Larry Kudlow breaks down Trump’s economic policy

Trump needs a big, good coalition to pass one big, good reconciliation bill and that’s a matter of debate. There are several important reasons for President Trump to strengthen his one big, good bill in his meeting tonight with Republican Senators, but the reason that is almost ignored is the diversity of House Republicans, where really any important legislation needs a coalition. Here is Speaker Mike Johnson making the 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 conference. The House Republican Conference is broad and has over 200 people with many different views and strengths in their districts at home and so, you’re going to consider that and we’re going to consider it focused on a single bill strategy .”

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I can think of at least four key groups whose votes will be needed to pass President Trump’s agenda. One is the pro-growth tax cut group. The second is those who want adequate resources to close the border. The third is those who will insist on reducing the PAYGO budget to balance anywhere spending money increase and fourth defense hawks.

Personally, I like all four, but not all of them are in the House GOP conference. What Speaker Mike Johnson is saying is that the one bill strategy is the only way to bring all these different interests together. It is important to note that the PAYGO budget cutters will play an important role in any negotiations – whether it is on this one bill, or on the next ten and they are right. There has been a clear disregard for budget overspending – from both political parties. This uniparty shortage and the debt bonanza must end.

That said, delaying tax cuts will slow blue-collar growth. The rollback of the tax cuts will disappoint President Trump’s new coalition of Republican workers. Delaying tax cuts will delay the real growth of the real middle class — which will hurt Republicans in the 2026 midterms. Most of the tax cut work is to extend Mr. There is nothing complicated about that.

Trump’s plan for a 15% corporate tax rate, along with tax-free tips and overtime pay, are all important measures for economic growth, but there’s nothing serious about that, either. And, this Trumpian mix of supply-side policies — tax cuts, deregulation, and more energy production — will eventually end Bidenflation. Meanwhile, the House has already passed HR1 for energy reform and HR2 for border closures.

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As for various knick-knacks, if some of our Republican friends want to double the SALT catch – well, a little beer. Just give them.

Finally, contrary to some fake news reports, Mr. Trump is considering a universal tax, which could pay with more tax cuts – and then some. The US brings in about $5 trillion a year, and 10% of that would be worth $500 billion. That buys a lot of tax cuts — and other important things, too. Without the need to think about a coalition, people should think about tariffs that have the potential to support this tax reduction. Believe me, it is never far from President Trump’s mind. That’s the wrap.

This article is adapted from Larry Kudlow’s opening remarks on Jan. 8, 2025, edition of “Kudlow.”