
Senate's version of Trump tax bill is a fiscal disaster Republicans created
After weeks of negotiating, the Senate finally got the votes to send its version back to the House. Any hope of the Senate being the more responsible legislative body, which is generally the case, vanished as it became clear it would pass a spending monstrosity even worse than the version the House put together.
The Senate has passed a completely irresponsible budget that endangers America's fiscal health.
This entire piece of legislation is oriented around extending the 2017 Trump tax cuts, which is good policy. In fact, it's just about the only good part of the bill.
If not extended, the expiration of the 2017 Tax Cuts and Jobs Act would have been devastating to Americans. If allowed to expire, 62% of Americans would see a tax increase, according to the Tax Foundation. Extending the TCJA would result in a gross domestic product growth of 1.1% in the long run.
The issue is that the extension of these tax cuts will result in a revenue loss of $4.5 trillion for the federal government. The economic growth spurred by the act will cover just $710 billion of that shortfall, leaving nearly $3.8 trillion that needs to be paid for somehow.
Jacob Stewart: Defunding Planned Parenthood won't stop virtual abortions in Indiana
The tax cuts themselves aren't the only significant source of spending in the bill. A sticking point for swing district Republicans has been the state and local tax (the SALT deduction), or the amount of state tax burden taxpayers can deduct from their federal income tax. Certain House Republicans have demanded that the annual limit of $10,000 be raised to $40,000, and the Senate has begrudgingly given them their increase for the next five years.
I've written elsewhere about why the SALT deduction is bad policy, but combined with other changes to the alternative minimum tax would result in a $325 billion revenue loss on net. The Senate's version is even more generous on these policies than the House's version was.
Additionally, the big ugly mess includes no tax on tips, social security and overtime pay. Neither Trump nor Republicans more generally have made a case for why these types of income are deserving of exempt status, and they amount to nothing more than a populist bribe of voters. These policies add hundreds of billions more to the revenue decreases from the tax cut extension.
Other defense and immigration enforcement provisions bring the grand cost of the legislation up to $4 trillion once the long-term economic growth is accounted for. Work requirements for Medicaid benefits and food stamps are the chief sources of new funding to offset these costs, as well as the elimination of certain clean energy tax credits.
As written, the Senate version of the bill adds even more to the budget deficit than the version the House put together. The House version was a fiscally irresponsible mess, which was estimated to add about $1.7 trillion to the deficit over the next decade, even after considering the economic growth that the bill is projected to create. The Senate version is estimated to add $2.9 trillion under the same metrics.
Some House Republicans have already expressed frustrations with the Senate version of the bill, which House Speaker Mike Johnson wants to pass before Friday, Independence Day. The budget hawks in the House must hold the line against the careless spending the Senate has engaged in. The House bill that passed in the first go-around was a mess, and the Senate made it even worse.
More from Dace Potas: Trump's refusal to enforce TikTok ban is his most lawless presidential act
The Senate version also exaggerates its benefits and underestimates its costs by making many of its programs temporary. This allows them to gloss over this fact when discussing the benefits while claiming a lower cost.
All of these games are played in order to avoid tough political conversations about slashing entitlements, the chief cause of our escalating budget crisis.
I have little faith in the House's ability to stop this mess of a bill. Our legislators (with one notable exception) are so terrified of the prospect of a Trump primary challenge that they will vote for just about anything to avoid being the one to hold up the president's desired budget.
America's takeaway from this should be to laugh hysterically the next time Republicans claim to be the party of responsible spending. For all the talk of slashing government spending, the GOP has put together one of the most counterproductive efforts in modern history.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Forbes
10 minutes ago
- Forbes
Retroactive Red State Rate Cuts And Backdated Blue State Tax Hikes
Illinois Gov. JB Pritzker, center, speaks, as Minnesota Gov. Tim Walz, left, and New York Gov. Kathy ... More Hochul, right, sit nearby during a House Committee on Oversight and Government Reform hearing, Thursday, June 12, 2025, at the U.S. Capitol in Washington. (AP Photo/Julia Demaree Nikhinson) As people across the U.S. get ready to commemorate the nation's founding, Congress is working toward final passage of the One Big Beautiful Bill Act, legislation that will prevent all federal income tax rates from rising at the end of the year and will restore full business expensing. While avoiding federal tax hikes on more than 80% of households will come as a relief to many, Americans who reside in several states have additional reason to celebrate this Fourth of July, as they also benefit from tax cuts that took effect this week. Many changes to state tax policy enacted this spring took effect on July 1, which is the first day of the new fiscal year in most states. In Georgia, for example, an income tax cut that Governor Brian Kemp (R-Ga.) and state legislators enacted in April took effect on July 1. That tax cut accelerated previously scheduled income tax rate reduction, cutting Georgia's flat income tax rate from 5.39% to 5.19%. That rate reduction was made retroactive to the first day of 2025. Governor Kemp and Georgia lawmakers plan to continue cutting the rate down to 4.99%. 'While other states are running up budget deficits and raising taxes on their citizens, we're investing in the priorities of our state while further cutting taxes and returning more than a billion dollars to hardworking Georgians,' Governor Kemp said in his signing statement. 'That's on top of the tax relief we've given in prior years and is a direct result of our conservative budgeting.' Meanwhile in Kansas, Senate Bill 269, an income tax relief package that the GOP-led Kansas Legislature enacted in April by overriding a gubernatorial veto, also took effect this week. With the enactment of SB 269, Kansas lawmakers established a mechanism to reduce the state income tax rate in the future based on revenue triggers. If the Budget Stabilization Fund balance is 15% of the prior year's general fund, and personal and corporate income tax collections surpass an inflation-adjusted FY 2024 baseline, the personal income tax rate will drop. This will continue until the rate falls to 4%. Once the personal income tax rate in Kansas hits 4%, the corporate income tax rate will be reduced based on the same parameters until the corporate rate falls to 4%. SB 269 also reduces the privilege tax, bringing the rate to 2.6% for banks and 2.62% for savings and loan associations. Though SB 269 took effect this week, the first opportunity for a rate cut to be triggered under the new law will be in tax year 2026. Retroactive Tax Increases Take Effect In Maryland And Illinois While some Americans received an income tax cut at the beginning of July backdated to January 1, some Marylanders were hit with a retroactive tax hike this week thanks to Governor Wes Moore's (D-Md.) first budget, which took effect on July 1. That new budget raised the state income tax rate from 5.75% to 6.25% for individual earnings between $500,001 and $1 million. That rate increase also hit joint filers with income between $600,001 and $1.2 million. Individual filers in Maryland with income exceeding $1 million and joint filers making more than $1.2 million saw their top rate rise this week from 5.75% to 6.5%. All of those rate increases were made retroactive to January 1, 2025, as was the 2% capital gains surtax also included in the budget. While Governor Moore's first budget imposes a multi-billion dollar net tax increase, it did provide relief to some taxpayers. That relief came in the form of standard deduction increase, raising it to $3,350 for individual filers and $6,700 for joint filers. In addition to the budget's retroactive income tax hikes, a 3% sales tax on data and IT services, which Maryland lawmakers imposed with the May passage of HB 352 also took effect on July 1. HB 352 also raised taxes on cannabis, car, car inspections, tires, and vending machines. In addition to Maryland, a retroactive income tax hike also took effect this week in Illinois. Governor JB Pritzker (D-Ill.) enacted a new budget in June, which took effect on July 1, that imposed a number of retroactive changes. Among those is repeal of addback exemptions to the Section 163(j) deduction for net business interest expenses, making it less generous, and inclusion of 50% of businesses' Global Intangible Low-Taxed Income (GILTI) into the state's corporate income tax base. While tax burdens rose in Maryland and Illinois this week, retroactively so, those states are outliers. Lawmakers in more than 25 states have cut state income taxes since 2020. So far in 2025, income tax cuts have been implemented in 11 states. 'All businesses operating in Illinois will now pay sales taxes, including those without a physical presence in the state,' explains Patrick Andriesen with the Illinois Policy Institute. 'Business outside the state will be required to collect sales taxes if they sell at least $100,000 worth of goods or services to residents.' In analysis published shortly after the legislature passed the budget, Andriesen outlines the other tax hikes included in the new spending package recently signed by Pritzker, which includes 'a 25-cent tax on the first 20 million wagers made within the state with licensed sports betting businesses and a 50-cent tax on all wagers made there-after.' 'Airbnb and other short-term rentals in Illinois will be taxed at the same rate as hotels under an update to The Hotel Operators' Occupation Tax Act,' Andriesen added. 'Visitors will likely now have to cover an additional 6% state tax on their short-term rental in Illinois and one of the highest tax rates in the nation when renting in Chicago. Illinois state budgets have grown $16.7 billion under Gov. JB Pritzker 'You would think the leaders of blue states, which have been losing population to lower-tax red states for years, would be trying to make their tax codes competitive by lowering rates for households and employers,' says Ryan Ellis, president of the Center for a Free Economy and an IRS-enrolled agent who operates a tax preparation business. 'Instead, JB Pritzker and Wes Moore, both of whom are discussed in the media as future White House contenders, are doing the opposite, doubling down on the high tax blue state model that has led to declining population and, subsequently, reduced representation in Congress.'


Hamilton Spectator
10 minutes ago
- Hamilton Spectator
First immigration detainees arrive at Florida center in the Everglades
The first group of immigrants has arrived at a new detention center deep in the Florida Everglades that officials have dubbed 'Alligator Alcatraz,' a spokesperson for Republican state Attorney General James Uthmeier told The Associated Press. 'People are there,' Press Secretary Jae Williams said, though he didn't immediately provide further details on the number of detainees or when they arrived. 'Next stop: back to where they came from,' Uthmeier said on the X social media platform Wednesday. He's been credited as the architect behind the Everglades proposal. Requests for additional information from the office of Republican Gov. Ron DeSantis and the Florida Division of Emergency Management, which is building the site, had not been returned early Thursday afternoon. The facility, at an airport used for training, will have an initial capacity of about 3,000 detainees, DeSantis said. The center was built in eight days and features more than 200 security cameras, 28,000-plus feet (8,500 meters) of barbed wire and 400 security personnel. Immigrants who are arrested by Florida law enforcement officers under the federal government's 287(g) program will be taken to the facility, according to a Trump administration official. The program is led by Immigration and Customs Enforcement and allows police officers to interrogate immigrants in their custody and detain them for potential deportation . The facility is expected to be expanded in 500 bed increments until it has an estimated 5,000 beds by early July. Environmental groups and Native American tribes have protested against the center, contending it is a threat to the fragile Everglades system, would be cruel to detainees because of heat and mosquitoes, and is on land the tribes consider sacred. It's also located at a place prone to frequent heavy rains, which caused some flooding in the tents Tuesday during a visit by President Donald Trump to mark its opening. State officials say the complex can withstand a Category 2 hurricane, which packs winds of between 96 and 110 mph (154 and 177 kph), and that contractors worked overnight to shore up areas where flooding occurred. DeSantis and other state officials say locating the facility in the rugged and remote Florida Everglades is meant as a deterrent — and naming it after the notorious federal prison of Alcatraz, an island fortress known for its brutal conditions, is meant to send a message. It's another sign of how the Trump administration and its allies are relying on scare tactics to try to persuade people in the country illegally to leave voluntarily. State and federal officials have touted the plans on social media and conservative airwaves, sharing a meme of a compound ringed with barbed wire and 'guarded' by alligators wearing hats labeled 'ICE' for Immigration and Customs Enforcement. The Republican Party of Florida has taken to fundraising off the detention center, selling branded T-shirts and beer koozies emblazoned with the facility's name. _____ Anderson reported from St. Petersburg, Florida. Payne reported from Tallahassee, Florida. Associated Press reporters Gisela Salomon in Miami contributed. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .

11 minutes ago
Gas prices near lowest level in 4 years ahead of Fourth of July
Gas prices are hovering near their lowest summer level in four years as millions of people ready themselves to hit the roads over the Fourth of July holiday weekend. The national average for a gallon of gas on Thursday stood at $3.16, which amounts to a nearly 10% decline from a year ago, AAA data showed. Gas prices dropped in recent weeks as crude oil erased a spike set off by the outbreak of war in the Middle East. Twenty states boast average gas prices below $3, spanning from New Mexico to Missouri to South Carolina. Mississippi, the state with the nation's lowest gas prices, offers drivers an average gallon for $2.71. More than 61 million people are expected to travel by car over the July 4 holiday, AAA forecasted. "The lower gasoline prices provide welcome relief for travelers," Timothy Fitzgerald, a professor of business economics at the University of Tennessee who studies the petroleum industry, told ABC News. Cheap crude oil is the main driver of low gas prices, analysts told ABC News. The U.S. West Texas Intermediate futures price -- a key measure of U.S. oil prices – has plummeted more than 17% since a recent peak in January. Oil prices have dropped as forecasters predicted a slowdown in global economic growth, which would slash demand for oil. Meanwhile, the alliance of oil-producing countries known as OPEC+ has increased output in recent months, boosting supply. The extra oil on the market has helped accommodate an annual surge in demand that takes hold over the summer traveling season, Aixa Diaz, a spokesperson for AAA, told ABC News. "Most of what we pay at the pump is in direct correlation to the price of crude oil," Diaz said. Crude oil prices surged as war broke out in the Middle East last month, but prices have returned to where they stood before the recent conflict between Israel and Iran. "The resolution in the Middle East does help," Patrick de Haan, the head of petroleum analysis at GasBuddy, told ABC News. President Donald Trump has touted the low gas prices on numerous occasions since he took office. "We have everything down at levels that nobody ever thought possible," Trump said in a social media post in April. Speaking at an event in Ochopee, Florida, on Monday, Trump claimed gas prices had fallen below $2 per gallon in five states. GasBuddy, which tracks prices at thousands of gas stations nationwide, found zero locations offering gasoline below $2 per gallon, de Haan said in a post Monday on X. That remained true as of Thursday, de Haan told ABC News. Trump could be referring to wholesale gas prices but such price levels hold little relevance since they are not paid by consumers, de Haan said. "This does not pass the sniff test," de Haan added. Gas prices will likely remain at current levels over the remainder of the summer -- and they may even drop lower, some analysts said. Gas supply typically increases over the course of the summer, alleviating price pressures, they added. Still, prices could rise in the event of a geopolitical conflict, disruptive hurricane season or major oil refinery outages, de Haan said, adding the national average price for a gallon of gas could drop below $3 by September. "It could happen if we don't see any of those caveats," de Haan said. "If it's a normal year."