Trump Allies Fret Tax-Cut Plans at Risk With GOP Infighting
Nancy Cook, Steven T. Dennis and Billy House
6 min read
(Bloomberg) -- A faction of President-elect Donald Trump’s allies is harboring doubts about Republicans’ chances of passing a sweeping tax bill in 2025 amid party infighting and strategy disputes.
Republicans broadly agree that there’s little room for error on what is a rare opportunity for the GOP to update the tax code without having to make any concessions to Democrats. There’s also time pressure: households and privately-held businesses will see their tax bills rise if Congress doesn’t act by the end of the year.
But Republicans openly disagree on how to meet that deadline. Little progress was made on Wednesday night when Trump met with GOP Senators, with the president-elect telling reporters at the conclusion of the meeting that it “doesn’t matter” to him how his allies in Congress plan to get his top legislative achievements passed.
Stephen Miller, the incoming deputy White House chief-of-staff and a vocal advocate for an immigration crackdown, has pushed lawmakers to first pursue a border security bill, before pivoting to taxes, an idea Senate Republican Majority Leader John Thune endorsed during his address to open the new Congress.
That pits them against House Republicans, many of whom want to cram all the party’s legislative goals — immigration, energy production and taxes — into a singular bill. That’s an approach that yields to the reality that the tiny House GOP majority — a fractious group of lawmakers willing to torch members of their own party during heated disputes — will have a hard time passing even one bill, let alone two.
“The best chance for a reconciliation bill that includes tax cuts to pass the House is for the tax cuts to be included in the first one, and preferably in one big beautiful bill,” said House Ways and Means Chairman Jason Smith, referring to the legislative process, known as reconciliation, allows the majority party to advance its priorities with the votes of the opposing party.
Trump, who made taxes and an immigration crackdown the centerpiece of his 2024 presidential campaign, has waffled on his wishes, further muddying the debate. Over the weekend, he posted that he supported “one powerful Bill that will bring our Country back, and make it greater than ever before.” At a press conference on Tuesday, however, he indicated a willingness to separate immigration from taxes.
“Well, I like one big beautiful bill. I always have. I always will. But if two is more certain, it does go a little bit quicker, because you can do the immigration stuff early,” he told reporters.
Senator Rand Paul, a Kentucky Republican, said following Wednesday’s meeting with Trump that they discussed using tariff hikes as a way to offset the cost of the tax cuts, a politically risky move that could further divide Republicans.
Thune, after meeting with House Speaker Mike Johnson on Tuesday, joked with reporters that the plan for sequencing the legislation is “as clear as mud.”
After the Wednesday meeting with Trump, Thune told reporters they are all united on the goals but lawmakers still have different views on the legislative strategy to get there.
Strategy Planning
Congress also must raise the debt ceiling this year — an issue that has routinely caused Republican infighting and soured relationships within the party. Johnson told reporters Tuesday he plans to add a debt ceiling increase to the bill, with the final product put together by “churning it out amongst our colleagues.” He also set an April goal to pass it out of his chamber.
Paul, however, said Wednesday there’s opposition from Reublicans in both chambers to addressing the debt ceiling in the bill.
“We need to do the tax bill in the first 150 days,” said Steve Moore, an informal economic adviser to Trump.
Moore said that he, along with Trump’s former National Economic Council Chair Larry Kudlow and economist Arthur Laffer, urged Trump to tackle taxes first.
“We shouted from the rooftops,” Moore said. “The argument made to Trump that carried the day was that delaying it would put the tax cut at risk.”
The business community has also warned that a delay — or failure — of the tax measure could stymie the economic growth promises Republicans ran on.
“I’m not going to second guess the speaker or the majority leader on the timing of the tax bill, but I will say that from a business perspective, from an investment perspective, a manufacturing perspective, sooner is going to be a whole lot better than later if they truly want to keep their promises that they’ve made,” said Jay Timmons, president and chief executive officer of the National Association of Manufacturers.
Many Republicans also publicly and privately worry that isolating immigration — an issue that has vexed Congress for decades — into an initial bill will take far more time than anticipated and eat up a great amount of political capital and good will, potentially jeopardizing the size, scope and ambition of a tax measure.
History Lesson
In 2017, Trump faced a similar legislative strategy quandary on the sequencing of policy when his team spent months trying to repeal the Affordable Care Act only to have then-Senator John McCain, an Arizona Republican, strike down the bill at the last minute. The Trump White House managed to barely pass tax reform that December — and that was with a much larger margin of Republicans in the House.
That legislation was also hastily written, and passed solely with the support of Republicans. At the time, there was a feeling in the Trump orbit that tackling infrastructure or taxes first would have provided the new president with far more political dividends than pursuing the failed health care legislation.
In the closing days of the 2024 election, Trump promised to extend the personal tax cuts from 2017 and expand the state and local tax deduction, while also creating new tax breaks like no taxes on tips, overtime pay or Social Security checks.
Trump has vowed to Wall Street executives that he would reduce the corporate tax rate to as low as 15%. That laundry list of promises surprised even some of his closest economic advisers, who privately said Trump was unlikely to turn all of this rhetoric into reality.
Though Trump, as recently as last weekend, has repeatedly singled out one specific pledge — no taxes on tips — which suggests it could be among the highest priority cuts for the incoming president.
Political Calculus
For Republicans, a key calculation is delivering on Trump’s tax promises so the party can hold onto its control of the House of Representatives in 2026. Former House Speaker Newt Gingrich, a close Trump ally, said history shows that Trump needs to pass the tax bill by July 4, 2025, to satisfy voters.
When President Ronald Reagan “did not front-load the tax cuts in 1982-1981, we lost 26 seats in 1982. When Trump did not get the tax bill through fast enough, we lost 40 seats in 2018. We also know that Franklin Delano Roosevelt, by acting aggressively, picked up nine seats,” he said.
Former Representative Kevin Brady, who led efforts on Trump’s 2017 tax overhaul, said Republicans ought to “educate” — or perhaps browbeat — their colleagues to make a priority of the cuts.
“Failure is not an option. You cannot wreck this economy. You cannot damage this presidency,” Brady said at an event in Washington. “You’re going to find a way to get this done.”
--With assistance from Alicia Diaz.
(Updates with Trump, Paul comments after Senate meeting)
