reduction proposals, the added debt estimate rises to some $10 trillion, according to the Joint Committee on Taxation, a non-partisan committee of Congress.

With Medicaid cuts off the table, and more defense spending and border costs in the pipeline, reductions in so-called “fraud, waste, and abuse” spending wouldn’t begin to do the job.

The obvious course of action is to increase revenue to handle the increased expenditures. How can that be done?

A logical way to ease at least some of the potential deficit is to terminate the tax cuts for those who don’t need them: the wealthy.

For months the GOP has quoted its gospel: just extend the tax cuts, period. Make no distinction between people of modest means and those in the highest tax brackets.

Nearly all Republicans, including Iowa Senators Chuck Grassley and Joni Ernst and Iowa Third District Representative Zach Nunn, have so far taken that across-the-board position: the tax cuts must be extended for the benefit of Iowans individually and their small businesses. The cuts for both of those categories make sense.

But Grassley, Ernst and Nunn are silent about why the wealthy need the tax cuts. The hackneyed argument that job creation will suffer if the well-to-do don’t get their taxes cut is threadbare. The top individual tax rate in the U.S. now is 37%. If the cuts are not extended, the top rate rises to 39.7%. That’s for persons earning more than $600,000 a year. It’s not rational to think that an increase of that size would reduce job creation to any significant extent.

If the tax cuts were extended only for those below, say, $400,000 of annual income, and terminated for those above that threshold, the federal treasury would be healthier by many, many billions of dollars every year, and some of the most damaging spending slashes could be eased.

If average Iowans and their small businesses are the only recipients of Grassley, Ernst and Nunn’s concern about tax cuts, why not extend those? Just those.

The American government employs a raft of intelligent economists to perform intricate budget calculations. Surely it’s not a major challenge simply to make a few tweaks to continue the lower tax rates for people of average income, or even comfortably above average, and terminate them for those in higher income brackets.

Even Donald Trump has broached that idea. He recently called for a modest increase in tax rates for the wealthy. In so doing, he’s thrown under the bus his super-loyal Congressional minions, who have always parroted his proposals.

Tax increases in any form violate the Republican canon. Remember George H.W.’s “read my lips: no new taxes” pledge, and how it contributed to his defeat in 1992 when he backtracked?

Trump’s startling recent proposal, of course, won’t cost himself politically: he’s not running for reelection next year. Most members of Congress are not so fortunate. They would have to decide if boosting taxes on their most well-to-do constituents, and funders, is worth remaining conjoined to their President.

It will be worth watching what Congressman Nunn and Senators Grassley and Ernst decide to do with the 2025-26 fiscal year budget. It will make a good deal of difference to most Iowans.

Rick Morain is a reporter and columnist with the Jefferson Herald.