However, with the Department of Government Efficiency (DOGE) cutting USAID funding and reducing waste, fraud, and abuse across the federal agencies, these tax breaks will be a welcome benefit to hardworking Americans. The government is currently on track to spend about $58.4 billion on these corrupt foreign dealings in the 2025 fiscal year. While cutting tens of billions of dollars of fraud might not make up for a $5 trillion deficit, the tax breaks will ultimately help pay for themselves, stimulating the market for U.S. made goods, boosting the formation of small businesses, and ensuring stronger economic gains and tax revenues over the long haul.
Key components of the tax package:
The tax package unveiled by Trump includes several key provisions, including:
• Extending the 2017 Tax Cuts and Jobs Act (TCJA): This could cost between 3.9 and 4.8 trillion, as the law’s individual and business tax cuts are set to expire in 2025.
• Expanding the State and Local Tax (SALT) deduction: This policy, which benefits high-income earners in states with high property taxes, could add between 200 billion and 1.2 trillion to the deficit.
• Eliminating taxes on tips: Trump has long championed this measure, which could reduce federal revenue by 100 billion to 550 billion.
• Exempting overtime pay and Social Security benefits from taxes: These two provisions could cost up to 3 trillion and 1.5 trillion, respectively.
• Lowering taxes for U.S. production of certain goods: This would reduce revenue by 100 billion to 200 billion.
• Closing the carried interest loophole and reducing tax benefits for stadium owners: These changes could save up to $100 billion.
Republicans are cutting waste, fraud, and abuse to provide tax breaks to Americans
The Committee for a Responsible Federal Budget (CRFB) has warned that without significant spending cuts to offset these tax breaks, the national debt could climb to between 132% and 149% of GDP by 2035, doubling current levels. Fortunately, DOGE will easily be able to cut spending across the agencies, allowing taxpayers a break from the runaway financing of fraud and the money laundering abroad.
To further offset the staggering cost of the tax cuts, House Republicans are proposing trillions in spending reductions. House Speaker Mike Johnson has floated $700 billion in cuts, but conservative lawmakers are pushing for deeper reductions. Tesla and SpaceX CEO Elon Musk, who has been tapped to lead the new Department of Government Efficiency, has already begun auditing federal agencies like the U.S. Agency for International Development (USAID) and has proposed its closure. However, final decisions on such measures require congressional approval.
The CRFB has warned that the proposed tax cuts could reduce GDP by 1.3% to 3.0% over the next decade, while also increasing interest costs on the federal debt by 1.2 to 2.7 trillion. These figures underscore the administration's growing fiscal challenges, which include rising healthcare costs, defense spending, and the costs of war in the Middle East.
At a recent press conference, Trump emphasized the need for across-the-board efficiency measures, saying, "Pentagon, Education, just about everything. We're going to go through everything." He described the situation at USAID as "very unfortunate," adding that most of its employees had already been dismissed.
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